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It's so important that YC went through the effort to codify the process: http://www.ycombinator.com/handshake/
What bugs me is that the founders went back on the deal that was agreed upon in person.
Welcome to the world of business, I see you're new here.
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A deal ain't a deal till its signed off. I make deals and negotiate all the time and I've negotiated thousands of times. It's a very good sign when you have a verbal agreement but you're a fool if you think that's a finished deal. It's the quick and the dead - if people are serious about a deal then they need to move quickly, wrap it up and sign it. If you are selling something (yourself, your company, shares in your…
A verbal contract is just as legally binding as a written contract. It's just that most people don't have authorized audio/video recordings of these kinds of interactions.
Note, that's 100% true (clarifications may stand, IANAL), but I wouldn't be surprised if the VC took steps to ensure no deal was done until the paper was signed.
Earlier quoted context omitted.
A verbal contract is just as legally binding as a written contract. It's just that most people don't have authorized audio/video recordings of these kinds of interactions.
Not all contracts... https://en.wikipedia.org/wiki/Statute_of_frauds
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Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then AirBnb backed out. If an investor pulled that on a YC company I'm sure they would be blackballed rather quickly.
You could equally say: "Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then the investor didn't sign"
The deal isn't done until the money is in the bank
Earlier quoted context omitted.
A deal ain't a deal till its signed off. I make deals and negotiate all the time and I've negotiated thousands of times. It's a very good sign when you have a verbal agreement but you're a fool if you think that's a finished deal. It's the quick and the dead - if people are serious about a deal then they need to move quickly, wrap it up and sign it. If you are selling something (yourself, your company, shares in your…
A verbal contract is just as legally binding as a written contract. It's just that most people don't have authorized audio/video recordings of these kinds of interactions.
About 11 years ago I did a short stint as a customer support bloke for a telco here in Australia. Recorded verbal contracts were the new fashion, and made life easier for switching phone companies. But every 'verbal' recording started with boilerplate stating that this was a recorded conversation, and constituted a contract. The content was specific points, like in a paper document. It was not a casual conversation. Things may have changed here in the meantime, but that's the way it was then.
I also think that a unilateral audio recording wouldn't stand in a lot of places, given that it's illegal in some places to record a private conversation without informing the other party.
Earlier quoted context omitted.
A deal ain't a deal till its signed off. I make deals and negotiate all the time and I've negotiated thousands of times. It's a very good sign when you have a verbal agreement but you're a fool if you think that's a finished deal. It's the quick and the dead - if people are serious about a deal then they need to move quickly, wrap it up and sign it. If you are selling something (yourself, your company, shares in your…
A verbal contract is just as legally binding as a written contract. It's just that most people don't have authorized audio/video recordings of these kinds of interactions.
This is the general principle in Common Law taught to law students in Contracts 100, but it really depends on the subject of contract and jurisdiction.
For example, many jurisdictions have legislation requiring all real property sales to be in writing. Many others require certain financial instruments or transactions to be in writing. And so on.
So while a verbal agreement may raise questions of honour and sometimes equity ("equity" as in the body of law, not the moral concept), it can often be considered non-contractual.
IANAL, TINLA.
If it's bad form for a VC to break a handshake deal, it's equally-bad for a startup too... no? Doesn't that reflect poorly upon the founders? It's so important that YC went through the effort to codify the process: http://www.ycombinator.com/handshake/
https://en.wikipedia.org/wiki/Offer_and_acceptance
IANAL, TINLA.