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The Handshake Deal Protocol

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Re: The Handshake Deal Protocol

#161

Post by larrys »

rscale wrote: post #100
larrys wrote: post #88

Earlier quoted context omitted.

"This protocol causes a valid and enforceable contract to be formed." Don't agree but if that were the case it would be a good reason not to use it. Details matter and this protocol doesn't have enough details (nor can it) that I would ever use it to form an legally binding agreement. I already to a version of this with other types of investing (email back and forth essentially or sometimes a text) and the underlying…

It's likely that other casual agreements that you don't think of as contracts are also contracts. I'm not a lawyer, I'm a guy who took a business law class during undergrad, but my prof drilled it into my head that a contract consists of offer, acceptance, consideration, capacity, and legality. It can be on a napkin, it can be verbal, it can be in a text message, so long as those elements are present. The difference…

"It's likely that other casual agreements that you don't think of as contracts are also contracts."

Well I'm not a lawyer but I've been in business a long time so long that I'd rather not say and reveal my age.

I've done plenty of deals over the years and have dealt with plenty of lawyers and situations. While what your prof has drilled into you is true in the real world it may or may not be applicable depending on the situation and the specifics.

The fact that it's a "contract" is meaningless to me. The only thing that matters is the issue and the cost of enforcement combined with whether there is a leg to stand on and how motivated the other party is and who they are.

You could have a deal with a very wealthy person (or company) with an iron clad contract and they might not pursue enforcement simply because they don't want to spend their time over the issue. Or, they may be vindictive and decide to spend time and money to make a point. Or everything in between.

I've been involved in situations that have no legal merit whatsoever but someone was able to tie up a deal for 2 years over something written on a napkin agreeing to sell something that was only signed by one party of the business entity. It wasn't even valid for that reason alone but the aggrieved party was able to still file a lawsuit and hold up a deal and extract a settlement. Prior to the lawsuit being filed other lawyers scoffed and laughed at the idea that anything could happen. But it did.

Re: The Handshake Deal Protocol

#162

Post by swampthing »

tomp wrote: post #150
swampthing wrote: post #137

Earlier quoted context omitted.

Taken literally - yea. But you can fix it pretty easily just by adding the standard "this is nonbinding" language that all term sheets have. That's a little inelegant though. Probably what would be best is just to have a page defining the protocol (and clarifying that it is nonbinding) and have people link to it in their handshake email.

What's the point in making a non-binding agreement? Isn't it easier to just not make one?

The same as with this handshake deal - it formalizes a level of commitment that the community recognizes as one that you should not back out of under normal circumstances (e.g. if the other side is being perfectly reasonable). You don't want the handshake deal to force people to invest no matter how unreasonable the company ends up being in the paperwork they send over.

Re: The Handshake Deal Protocol

#163

Post by brohee »

samstave wrote: post #46
kirse wrote: post #32

Why not do something creative like have the investor sign a dollar bill (of any denomination) and give it to the founders? Every founder comes prepared with some cash in their wallet, and then when you confirm a deal the founders ask the investors to sign the dollar bill with a Sharpie/pen. On it would be some sort of short-hand for the deal valuation... Cash is more ubiquitous than phones - even impromptu, it's high…

This is a fantastic idea, and there is no reason that this couldnt be an option to the Handshake Protocol. Also, these bills will be sold off and collected when massive failures happen in later years.

Don't forget to do it before witnesses, preferably a Secret Service agent.

"-STATUTE- Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued, shall be fined under this title or imprisoned not more than six months, or both. "

18 USC CHAPTER 17 - COINS AND CURRENCY http://uscode.house.gov/download/pls/18C17.txt

Re: The Handshake Deal Protocol

#164

Post by larrys »

logn wrote: post #117
rscale wrote: post #100

Earlier quoted context omitted.

It's likely that other casual agreements that you don't think of as contracts are also contracts. I'm not a lawyer, I'm a guy who took a business law class during undergrad, but my prof drilled it into my head that a contract consists of offer, acceptance, consideration, capacity, and legality. It can be on a napkin, it can be verbal, it can be in a text message, so long as those elements are present. The difference…

At the very least it makes people accountable and open to shaming if they don't follow through. And in a small community word would spread about who breaks their deals. Also I think PG should make this into a small mobile app. Every VC is going to add some wiggle text to his boiler plate.

