Case Scenario – Big Time Toymaker 1
Case Scenario – Big Time Toymaker
Scenario: Big Time Toymaker (BTT) develops, manufactures, and distributes board
games and other toys to the United States, Mexico, and Canada. Chou is the inventor of a new
strategy game he named Strat. BTT was interested in distributing Strat and entered into an
agreement with Chou whereby BTT paid him $25,000 in exchange for exclusive negotiation
rights for a 90-day period. The exclusive negotiation agreement stipulated that no distribution
contract existed unless it was in writing. Just three days before the expiration of the 90-day
period, the parties reached an oral distribution agreement at a meeting. Chou offered to draft the
contract that would memorialize their agreement. Before Chou drafted the agreement, a BTT
manager sent Chou an e-mail with the subject line “Strat Deal” that repeated the key terms of the
distribution agreement including price, time frames, and obligations of both parties. Although the
e-mail never used the word contract, it stated that all of the terms had been agreed upon. Chou
believed that this e-mail was meant to replace the earlier notion that he should draft a contract,
and one month passed. BTT then sent Chou a fax requesting that he send a draft for a distribution
agreement contract. Despite the fact that Chou did so immediately after receiving the BTT fax,
several more months passed without response from BTT. BTT had a change in management and
informed Chou they were not interested in distributing Strat.
1). At what point, if ever, did the parties have a contract?
Answer:
I believe the parties had a contract when the manager at Big Time Toymaker (BTT) sent
the e-mail to Chou, which expressed and repeated key terms of the distribution agreement that
included pricing, time frames and the obligations of both parties. Chou believed that the e-mail
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sent that was titled “Strat Deal” was to replace the draft contract. The contract was solidified
with the e-mail sent to Chou that gave him a set of promises and is enforceable. There was also
a contract when BTT paid Chou $25,000 in exchange for exclusive negotiations rights for Strat
for a 90-day period.
2). What facts may weigh in favor of or against Chou in terms of the parties’ objective intent
to contract?
Answer:
The fact that may weigh in favor of Chou in terms of the parties’ objective intent to contract
is the Uniform Electronic Transactions Act (UETA). The UETA gives electronic signature and
records the same legal status as traditional signatures, paper notices, memoranda, and notices
