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The Handshake Deal Protocol

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Re: The Handshake Deal Protocol

#191

Post by rscale »

dangrossman wrote: post #185
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…

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…

Yes, I remember that intent to contract was one of the requirements of an offer, and I remember that intent to contract is indicated by language. To quote my notes:

The second element of a valid offer requires the party who offers the proposal to intend to contract. Phrases such as “Are you interested” or “Would you give me” are words of preliminary negotiations.

Terms such as “I bid,” “I will give you,” or “My lowest price is,” show a present intention to contract and constitute valid offers.

That said, I'll take this opportunity to reiterate that I'm not a lawyer, I'm not accepted by the bar in any state, and for all I know the standards on this matter may vary by jurisdiction.

I'd simply err on the side of asking my lawyer before I started using this protocol with entrepreneurs or investors that I didn't know very well.

Re: The Handshake Deal Protocol

#192

Post by [deleted] »

rscale wrote: post #191
dangrossman wrote: post #185

Earlier quoted context omitted.

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…

Yes, I remember that intent to contract was one of the requirements of an offer, and I remember that intent to contract is indicated by language. To quote my notes: The second element of a valid offer requires the party who offers the proposal to intend to contract. Phrases such as “Are you interested” or “Would you give me” are words of preliminary negotiations. Terms such as “I bid,” “I will give you,” or “My lowes…

[deleted]

Re: The Handshake Deal Protocol

#193

Post by ghshephard »

kirse wrote: post #91
ghshephard wrote: post #59

Earlier quoted context omitted.

Numerous Reasons: o Everyone has a mobile device at all times, trying to remember to carry cash and/pens is an extra step. Cash, in the valley, is not as ubiquitous as a phone. In fact, it's not as ubiquitous as a smart phone. o Texting is instantaneous. In fact, when we're sitting at a table having a conversation, it's not unusual for some people to be texting each other instead of talking to avoid creating a break…

OK people, I get it, you don't carry cash, etc etc. I'm just imagining myself using whatever I have on me to come to a quick agreement on a precise valuation and secure a solid "affirmative" from an investor, beyond a basic verbal agreement. So whether that's scrawled on a dollar bill, transmitted officially via the "PG Handshake Protocol", or signed on your ass with a picture in the mirror for posterity... doesn't m…

Well, my arguments for Cash would be:

o Physical Tokens continue to have real value beyond the ephemerality of digital data.

o A scrawled signature is both somewhat of an validation of identification, plus, it's a somewhat more concrete step than just sending an email. There is ceremony around it.

o With a bit of thought, you can create a Mini-Term sheet that can be signed/counter signed.

o Sharpie on Dollar bill is harder to modify / change - particularly if you have a number of signatures that have been built up on it.

o That multi-signed dollar bill would have a lot of potency, particularly if you are able to assemble a top-tier investment group. Suitable for framing.

Re: The Handshake Deal Protocol

#194

Post by rscale »

[deleted] wrote: post #192
rscale wrote: post #191

Earlier quoted context omitted.

Yes, I remember that intent to contract was one of the requirements of an offer, and I remember that intent to contract is indicated by language. To quote my notes: The second element of a valid offer requires the party who offers the proposal to intend to contract. Phrases such as “Are you interested” or “Would you give me” are words of preliminary negotiations. Terms such as “I bid,” “I will give you,” or “My lowes…

[deleted]

The difference, according to the lawyers who served as my professors, is that one is considered by the courts to show intent to contract, and that the other is considered by the courts to be negotiation.

That said, I'm just repeating what a lawyer taught me about how courts determine intent to contract. I'm not a judge or a lawyer. I'm an entrepreneur who took some business classes.

edit: I just sent an old professor an email with the question, and a prompt to try to help him remember who I am. If he responds, I'll share the response no matter what it says.

Re: The Handshake Deal Protocol

#195

Post by [deleted] »

a3_nm wrote: post #149
wuest wrote: post #80

Earlier quoted context omitted.

The last time I had cash on my person, it was because I was traveling, and wanted some on hand. I haven't carried cash, as a rule, in almost a decade.

I'm not in the valley, but I have the opposite policy: I systematically use cash unless it is not possible to do so. (It's better for privacy.)

[deleted]

Re: The Handshake Deal Protocol

#196

Post by coopdog »

I smell an app

Google Glass (or even a simple voice recorder in an app designed for the purpose) would also be great to reduce the friction of having to type something into a phone while talking to an investor.

Re: The Handshake Deal Protocol

#197

Post by shin_lao »

kaliblack wrote: post #184
shin_lao wrote: post #136

The 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.

In a restaurant crowded with founders and investors I think it's easy to say "I said yes to the wrong sms"... Otherwise a malicious founder could overhear a conversation and send a sms at the right time to have a yes "proof"...

My main point is that it doesn't hurt to be explicit when confusion is possible.

Re: The Handshake Deal Protocol

#198

Post by barry-cotter »

larrys wrote: post #164
logn wrote: post #117

Earlier quoted context omitted.

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…

Reputation among what group is the question. I'm guessing if someone backs out on such a deal Y Combinator will remember, pass it on, fail to invite to Demo Day. This protocol works to YC's benefit even if the information never spreads beyond employees, participants and alumni. Any spillover is a bonus.

Re: The Handshake Deal Protocol

#200

Post by amalcon »

a3_nm wrote: post #149
wuest wrote: post #80

Earlier quoted context omitted.

The last time I had cash on my person, it was because I was traveling, and wanted some on hand. I haven't carried cash, as a rule, in almost a decade.

I'm not in the valley, but I have the opposite policy: I systematically use cash unless it is not possible to do so. (It's better for privacy.)

I have your policy, but for a different reason: I generally don't want the merchant to be charged a fee for the transaction.
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