I am baffled by the idea that this is a binding contract. You agree to a loan without specifying an interest rate -- how is that a done deal??
The Handshake Deal Protocol
181–190 of 237 posts
Re: The Handshake Deal Protocol
#182Earlier 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…
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Re: The Handshake Deal Protocol
#183This protocol causes a valid and enforceable contract to be formed. In fact, the constraints imposed by the protocol are almost exactly what you might learn about contracts in the first year of law school. A contract is composed of a 1) reasonably specific offer, 2) acceptance of that offer, and 3) some consideration between the parties. By forbidding vague offers, PG is assuring that obviously questionable or unenfo…
"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…
The general rule is that intent of the parties to bind themselves forms a contract, even if the parties intend to draft a formal agreement later.
Re: The Handshake Deal Protocol
#184The protocol is flawed at step 4. The investor should reply "I confirm I'm in for for " otherwise the investor could say it said yes to the wrong text message/mail, and that's it's all a misunderstanding yada yada yada Hard to do that if you have to answer something explicit.
"Yes" is sufficient. Remember that this purpose is to formalize a usually in-person handshake deal. Even out of that context, claiming "oh I signed the wrong paper" won't fly.
Re: The Handshake Deal Protocol
#185Earlier 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…
Your professor probably also mentioned that there must be intent to make a binding agreement. If these agreements are regularly made in this situation merely as an offer to negotiate an actual contract at a later time, then the parties do not intend to be bound and they are not contracts. I believe that to be the case.
From Anderson's Business Law:
> Because a contract is based on the consent of the parties and is a legally binding agreement, it follows that the parties must have an intent to enter into an agreement that is binding. Sometimes the parties are in agreement, but their agreement does not produce a contract. Sometimes there is merely a preliminary agreement, but the parties never actually make a contract, or there is merely an agreement as to future plans or intentions without any contractual obligation to carry out those plans or intentions.
> In some cases, the fact that important terms are missing indicates that the parties are merely negotiating and that a contract has not been made. When a letter leaves many significant details to be worked out later, the letter or printed matter is merely an invitation to negotiate. It is not an offer that may be accepted and a contract thereby formed.
Re: The Handshake Deal Protocol
#186Earlier quoted context omitted.
I do wonder what happens without step 4 occurring.
I wondered this too. How long could an investor wait before sending the "Yes" and have it still considered valid? Could the investor not reply for a few weeks or months and only send the "Yes" once the startup is growing and worth more than the initial deal's valuation? I think there needs to be an explicit timer between step 3 and 4. Something on the scale of a few hours or at most a few days.
> Where no time is specified in the offer, the offeree has a reasonable period of time to accept the offer. After a reasonable period of time expires, the offeree's power to make a contract by accepting the offer "lapses". ... When a seller purports to accept an offer after it has lapsed by the expiration of time, the seller's acceptance is merely a counteroffer and does not create a contract unless that counteroffer is accepted by the buyer.
-- Anderson's Business Law, Formation of Contracts: Offer and Acceptance: Lapse of Time
Re: The Handshake Deal Protocol
#187This is great protocol for all discussions/agreements. It's pretty hard for any relationship to break down if there's a shared understanding of expectations. The re-statement/confirmation email is a great weapon against what time+memory do with reality, whether it's in the investment setting, with a partner, with an employee, or, heck, with a friend/spouse.
I wouldn't expect most "handshake deals" with a friend/spouse to require that level of formality - unless money is changing hands.
Handshake deals are reliant on trust, which friends/spouses usually have in good supply. This protocol is attempting to add enough formality to lower the trust required somewhat (because people have been welching, so enough trust is not always available), without dropping it all the way to zero (which is what a traditional antagonistic/defensive contract is for).
Re: The Handshake Deal Protocol
#188Earlier quoted context omitted.
Thanks you. A lot of people commenting on this thread don't seem to realize that oral contracts are just as legally valid as written contracts (as long as all the elements of a contact are present), email records notwithstanding.
Not necessarily. In New York state for example, it's required that any contract worth $500 or more be written. Oral contracts over $500 aren't enforceable.
Doesn't an email count as written? I'm pretty sure there's case law on that. (Not sure about a text message, though.)
Re: The Handshake Deal Protocol
#189Earlier quoted context omitted.
You don't use your browser's zoom feature?
Should you really have to?
I guess not; people should design their web pages with em-based font sizes and have everything relative to the base font size specified by the browser. (Unless there's a good argument against this practice I'm not aware of.)
If you're regularly having trouble reading a page then it doesn't hurt to specify minimum font sizes. I personally never run into a page I can't read thanks to them.
Re: The Handshake Deal Protocol
#190Step 4 needs to be: The investor replies with Yes within 96 hours. Otherwise it's the equivalent of having one party execute a contract, and the other party just sit on the contract to wait for more information. Either executing if it's clearly beneficial, or ignoring if it's not.
If this is a handshake deal - then doesn't the investor reply yes immediately? It would be nice if those who are more knowledgeable than I would weigh in and indicate whether these things happen in real-time. I.E. The "Handshake" deal takes place within the space of a few minutes.
g.