I did read the article. And I listened to the recording. As a businessperson, Christian should know that the salespersons statements were not a binding promise, since there was no mutual consideration and those statements were not reflected in the actual written agreement he would have signed.
As I said, I'm looking at this from the legal perspective, not the emotional perspective.
> Comes looking with no contract and none of his own commitment to show?
I'm not a lawyer, but I did study a little business law, especially contracts. Contrary to common belief, you don't need something in writing for an agreement to be considered a contract. See, for instance:
The transfer of the $1000 is pretty clear evidence of an agreement. Then there's records of the regular calls/chats. The partner, while maybe a jerk, has some claims of ownership here. (Also, I think he's probably less of a malicious jerk and more likely he's feeling hurt/threatened/betrayed - the threats to sue were in response to being told he's being kicked out of a business he presumably thinks he owns half of, took a risk on with his cash, and has put in some hours of his life)
> I suspect there was a contract signed early on in their dealings that the author of this blog post is not being forthcoming with.
I also think there's more to this.
In the event of no contract, winning this is basically one court visit, plus a cost order against the broker.
In the event of a contract that specifies no payment until the deal is closed with the broker's buyer, that's also going to be one court visit with a cost order against the broker.
The only reason to pay him is if the contract said "in the event of a sale" with no further qualifiers. I'm pretty certain it said something along those lines.
> I.e. if you are doing a deal, don't be surprised if only the immediate terms are honored. Don't bank on future promises.
Dave himself admits that he felt like he had a disincentive to enforce the future promises due to what he had already received as a result of the more immediate terms -- a contract is, ultimately, not just a set of promises, but a set of promises that the parties feel need to be backed by the threat of legal action to ensure compliance.
If, for any of those promises, you aren't going to be willing to act on that threat when they are violated, and the other party knows the incentive structure that makes you unwilling to act on the threat, well, then the threat is gone, and if you didn't need the threat to enforce the promises, you wouldn't have needed a contract in the first place.
That doesn't really mean there is a difference between short-term and longer-term promises, it means that there is a difference between promises backed by the credible threat of legal action and promises not backed by the credible threat of legal action, which is rather the entire reason contracts exist in the first place.
Ah, yes, missed that. My point about the agreement stands though. The email on page 11 appears to state that they owe him $30,000, if he just provides some demographic info. They then send him a contract weeks later, and use the phrase "formalizing the terms ... [of] the reward payment" in order to try to make it look like this is all part of the process. But this the start of a new negotiation.
Edit: I'm getting downvotes on my comment above, and maybe it's because I missed the part where he said he consulted a lawyer, but I have a suspicion that it's because I suggested the threat of a lawsuit. I know we live (in the US) in a overly litigious society, but my point is that the company is (perhaps through disorganization or communication problems) trying to alter the terms of an existing agreement. This is what contract and tort law is for. Sometimes the threat of getting the courts involved can cause the other side to see more clearly what is going on.
I'm actually aware that the absence of a written contract doesn't necessarily negate his rights, especially in light of the fact that he had emails showing the arrangement. I was pointing out the CFO tried to use the lack of contract to fuck him out of the money.
When they sold their business it was not their responsibility to make sure the buyer was getting a good deal. It was the responsibility of the buyer to honor the agreements they made as part of the purchase.
>The ultimate reason why no heads rolled is that those heads are extraordinarily politically connected.
This is probably very true
That said, in business, if someone is willing to put their signature on a dotted line, it isn't your job to remind them of its implications.
Personal example: a friend of mine sold his house recently. The HVAC system was suspected but not known to have a leak - it had lost about a pound of coolant in a month. The leak was suspected a few days before close. He got the HVAC refilled, told the technician to write "may have a small leak" in his report, and sent this report to the buyer. The buyer agreed to close the deal anyway. Morally, his job was to properly identify and fix the leak before selling the house. In reality, the buyer signed the dotted line given the information available to her. If the HVAC now needs repairs costing several thousand dollars, no judge is going to tell him to accept liability.
