A contract occurs when one party makes an offer to another party, and the other party accepts the offer for a contract to be valid, both parties must have the capacity to contract. In this case study, two binding contracts come into existence and their breach renders the parties liable (McKendrick, 2005).
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The first contract takes place when Chou receives $ 25,000 as a consideration for the provision of exclusive rights of negotiation within 90 days to BTT. This amounts to a contract because BTT initiates an offer so as to prevent Chou from negotiating with any other party for 90 days. The $ 25,000 offered to Chou is the monetary consideration of this contract. According to the terms of the contract, Chou cannot negotiate with any other party in the period of 90 days, and if he does this he will be liable for breach of contract. However, one term of the contract restricts future contracts between Chou and BTT. The agreement in this contract that any valid agreement between them should be in written form makes any oral negotiations invalid if they not documented (Melvin, 2011).
The second contract comes into existence when Chou replies an email from one of the managers during the board meeting. The discussion in the meeting is not enough to bring a binding contract into existence unless supported by other evidence. There is no documentation of the meeting anywhere as it can cause a breach of their past contract and both of them will be liable. The email sent to Chou by the BTT manager constitutes an offer and his reply amounts to an acceptance of the offer. Chou never opposed any terms stated in the email from the manager and he agreed to all the terms in his reply. Thus, this constituted a binding contract between Chou and BTT.
The facts that may weigh in favor of Chou
Breach of the second contract by BTT occurs when there is a change in their management. The new management decides and later informs Chou that they are not interested in dealing with the distribution of Strat anymore. This amounts to a breach of the contract between Chou and BTT. Since, the contract is between Chou and the Company BTT and not its management, which has no right, to terminate the contract between the two parties. Thus, the termination of the contract amounts to a breach and makes BTT the liable party in this case. Chou has a right to sue BTT in a court of law for breach of contract, and he stands to be indemnified using the relevant remedies (Melvin, 2011).
The facts that could weigh against Chou
The case in line with the second contract can only be lost if the two emails that brought the contract into existence do not exist in either a written or printed form. The first contract imposes a condition of the second contract. As per this condition, any valid contract from the negotiations had to be documented in order to be considered valid. The managers of BTT can argue that there was no valid contract, and in case Chou does not produce a copy of the two emails he will lose the case. In the second contract, if Chou negotiates with any other party in within 90 days he is to be sued since BTT had a contract with him that restricted him from negotiating with other parties. Thus, any negotiations with third parties will amount to a breach of contract. However, according to the provided facts Chou sticks to the terms of the first contract (Melvin, 2011).
Melvin, S. P. (2011). The legal environment of business: A managerial approach: Theory to practice. New York, NY: McGraw-Hill/Irwin. Web.
McKendrick, E. (2005). Contract Law – Text, Cases and Materials. Oxford: Oxford University Press. Web.