Basis Technology Corp. created software and provided technical services for Amaz

Question

Basis Technology Corp. created software and provided technical services for Amazon.com, Inc.’sJapanese-language Web site. Their agreement allowed for separately negotiated contracts foradditional services. Later, Basis filed a suit in a Massachusetts state court against Amazon in part fornonpayment of services that the initial agreement did not cover. During the trial, the two partiesexchanged e-mail messages that outlined settlement terms. Amazon reneged on the terms. Basisfiled a motion to enforce the settlement. The court granted the motion. Amazon appealed.The Appeals Court of Massachusetts affirmed. The parties’ e-mail notes constituted a completeand unambiguous statement of their desire to be bound by the settlement terms. “Provisions are notambiguous simply because the parties have developed different interpretations of them. Under what circumstances could Amazon justify its “about face” after having agreed in an e-mail tothe settlement terms?

Explanation / Answer

Under what circumstances could Amazon justify its “about face” after having agreed in an e-mail to the settlement terms?

There might have been some part of the case that Amazon felt would result in ajudgment against it, and its acquiescence to settlement termsmay have been a delaying ploy. Or fromAmazon’s perspective there may have been some aspect of the settlement that was disadvantageous on a closer look.

Agreements to Agree

Agreements to agree serve valid commercial purposes and can be enforced if the partiesclearly intended to be bound by the agreements, and have agreed on all essential terms.  Inother words, the emphasis is on the parties’ intent rather than on form.

Advertisements

In general, ads, catalogues, price lists, and circular letters are treated as invitations to negotiate.   If an ad to sell a single item was interpreted as an offer and fifty people accepted, the offer or would breach forty nine contracts.   A price list is not an offer to sell at that price; itinvites the buyer to offer to buy at that price. If an ad makes a promise so definite in characterthat it is apparent that the offeror is binding him or she to the conditions stated, however, the ad is treated as an offer.

Definiteness of terms

The next requirement for an effective offer involves the definiteness of its terms .an offer must have terms that are reasonably definite so that, if it is accepted and a contract formed a court can determine if a breach has occurred and can provide an appropriate remedy. Generally, a contract must include the following terms either expressed in the contract or capable of being reasonably inferred from it.

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