Reading the case[1], there's relevant background specific to the circumstances. The judge notes the two parties had demonstrated a long history of executing contracts and doing business in this manner.
Most of the other comments here (at least at the moment) seem to have missed this nuance. The earlier HN post linked by OP mgbmtl has more interesting discussion: https://news.ycombinator.com/item?id=36618977
>"This will vary between jurisdictions but my understanding is that, yes, you can be sued for making a false promise to buy from a specific seller even if you don't get to the stage of a formal contract."
Absolutely but simply stating interest or saying "We want to buy X quantity of Y", without having any agreement with a company or stating company name isn't agreeing to purchase nor should be seen (except certain situations) as bad
That's different. The manager made an ambiguous oral statement, and in contract law ambiguity is resolved in favor of the party with less power or who didn't make the ambiguous statement.
If the company signs the deal based on these claims the founder made, its called misrepresentation and misrepresentation = fraud. So should something screw up, and they want to get out of the contract they can use that as a basis,or even if they dont feel like paying. If they have proof, they will most likely WIN.
Firstly, i have to ask though was this put in writing or just while talking?
Secondly, there is a difference between almost closing a deal(Customer has show interest and you reassure him with the numbers) and the customer hasnt made a choice and you use the lies to convince him. In the second instance it's fraud.
So, let's assume it was in the actual contract. What is he going to do about it? Sue? Annul the deal?
No? Than it doesn't matter. The whole idea that because something is written into a contract that that automatically means that that his how things will be in the indefinite future is an illusion, and I've seen plenty of people burned that way. A contract only matters if (1) you are prepared to sue over it and (2) you will know what kind of remedy you want if you win the suit.
In this case the state of (1) is 'no' and the state of (2) doesn't matter because of (1).
> So in short, what we have is an uncontested pattern of entering into what both parties knew and accepted to be valid and binding deferred delivery purchase contracts on a number of occasions. It is important to note that each time Kent added to the offered contract “Please confirm terms of durum contract” and Chris did so by succinctly texting “looks good”, “ok” or “yup”. The parties clearly understood these curt words were meant to be confirmation of the contract and not a mere acknowledgement of the receipt of the contract by Chris. There can be no other logical or creditable explanation because the proof is in the pudding. Chris delivered the grain as contracted and got paid. There was no evidence he was merely confirming the receipt of a contract and was left just wondering about a contract.
....
> I find this to be very similar to the durum contracts referred to above including Kent’s use of the phrase “Please confirm flax contract” (the only difference being the use of the word flax instead of the word durum) and this time instead of words like “ok”, “yup” or “looks good” being texted by Chris – a commonly used <thumbs up> emoji was texted by Chris.
This is the key finding in the Judgement[1] for how the judge resolved the ambiguity, including important context missing from TFA. The parties had done business together for ten years, and had executed contracts via text message on three previous occasions. In all three previous cases, the seller responded with something terse and then delivered on the contract.
> It's not like the seller couldn't have fulfilled it; they would have just taken a loss to do so.
Contract law exists to enforce contracts that one party doesn't want to complete because they regret entering into the deal once they have more information, or the costs change, etc.
You could try to sue the vendor in small claims court to recover your damages, including the costs of the suit. The vendor is counting on you and other parties not actually doing that.
I agree. I'd love to see more details on what the guy felt he was entitled to. I suspect there was a contract signed early on in their dealings that the author of this blog post is not being forthcoming with.
> Is contract law so inviolate that most people here would advocate honoring it?
Assuming that the contract was made in good faith, he had the opportunity to counsel a lawyer, the other guy didn't lie to him, etc, etc. Then yes I would normally believe the contract should be honored - it is bad horrible contract from Zuckerbergs perspective, but it is still a contract that he signed.
However this was a long time ago, and since the guy didn't show up until now it don't think it is fair to actually give him the procentage of facebook - a lot has been sold to the investors and he could should have shown up years ago.
As I said, I'm looking at this from the legal perspective, not the emotional perspective.
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