The Handshake Deal Protocol • Hacker News Board

Re: The Handshake Deal Protocol

#101

Post by jarrett » Thu, Mar 14, 2013, 6:12 PM UTC

FlukeATX wrote: post #99

tc wrote: post #65

This 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…

Though this does follow the qualities of a contract, it's important to note that oral agreements only get you so far in many jurisdictions and particularly have an upper limit on the value, around the order of $500. So while its great this is an explicit and clear conversation, I don't think you can say that it is assuring unenforceable agreements aren't made.

There is a written component to the protocol: The follow up email/text. "This is to confirm you're in for X." "Yes."

Re: The Handshake Deal Protocol

#102

Post by pc86 » Thu, Mar 14, 2013, 6:13 PM UTC

lincolnq wrote: post #78

pc86 wrote: post #44

Earlier quoted context omitted.

Can someone define cap for me in this context?

Convertible debt is the trendy way to finance seed-stage startups these days. It allows early investors to essentially "punt" on determining the true valuation of the company at an early stage, while still ensuring that they get a decent deal when a valuation does get determined. The way it works: instead of negotiating over true valuation early on, the seed investor hands over the cash as a debt instrument (so the s…

This is exactly what I wanted to know, thank you!

Re: The Handshake Deal Protocol

#103

Post by minimax » Thu, Mar 14, 2013, 6:14 PM UTC

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…

What I like most about is that it embodies the idea that funding is an end rather than a means. Rather than commemorating revenue you're celebrating funding. It's perfect for the VC centric world of Silicon Valley.

Re: The Handshake Deal Protocol

#104

Post by nym » Thu, Mar 14, 2013, 6:15 PM UTC

nym wrote: post #97

Why not have both parties sign a contract digitally with crypto? https://itunes.apple.com/us/app/opengp/id414003727?mt=8

In fact, you could make everyone who attends register by signing a message- that way everyone at your event would be ready (and have a public key registered with YC) to sign any contract digitally.

Welcome to the future.

Re: The Handshake Deal Protocol

#105

Post by msellout » Thu, Mar 14, 2013, 6:15 PM UTC

notatoad wrote: post #50

Totally unrelated to the topic at hand, but what is PG's obsession with tiny fonts? this article is set in 8.5pt font - can anybody read that? at 10pt HN itself is almost as bad.

You don't use your browser's zoom feature?

Re: The Handshake Deal Protocol

#106

Post by apalmer » Thu, Mar 14, 2013, 6:16 PM UTC

icegreentea wrote: post #87

apalmer wrote: post #71

This doesn't make sense to me. Fundamentally, you either have a signed legal contract, or you 'just' have a verbal agreement aka handshake deal. The problem that this supposedly solves, is that verbal agreements are non binding and leave wiggle room. If you cant trust the other party, the only recourse is the full legal contract. If you can trust the party then the handshake and the intention is enough. Further more…

As pointed out elsewhere in the thread, verbal agreements that contain all the other aspects of a valid (for example written) contract is infact every bit as binding as a written version providing you can prove it occurred. You can do this all sorts of ways - witnesses for examples. The wiggle room that enters verbal agreements are typically not the result of it being a verbal agreement, but that verbal agreements ar…

I understand completely verbal contracts are enforceable if all the 'wiggle room' is squeezed out, by specifying in detail the specifics of the contract and witnesses to remove the 'he said she said'. That's all a written contract with all the legalese and signatures in triplicate etc really provides.

My point is IF you create a handshake protocol that meets all the criteria to be fully 'enforceable', no one will actually partake, because business people do not enter legally binding contracts without lawyers reviewing etc.

The handshake deal in addition to the legal aspect really requires a level of trust. a handshake deal works because both parties trust the other really is making a deal, that both parties are operating in good faith, AND that if their is some technicality does occur they can still back out, but trust exists that neither party will back out unless such a technicality does occur.

Re: The Handshake Deal Protocol

#107

Post by nym » Thu, Mar 14, 2013, 6:17 PM UTC

derefr wrote: post #17

darxius wrote: post #14

Earlier quoted context omitted.

I was just thinking about using the "bump" feature a lot of smartphones have for step 3. The bump would have a message pop up on their screen, to which they would reply yes or no and completing step 4.

I would say, 1. something with a trigger like Bump, 2. which then pops up an Etherpad-style collaboratively-edited text field, 3. with MMO trade-dialog style 3-phase mutual-assent commit, 4. that leads to a copy being saved on both your phones, to a public-but-anonymous URL both parties can cite, and also forwarded to any other parties which either of you please--for example, your lawyers.

Build in SHA256 signing and you have something rock solid.

Re: The Handshake Deal Protocol

#108

Post by joshAg » Thu, Mar 14, 2013, 6:17 PM UTC

FlukeATX wrote: post #99

tc wrote: post #65

This 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…

Though this does follow the qualities of a contract, it's important to note that oral agreements only get you so far in many jurisdictions and particularly have an upper limit on the value, around the order of $500. So while its great this is an explicit and clear conversation, I don't think you can say that it is assuring unenforceable agreements aren't made.

that's what steps 3 and 4 are for, aren't they? Wouldn't that make it a written contract instead of just an oral one?

Re: The Handshake Deal Protocol

#109

Post by joonix » Thu, Mar 14, 2013, 6:18 PM UTC

apalmer wrote: post #71

This doesn't make sense to me. Fundamentally, you either have a signed legal contract, or you 'just' have a verbal agreement aka handshake deal. The problem that this supposedly solves, is that verbal agreements are non binding and leave wiggle room. If you cant trust the other party, the only recourse is the full legal contract. If you can trust the party then the handshake and the intention is enough. Further more…

Sorry but this is completely incorrect. Oral agreements are just as valid under the law (except where something called the Statute of Frauds comes into play) as written agreements. You just need a somewhat specific offer, an acceptance, and consideration. That's it.

Re: The Handshake Deal Protocol

#110

Post by jarrett » Thu, Mar 14, 2013, 6:19 PM UTC

tc wrote: post #65

This 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…

There is much to be decided about any investment deal beyond what is contemplated in the protocol. For some examples:

http://mashable.com/2011/05/27/term-sheet-startup-investing/

Just as a thought experiment, let's imagine what would happen if you tried to enforce this handshake deal (complete with email confirmation per steps 3 and 4). How would the courts decide all the issues that would normally have been negotiated and agreed to in a terms sheet?