Briefly describe what happened in the Basis Technology v. Amazon case?

\What rule or legal theory did the plaintiff assert in the Basis Technology v. Amazon case?

Summarize the court's analysis.

Who won the case and why?

BACKGROUND AND FACTS Basis Technology Corporation created software and provided technical services for a Japanese-language Web site belonging to Amazon.com, Inc. The agreement between the two companies allowed for separately negotiated contracts for additional services that Basis might provide to Amazon. At the end of 1999, Basis and Amazon entered into stock-purchase agreements. Later, Basis sued Amazon for various claims involving these securities and for failure to pay for services performed by Basis that were not included in the original agreement. During the trial, the two parties appeared to reach an agreement to settle out of court via a series of e-mail exchanges outlining the settlement.

What does it mean to agree to settle out of court?

ANSWER When two parties to a dispute agree to an out-of-court settlement, they are agreeing that they will no longer pursue judicial remedies (in court), but rather will resolve all issues without judicial intervention, approval, or supervision.

When Amazon reneged, Basis served a motion to enforce the proposed settlement. The trial judge entered a judgment against Amazon, which appealed.

In the Language of the Court

SIKORA, J. [Judge]

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* * * On the evening of March 23, after the third day of evidence and after settlement discussions, Basis counsel sent an e-mail with the following text to Amazon counsel:

[Amazon counsel]This e-mail confirms the essential business terms of the settlement between our respective clients * * *. Basis and Amazon agree that they promptly will take all reasonable steps to memorialize in a written agreement, to be signed by individuals authorized by each party, the terms set forth below, as well as such other terms that are reasonably necessary to make these terms effective. * * * * [Amazon counsel], please contact me first thing tomorrow morning if this e-mail does not accurately summarize the settlement terms reached earlier this evening. See you tomorrow morning when we report this matter settled to the Court. What does memorialize mean in a legal context?

ANSWER Typically, one memorializes an agreement by putting it into writing.

At 7:26 a.m. on March 24, Amazon counsel sent an e-mail with a one-word reply: correct. Later in the morning, in open court and on the record, both counsel reported the result of a settlement without specification of the terms.

On March 25, Amazons counsel sent a facsimile of the first draft of a settlement agreement to Basiss counsel. The draft comported with all the terms of the e-mail exchange, and added some implementing and boilerplate [standard contract provisions] terms.

* * * *

[Within a few days, though,] the parties were deadlocked. On April 21, Basis served its motion to enforce the settlement agreement. Amazon opposed. * * * The motion and opposition presented the issues whether the e-mail terms were sufficiently complete and definite to form an agreement and whether Amazon had intended to be bound by them.

What is the issue with respect to agreements to agree, or preliminary agreements?

ANSWER When does a series of e-mails indicating that an out-of-court settlement has been reached become a binding agreement?

Why is intent so important here?

ANSWER The modern view of agreements to agree is that such agreements become enforceable when the parties intended to be bound by the agreements. Intent is more important than form.

* * * *

We examine the text of the terms for the incompleteness and indefiniteness charged by Amazon. Provisions are not ambiguous simply because the parties have developed different interpretations of them. [Emphasis added.]

* * * *

We must interpret the document as a whole. In the preface to the enumerated terms, Basis counsel stated that the e-mail confirms the essential business terms of the settlement between our respective clients, and that the parties agree that they promptly will take all reasonable steps to memorialize those terms. Amazon counsel concisely responded, correct. Thus the essential business terms were resolved. The parties were proceeding to memorialize or record the settlement terms, not to create them.

* * * *

To ascertain intent, a court considers the words used by the parties, the agreement taken as a whole, and surrounding facts and circumstances. The essential circumstance of this disputed agreement is that it concluded a trial.

* * * As the trial judge explained in her memorandum of decision, she terminated the trial; she did not suspend it for exploratory negotiations. She did so in reliance upon the parties report of an accomplished agreement for the settlement of their dispute.

What is the rule of law with respect to preliminary agreements negotiated via e-mail?

ANSWER When the essential terms of an agreement are agreed to by both parties and it is their intention to be bound by those terms, there is a valid and binding contract.

* * * *

In sum, the deliberateness and the gravity attributable to a report of a settlement, especially during the progress of a trial, weigh heavily as circumstantial evidence of the intention of a party such as Amazon to be bound by its communication to the opposing party and to the court.

DECISION AND REMEDY The Appeals Court of Massachusetts affirmed the trial courts finding that Amazon intended to be bound by the terms of the March 23 e-mail. That e-mail constituted a complete and unambiguous statement of the parties desire to be bound by the settlement terms.