Case Scenario: Big Time Toymaker
In this scenario, Big Time Toymaker had entered into an option contract with Chou whereby they paid him $25,000 for exclusive negotiation rights for distribution of his strategy game for 90 days. This negotiation agreement stated that no contract existed unless it was in writing. Three days before the 90-day period was over, BTT and Chou reached a verbal agreement at a meeting. Chou was to draft the agreement, but a BTT manager sent an e-mail to him entitled “Strat Deal” that included all aspects of the agreed-upon contract. Chou believed this e-mail was to negate his drafting of the contract. A month passed before Chou was asked by BTT to fax a draft of the contract, which he immediately did. Several more months passed before BTT contacted him again to revoke the contract. This paper will attempt to point out why Chou has a case against BTT for contract enforcement.
This type of contract is governed by state statutory law based on the Uniform Commercial Code (UCC), Article 2, as it is a contract for the sale of goods. Generally, the contract would be considered unenforceable as it was stipulated by both parties in the original negotiation agreement that no contract existed unless it were in written form. The manager of BTT made a unilateral mistake according to the Doctrine of Mistake. He sent an e-mail outlining the terms of the contract and though it did not specifically contain the word “contract”, it did contain the word “deal” and outlined all of the terms required to make the contract enforceable. Courts are less willing to allow a party to avoid a contract because of a unilateral mistake. The contract is supported by consideration since Chou is giving up something of value and BTT made a promise as part of a bargained for exchange and as long as there is bargained for
