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No oral contract is possible under Pennsylvania law where the parties previously expressed in writing the intent to form a written contract but never signed one, a federal judge has ruled. In his 11-page opinion in Buzzmarketing LLC v. Upper Deck Co., U.S. District Judge Berle M. Schiller dismissed a suit brought by a Delaware County advertising firm that claims it was never paid for its marketing plan for launching a new toy — which involved striking a deal with a pop singing group to endorse the product — even though the manufacturer allegedly took steps to use the plan. Schiller found that dealings between the two companies never got past the stage of written proposals. And the final written proposal, Schiller found, clearly stated that any contract would have to be signed. “By describing the manner in which ‘signatures shall suffice’ to ‘execute’ the agreement, this clause clearly indicates the parties’ intent to execute the agreement only by signing it,” Schiller wrote. “Indeed, it is difficult to conceive of any reasonable reading of this term under which the agreement could be executed without the signatures of both parties. Thus, the writing demonstrates that the parties intended to be bound only by the terms of the written document once signed,” Schiller wrote. In the suit, Buzzmarketing claims it was contacted by Upper Deck in January 2003 as part of a search for marketing firms to handle the launch of its new toy, named “BreaKey.” According to Upper Deck official Web site, BreaKey is “the ultimate battle of knowledge, luck and physical skill where two or more opponents challenge one another using their collection of keys to BREAK OFF and WIN!” The BreaKey game mimics many of the features of collectible card games such as Pokemon, but uses plastic keys rather than cards. It was launched last year with original characters, and Upper Deck is planning a launch this spring of a Major League Baseball version of the game, with additional versions based on Marvel comics characters and Pokemon characters to debut this summer. Aimed at boys age 7 to 14, the game’s Web site urges players to “Battle your friends in the quest to become the BreaKey Master.” Buzzmarketing claims in the suit that Upper Deck rejected its first four proposals for marketing the game, but accepted its fifth proposal that involved launching the game with a song by a new pop singing group. The suit says Upper Deck repeatedly promised to wire money to Buzzmarketing, but failed to do so. But despite failing to pay for the marketing plan, the suit cites proof that Upper Deck used the plan. In the May 2003 edition of Billboard magazine, the suit says, an article said Upper Deck had agreed to sponsor the European and U.S. tours of an unnamed pop group “in exchange for a song about a new game it is introducing later this year.” The article, headlined “Bling! Bling! Ka-ching! Products get play for love and money,” detailed numerous instances of pop stars engaging in the sort of paid product placement previously seen only in movies. The article said Upper Deck did not want to reveal the name of the pop group that was hired to launch BreaKey because it was “in the process of being signed to a major record label.” But in court papers, Buzzmarketing claims that the group is The Guardians, a new band out of Florida with the same producers as the Backstreet Boys, ‘N Sync and Pink. In a PowerPoint presentation filed in court, Buzzmarketing described The Guardians as a band with “the music of ‘N Sync, the look of Kiss and the appeal of the [Teenage Mutant] Ninja Turtles.” The marketing plan said The Guardians would sing a song about the BreaKey game that would introduce a popular new dance, the “BreaKey Break,” which would be as “fun and contagious” as the Macarena. The proposal said the 10-to-15-second dance would be “slightly taboo.” The proposal also said there was a 65 percent chance that movie star Adam Sandler would lend his voice to the song. Buzzmarketing proposed that it could stir interest in the song and the dance by hiring interns to make “seeded call-ins” to radio stations in key markets asking for the song to be played. By making 6,400 such calls, the proposal said, Buzzmarketing estimated that it could get the song aired four to five times per day. Buzzmarketing’s lawyer, Kathleen K. Barksdale of John Churchman Smith & Associates, argued in her brief that, in the advertising industry, business usually begins with an oral contract, “the terms of which may later be reduced to writing.” Businesses often enter into oral contracts, she argued, “with the understanding that a written contract will follow that merely memorializes [the terms].” But if no written contract is signed, she said, the oral contract still governs. But Upper Deck’s lawyers, Edward S. Zusman and Kevin K. Eng of Markun Zusman & Compton in San Francisco, argued that no deal was ever struck. Since there were “ongoing negotiations” about “material terms,” they said, there was never any offer and acceptance of any oral contract. The defense lawyers also pointed to language in the proposal that, they argued, clearly shows that any contract would have been written, not oral. On that point, Schiller found that Pennsylvania law favored Upper Deck. Schiller found that, in the 1999 decision in Shovel Transfer & Storage Inc. v. Pennsylvania Liquor Control Board, the Pennsylvania Supreme Court was asked to decide whether the fact that a proposed contract contained signature lines was conclusive evidence that the parties intended to require the contract to be executed only in writing, such that an oral agreement thereon would be unenforceable. The court held that if the contract had contained language stating the parties’ intent to execute the agreement in writing, the oral agreement would be invalid, but that the absence of such language would be construed against the drafting party. Schiller said the Pennsylvania Commonwealth Court interpreted Shovel Transfer in its 2003 decision in Commonwealth v. On-Point Technology Systems Inc., holding that if a contract contains language requiring execution to be in writing, courts should honor the parties’ intent by not enforcing an oral agreement to the terms of the writing. Applying the On-Point ruling, Schiller found that Buzzmarketing’s claim failed because “the writing demonstrates that the parties intended to be bound only by the terms of the written document once signed.” Schiller also rejected Buzzmarketing’s claim that Upper Deck had breached an “implied-in-fact” contract. The facts, Schiller said, did not meet the test for proving an implied-in-fact contract because “neither party performed any of the tasks that they were allegedly expected to perform under the contract — i.e., Upper Deck never sent any payments, and Buzzmarketing never performed any marketing services.” The only admissible evidence of such an implied contract, Schiller said, was phone and e-mail communications in which Upper Deck appeared to “acknowledge that money should be wired” to Buzzmarketing. But Schiller found that the communications proved only that the two companies had reached an agreement on the amount of Buzzmarketing’s fee. “This agreement cannot be construed as an implied-in-fact contract because the price term alone, in the absence of manifested agreement as to any other material term of the contract … is insufficient to create an enforceable contract for services,” Schiller wrote.

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