FIN 2015, Section 1
Winter Quarter 2016
1a) In order to determine whether Dot Comm made a valid offer to BitPlayer Company, we must consider three basic legal requirements of avalid contract. First, there must be an agreement between the twoparties. In other words, the must be an agreement between the offerorand the offeree. This simply means that there must be an offer and anacceptance made between the two parties in the contract. Secondly,there must be consideration or value given for the obligations to beassumed in the contract. Finally, there must be the intent to createa legal relationship between the two clients.
Acontract is an agreement that legally binds two parties. As mentionedearlier, for a contract to exist, three conditions must be met. Thefirst is an agreement between the offeror and the offeree, there mustbe consideration and finally, there must be an intent to create alegal relationship between the two parties. In order to determinewhether Dot Comm made a valid offer to Bit Player Company, two legalrequirements need to be satisfied. An offer can be described as adefinite promise to be bound on specific terms [ CITATION BPP151 l 1033 ].Inorder for an offer to be valid, the offer must: First, be madeimpliedly or expressly on terms that the offeror will be made boundonce a contract is accepted unconditionally. Secondly, the offer hasto be made to a person, a group of people or the whole world and onlythe people to whom the offer is made may accept the offer. In thiscase, it appears that Dot Comm did not make an offer to Bit PlayerCompany. In reference to the narrative, it is evident that Bit Playerwas not one of the companies listed on Dot Comm offer list. Inreference to the narrative, Dot Comm made her proposal to a number oflarge software companies with the likes of : App-O-Plexus,SoftwareHouse and OverByte Corp. Dot’s proposal wished to seekassistance in packaging, duplicating, distributing and marketing herBlock Aid app but of the big companies responded.
Therefore,in reference to the law of contract, there was no offer made to BitPlayer Company. Since this is the case, there cannot be a contractbetween Dot Comm and Bit Player Company because a contract cannot beformed without an offer. Hence, Bit Player Company could not acceptan offer that was not made to them.
1b) To determine whether Howards Hertz, acting on behalf of Bit PlayerCompany made valid acceptance, we must consider one legal requirementfor a valid acceptance. The legal question is whether Bit Player wasmade an offer. In reference to the narrative, it is clear thatHoward’s company was not in the list of companies which the offerby Dot Comm was made. Therefore, this automatically means that therecan be no contract between Dot Comm and Bit Player Company. Inaddition, for an acceptance is defined as a positive act to whom anoffer has been made which unconditionally binds the contract intoeffect. In this case, an offer was not made to Bit Player Company andtherefore an acceptance made by Bit Company might be treated as aninvitation to treat. An invitation to treat is simply an indicationthat a party is willing to receive offers with the intention ofgetting into a contract. Invitations to treat are synonymous withauction sales, exhibition of good for sale such as in stalls orsupermarkets and advertisement for goods and services such as onnewspapers. Since Howard’s email was not an acceptance as it failedto meet the standards for an acceptance since there was no offer itcan only be treated as an invitation to treat.
2a) To determine whether Dot Comm made an acceptance by clicking the“I Accept” button, the legal requirement of whether an offer wasmade to Bit player should be answered. By Dot clicking on “IAccept” button, she might have accepted the terms of Howard’semail. But going back to the narrative, Howard’s email was only aninvitation to treat because there was no offer made to Bit PlayerCompany in the first place. Therefore, there are no grounds foracceptance since there can be no contract or any binding agreementbetween Dot Comm and Bit Player Company. However, according to thelaw of contract, an acceptance is communicated by either action,express words or inferred from conduct. But in this case, even ifthere had been a valid contract between Dot Comm and Bit PlayerCompany, the contract would not have existed due to the fact thatthere was no intent to create a legal relation between the twoparties. In reference to the case, Dot’s acceptance was as a resultof Howard’s cunningly placing the accept button next to the closebutton. Therefore, the acceptance would not have been valid.
2b) To determine if Dot did anything to indicate Howard’s email’sterms, the legal question of communicating acceptance should bediscussed. When it comes to acceptance, it has to be made by action,express words or through inferred conduct. Since in this case, therewas no contract in the first place since there was no offer to BitPlayer Company, the offer by Bit Player Company to Dot Comm couldonly be treated as an invitation to treat. Therefore, going by that,the offer made to Dot Comm could only have been accepted in Dorothyintended to have a legal relationship with Bit Player Company. Inthis case, the acceptance by Dorothy by way of clicking the acceptbutton cannot be treated as an acceptance because there was no intentto enter into a binding contract. In addition, since she was silentand did not contact Howard Hertz after the accidental acceptance doesnot mean that there was acceptance in her part Felton v Bindley 1862,therefore Howard cannot claim that the offer was binding on DorothyComm. Moreover, the fact that Dorothy was angry for being charged fora service she had not purchased cements the fact she had no intentionof entering into an agreement with Bit Players Company and hence theacceptance was not valid.