"makes people accountable and open to shaming if they don't follow through"

And what exactly might be the method of shaming? A blog post? A central repository of shame? It's not like there is going to be some ebay type feedback system on investors that will take into account investors failing to live up to their promises. New entrepreneurs are hatched everyday. The "reputation" that an investor earns will have to be etched pretty clearly for them to find that info and believe it's ubiquity.

Re: The Handshake Deal Protocol

#165

Post by samstave »

brohee wrote: post #163
samstave wrote: post #46

Earlier quoted context omitted.

This is a fantastic idea, and there is no reason that this couldnt be an option to the Handshake Protocol. Also, these bills will be sold off and collected when massive failures happen in later years.

Don't forget to do it before witnesses, preferably a Secret Service agent. "-STATUTE- Whoever mutilates, cuts, defaces, disfigures, or perforates, or unites or cements together, or does any other thing to any bank bill, draft, note, or other evidence of debt issued by any national banking association, or Federal Reserve bank, or the Federal Reserve System, with intent to render such bank bill, draft, note, or other e…

Some rules are meant to be broken.

Re: The Handshake Deal Protocol

#167

Post by [deleted] »

larrys wrote: post #161
rscale wrote: post #100

Earlier quoted context omitted.

It's likely that other casual agreements that you don't think of as contracts are also contracts. I'm not a lawyer, I'm a guy who took a business law class during undergrad, but my prof drilled it into my head that a contract consists of offer, acceptance, consideration, capacity, and legality. It can be on a napkin, it can be verbal, it can be in a text message, so long as those elements are present. The difference…

"It's likely that other casual agreements that you don't think of as contracts are also contracts." Well I'm not a lawyer but I've been in business a long time so long that I'd rather not say and reveal my age. I've done plenty of deals over the years and have dealt with plenty of lawyers and situations. While what your prof has drilled into you is true in the real world it may or may not be applicable depending on t…

[deleted]

Re: The Handshake Deal Protocol

#168

Post by sbashyal »

rthomas6 wrote: post #41
kirse wrote: post #32

Why not do something creative like have the investor sign a dollar bill (of any denomination) and give it to the founders? Every founder comes prepared with some cash in their wallet, and then when you confirm a deal the founders ask the investors to sign the dollar bill with a Sharpie/pen. On it would be some sort of short-hand for the deal valuation... Cash is more ubiquitous than phones - even impromptu, it's high…

>Cash is more ubiquitous than phones Are you sure? Right now I have a phone but I don't have any cash.

I just created a poll to find out the statistics among HNers. Please vote: https://news.ycombinator.com/item?id=5377521

Re: The Handshake Deal Protocol

#169

Post by [deleted] »

pg wrote: post #55
kirse wrote: post #32

Why not do something creative like have the investor sign a dollar bill (of any denomination) and give it to the founders? Every founder comes prepared with some cash in their wallet, and then when you confirm a deal the founders ask the investors to sign the dollar bill with a Sharpie/pen. On it would be some sort of short-hand for the deal valuation... Cash is more ubiquitous than phones - even impromptu, it's high…

That's an amusing idea. It would be fine with me if that variant evolved. But it would have seemed frivolous if we'd proposed that.

[deleted]

Re: The Handshake Deal Protocol

#170

Post by mtrimpe »

pg wrote: post #55
kirse wrote: post #32

Why not do something creative like have the investor sign a dollar bill (of any denomination) and give it to the founders? Every founder comes prepared with some cash in their wallet, and then when you confirm a deal the founders ask the investors to sign the dollar bill with a Sharpie/pen. On it would be some sort of short-hand for the deal valuation... Cash is more ubiquitous than phones - even impromptu, it's high…

That's an amusing idea. It would be fine with me if that variant evolved. But it would have seemed frivolous if we'd proposed that.

I keep wishing someone takes up the frighteningly ambitious idea here: developing a low-friction government approved (through e.g. legal precedent) service for signing data.

After a passport/identiy check it would technically just be a highly available service to cryptographically sign blobs, coupled with a mechanism to handle retractions of signed data in case of compromised keys and a decently advanced notification system for early detection of suspected fraud.

On a societal level however, this would enable anything from frictionless contract signing apps to building a Kickstarter for organizing ad-hoc grass-roots referendums whose results are provably meaningful.

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