The case study is based on the privities of a contract. The agreement between two individuals or parties where each side is bound to terms and conditions of deal is referred to as contract. Each individual makes equitable contributions as per agreed status. An offer refers to an agreement between parties. A breach of the contract calls for the innocent person to claim for compensation usually called compensation. Damages may be in monetary form, injunction on a court of law or repeal. From our case study we have only two parties entering into contract as the laws permits, here according to this case study Big Time Toney producer who pays a fee of 25,000 dollars to the owner of the strat(a patent right) called Chou. However the executive is a BBT’s agent and enters into a contract on behalf of business without a consultation. Thus the principal makes BBT to be bound into a arrangement was made between the principal and Chou since he was the one involved in writings. The agreement entered between BBT and Chou was not binding since the law clearly defines a contract as only that agreed and remains in written form.
In accordance to Poole (2008), In case of the breach of the contract, some facts can do for Chou as that the manager wrote to him three days prior to the expertly set days of three months thereby the manager showed an intention of entering into a agreement by paying a small amount of money. Secondly the manager wrote an e-mail which could be used as a reference for future to clear any ambiguity or misunderstanding in case of any breach of the contract. Thirdly, even though the manager did not use the word ‘contract’ in his e-mail, he instead used the word strat deal which cannot make owner who is the principal to escape the breach. However, some things such as Chou accepting the negotiation amount of 25000 dollars in oral terms could have cost him no damage in case BBT breaches the contract like now. It is clearly known that no contract binds orally. Note that in law the manager has an implied authority to enter into the contract on behalf the principal in this case who is the BTT.
Communication of the parties through an e-mail has a negative impact to BTT and a positive one to Chou. An e-mail is an electronic message written by one party and addressed to another party and thus it can be termed as a tool for future reference therefore binding the parties to the contract. BTT must compensate the innocent party who’s Chou.
A statute of fraudulence is clearly depicted in the contract, where Chou draft written entity bleach of oral terms into written form. The two parties must be involved in designing the agreement to avoid ambiguity that can cause conflict between the two parties. Moreover, the manager acted without the consent of the principal hence he behaved recklessly as he could have communicated the e-mail to BTT before entering into an agreement with Chou.
Poole(2008),Under the doctrine of mistake, it’s clearly stated well that in a court of law an individual can be relieved from being bound and called for a claim if adequately proves that the issue was clearly made and no communication made over the agreement between his agent and the offered. Thus BTT can only be set free if it shows that the manager acted on his behalf without communication. Moreover, he can only be exempted also if insane or bankrupt. In case of breaching the contract the parties can have several remedies or defenses. Some of the remedies entail innocent party given a monetary compensation for suffering from the contract breach. Also the injured party can run to court for an injunction; for example, in our case Chou can go to a court to ensure that BTT is stopped from breaching the contract. This will help him in mitigating unnecessary further injuries that can result from the breach of the contract.
Chelshire and North (1987) say Sometimes compensation from monetary kits can be inadequate, and therefore the court of law can adequately help the parties reap adequate damages. Under our circumstances here, BTT can claim in the court for reformation of the contract in case it comes to its notice that is liable for the contact offense. Some changes are reinstituted in the contract under the two parties consent to ensure no party suffers.
Lastly the contract can be avoided by BTT through entering into an agreement with Chou not to refund him the 25,000 dollars. Thus in conclusion it’s clear that BBT is liable for the failure to meet the fulfillment entered been him and Chou although his manager did not inform the company when sending the e-mail. The parties if we can say it had agreement but not a clear contract though emails can a form of communication it cannot be used to bind party’s documentary and Chou can claim for compensation damages incurred after the bridge of contract.
Chou entered into an incomplete contract which may lead him into losses though he may claim for consequential damages due to uniqueness’s resulting to foreseeable circumstances. Email are only for delivery information but cannot be used as binder for communication. Therefore fraud resulted to liquidity losses since the supplier company BBT losses 25000 for entering into a deal and also Chou looses consequentially and he is at the right position to recover equitably. BTT cannot avoid the agreement deal since the contract is said to have for almost 97% days and is coined by the $ 25000 a t the start of the contract.
Below is an e-mail send by BTT manager to Chou without company consent. It contains terms made on distribution, price agreed upon by the two parties and obligations made to bind the two parties. Note that the e-mail has ambiguity as it’s not clear whether the manager communicated to the principal over the matter.
Hallo Chou! I hereby enter into a strat deal agreement for distribution of our product on behalf of company. Note that we shall give you a negotiation price of $ 25000 exclusionary for deals of up to a period of 90 days. Note that all terms and condition must be followed, including that our agreement be on writing.
Thanks in Advance.