3.To determine if the court would rule in favor of Bit Player Companyor Dot Comm, we must consider if either party was in breach ofcontract in the first place. If Dot Comm would convince i-b-Bank notto pay Bit Player and in turn Bit Player would sue for breach ofcontract, the Court would make a ruling in favor of Dorothy. Inreference to the case, there is no contract to begin with between thetwo parties. In other words, there is no valid contract between DotComm and Bit Player Company. This is because there was no offer madeto Bit Player but Bit Player initiated an invitation to treat whichappeared to have been accepted by Dot Comm accidentally and thereforecould have created a legal relationship between the two parties.However, Dot Comm’s actions and conduct suggest that she was notwilling to enter into an agreement with Bit Player which would renderthe contract between the parties void. Under a void contract, theparties in the contract are not bound by it and if there is anytransfer of property to third parties, goods can be recovered. Inthis case, since there was no contract between the two parties noterms could have been breached and therefore Dot Comm should beentitled to any transfer of goods which could have occurred. Thismeans that Dorothy should get a refund for the $399 plus any taxtransferred in the void contract. In addition, Bit Player’sconsideration could not have been sufficient in this case. In otherwords, the service rendered by Bit Player Company could not have hadany identifiable value. In reference to the case, Dorothy wished topartner with the large companies because she needed assistance inpackaging, duplicating, distributing and marketing her application.Therefore, a list of email addresses could not have given her anyvalue for her money. Therefore, the contract between Dot Comm and BitPlayer Company would have been void since its consideration would beinsufficient.
4.To determine whether Dot Comm would avoid the agreement on basis oflack of capacity, validity factors of a contract need to beconsidered. Dot may avoid the agreement with Bit Player in referenceto lack of capacity on her side. In order for a party to make acontract void they might claim incapacity on three factors. First,Dorothy might claim she is a minor. Assuming that Dorothy is below 18years, she cannot enter into contracts for goods and services otherfor necessities such as food, clothes or shelter. If Dorothy is aminor she could claim incapacity for being less than 18 years andthis would make the contract void. Dorothy could also make a case onthe form of the contract. In this case, the contract is deemed tohave been accepted by a click of a button, which was an accident andmade her liable for $399. Dorothy can make a claim that such acontract that involves money should be made into writing andsignatures should be made in consent to the agreement in thecontract. Finally, Dorothy may also make a case on genuine consent.In reference to the contract, there was a mistake made by Dorothy, anaccidental click on accepting the contract and which was not herintention to get into a contract. Therefore, Dorothy may make a casethat she was induced to enter into a contract without her genuineconsent because there was a mistake committed by one of the partiesin the contract.
5.To determine if the courts would rule in favor of Mimi Inc. or MaxDownload, the legal question of whether the offer was still open andthe doctrine of estoppel need to be considered. If Mimi’s MemoryInc. were to sue Max Download or Dot-Max, the court would rule infavor of Mimi Memory Inc. This is because Max promised to keep theoffer to Mimi Inc. for a week and Mimi Inc. responded and acceptedthe offer the following day. Max had made a $ 500,000 offer forsoftware source codes and an additional 50% of all the revenue MimiInc. would make from Block aid sales. However, Mimi had rejected theoriginal offer and called Max a software pirate. This would haveamounted to a rejection of offer but since Max promised to keep theoffer open for a week, the offer was still valid for acceptance.Therefore, since the original offer was rejected, a counter offerwould have been effective and from the look of things, Max did acceptthe original offer after receiving a phone call from Mimi Inc. Inaddition, the doctrine of promissory estoppel binds Max to hispromise of keeping the contract open for a week. Promissory estoppelprevents individuals from denying a promise they had made to someone.Therefore, Mimi Inc. would have won the case on the premise of thedoctrine of promissory estoppel and due to the fact that theyaccepted the offer while it was still open.
6.To determine whether the termination clause in the agreement betweenBeta Breakers and Dot Comm would render the contract illusionary, thelegal question of exemption clauses need to be addressed. Thecancellation clause “take it or leave it” does render thecontract illusory. This is because it leaves both parties open toterminate the contract or breach the terms of the contract when theyfind it necessary. This is especially in the case of Max who is alsohas the option of other contract with other parties such as Mimi Inc.and others. The take it or leave it clause is simply an exclusionclause which allows a party to restrict its liability in case ofbreach of contract or in case of negligence. In order to beenforceable, the clause has to be incorporated in the contract.Therefore, the contract is valid but the presence of exemptionclauses might deem the contract an illusion if one party breaches thecontract or there is negligence in regards to performance. Since oneof the parties might rely on the exemption clause regardless of theexpress promises made in the contract between Dot-Max LLC and BetaBreakers.
7.To determine whether Dot would win after sue Max Download for lack ofproper assent, the legal requirement of a partnership agreementshould be answered. Ignoring all other legal issues, If Dot were tosue Max for $100,000 as her split on the sale of Block Aid app for$200,000 the courts would rule in her favor . Dot did not do duediligence in the reading the contents of the partnership agreement asstipulated by the Assignment of Rights between Max and Dot. It seemsthat Dot took advantage of her relationship with Max as he allocatedhimself 75% as opposed to 50% of the share of profits between Dot andhimself. In addition, partnership agreements must not be writing.Therefore, ignorance is no defense when it comes to note reading thecontents of the partnership agreement. However, because there wasmisrepresentation by Max, Dot could sue for breach of the terms inthe agreement because this was not what the parties had consented toin the agreement.
8.To determine whether Dot would win the case against Max for ignoranceof the content of the assignment of rights, the legal requirement ofa signed document should be considered. Unsigned contracts andnotices are no defense when it comes to contracts. Each party shouldbe aware of the contractual terms before entering into an agreement.Signed documents or agreements can have effect if the contents in theagreement are not misleading. However, if the contract is misleadingas the Assignment of Rights, the agreement would not hold water. Thiscould be illustrated by the case, Curtis v Chemical Cleaning Co.1951.
9a) To determine whether a tiny portion of the contract between BetaBreakers and Dot-Max would make the entire agreement void, the legalrequirement of the terms of the contract according to document 2should be looked into. The illegality of a tiny part of the contractbetween Beta Breakers and Dot-Max does not make the entire agreementvoid because it is illegal. If this was the case, Beta would not havegone ahead and made SafeGuard, a modification of the former BlockAid. SafeGuard had been modified to ensure it did not interfere withgovernment drones. According to the law of contract, contracts whichengage in illegal practice are void but since this is technology andthe application can be modified, the contract cannot be illegal dueto the fact that it interfered with drones. This is because theapplication can be easily be modified to get rid of the illegal part.In addition, section 13 of document 2 of the agreement suggests thatparts of the agreement might be deemed void or null and can be doneaway with without interfering with the rest of the agreement.Therefore, this clause protects the application in case of anyillegality in sections of the application.
9b) To determine whether there was a binding contract between Dot-Maxand Beta Breakers the legal requirements of terms of a contract mustbe considered. If there was a binding contract between Beta Breakersand Dot-Max LLC for the sale of the Block Aid application, Dot-Maxwould win if they sued Knute Booke. This is because Booke breachedthe terms of the contract. According to the narrative, Booke hadexpressly promised that 10% of the profits would be shared after $ 5million gross sales. Section 3, of the document between the twocompanies also states that a consideration of $200,000 shall beexecuted after 5 business days. The promise is enforceable since itis a term clearly written in the contract. Therefore, since BetaBreakers made revenues of over $10 million, Dot-Max could have beenentitled to the $200,000 consideration which was due after five days.They would be entitled to $ 500,000 of the extra $ 5 million salesafter the initial $ 5 million. This would bring their total to over$700,000 in that year.
10a) To determine whether the assignment of rights, title and interestof Block Aid to Overbyte was proper, the legal question of the termsof contract in document 2 should be considered. Assuming the contractbetween Beta Breakers and Dot-Max was binding, the transfer of rightsand title to Overbyte was not proper. This is because it was inbreach of the contract agreed upon by Beta Breakers and Dot-Max.According to the legal standards, one can only transfer a productthey have a 100% patent or rights in it. Products that share a patentwith other companies cannot be fully transferred to acquiringcompanies. This is because there is a prior agreement between twoparties. The agreement prohibits the transfer of property to otherparties besides the two parties initially listed in the agreement.Therefore, the transfer of rights and title of Block-Aid technologyis not appropriate. Moreover, the reason for getting into anagreement with Beta Breakers was to help Dot-Max LLC manufacture,distribute and market their technology. Therefore, a third partyshould not interfere with the agreement by virtue of acquisition ofBeta Breakers.
10b) To determine whether Beta Breakers assignment of rights and titleto OverByte was improper, the legal issue of breach of contractshould be considered. Since there is breach of contract in regards tosection 6 of the agreement, No prior Assignment or Transfer, Dot-Maxwould be entitled to a revocation of the agreement between BetaBreakers and Dot-Max LLC. This would in turn reward Dot-Max theirrights to the title and rights of Block Aid.
11.To determine whether the agreement between Dot-Max and Beta Breakerswas unenforceable since it was unconscionable, the legal definitionof unconscionability should be established. An unconscionablecontract is a contract that is unfair to the one of the parties somuch that a reasonable person cannot agree to enter into such acontract. In reference, to the contract between Beta breakers andDot-Max, Dot-Max has been treated unfairly as they have lost theirconsideration and their application rights all together. Anunconscionable contract can be manifested in two ways, unfairsurprise and exculpatory clause. Unfair surprise involve the use ofterms not expected by the other party while exculpatory clausesrelieves parties from injuries caused either due to negligence or onpurpose. In such a case, Dot-Max LLC can sue for damages for theamount of loss made in the contract.
BPP Learning Media. Corporate and Business Law. London: BPP Learning Media Ltd, 2015.