3 ms·

>if I tell you a contract is one thing, but it actually says something else, and you sign it, then you must perform the contract. That is actually the exact op

>if I tell you a contract is one thing, but it actually says something else, and you sign it, then you must perform the contract. That is actually the exact opposite of how the law works. If you enter a contract because of someones misrepresentations and you suffer damages as a direct result of those misrepresentations that is fraud and voids the contract.

marcus_holmes 10y ago
My MBA legal lecturer was absolutely clear that when signing a contract what was said was irrelevant, what was in the contract was what was important. I think you're talking about a retail position maybe? Or possibly there's differences between US and Australian law in this regard. I'm not sure I see the point of having words in a contract if it can be voided because someone said something different once...
- will_brown 10y ago
  There certainly could be differences in US and Australian law in this regard. >I'm not sure I see the point of having words in a contract if it can be voided because someone said something different once... It is not a simple as a one time statement being inconsistent with the contract, though the could be enough. Also there are many different theories of law I could pursue, but just one example: Fraud in the Inducement[1]: 1. The defendant made an intentional action, statement, or omission 2. The misrepresentation was material to the decision to enter into a contract 3. The plaintiff reasonably relied on such misrepresentation, and 4. The plaintiff suffered some degree of injury, usually economic harm And don't get me wrong I understand all the counter arguments as it relates to this single theory of law (but trust me there are more) which including: reliance on the marketing materials/solicitations were not reasonable because the included disclaimers to the effect the marketing materials were not accurate and the contract/code is controlling. In this case I don't think it would matter, because there is no doubt investors relied on these representations from the creators of the DAO including, the DAO was "100% safe", investments were subject to voting, there were safe guards allowing investors to "pull the plug" and get their investments back...not of that was true, was likely the reason investors invested and resulted in damages when it turned out they weren't true. [1] http://www.legalmatch.com/law-library/article/fraudulent-inducement-lawyers.html http://www.legalmatch.com/law-library/article/fraudulent-ind...
  - marcus_holmes 10y ago
    It appears that Aussie law is similar but different (I'm learning new things!): An actionable pre-contractual misrepresentation occurs where a party makes a 'false representation' (orally, in writing or by conduct), the representation is one of fact (rather than a statement of opinion of law or a prediction about the future), it must be made to the other contracting party and it must induce the contract. Where established the key remedy is rescission (generally damages are not available unless the misrepresentation constitutes a tort - that is, it is also fraudulent or negligent - in which case tortious (but not contractual) damages may be available). Even where misrepresentation is established there are some limits on rescission - most significantly, if restitution is not possible the right to rescind will be lost. [1] So yes, in this case, if the DAO contract was induced by a mis-representation of fact about the contract, then it could be rescinded. I guess this will be an interesting aspect to Ethereum and "smart contracts" - if there is a legal right to rescind them, how does that work? Can you unwind the blockchain transactions to rescind the contract? [1] http://www.australiancontractlaw.com/law/avoidance-misleading.html http://www.australiancontractlaw.com/law/avoidance-misleadin...
    - will_brown 10y ago
      Thank you for cross referencing the Australian law, it does seem similar and as you noted the legal issue can trigger additional claims, and the same is true in the U.S. To take a stab at your questions regarding how such a claim might play out in the U.S. Say investor A put money into the DAO, based on statements in the marketing materials (example "the DAO is 100% secure") and said funds were lost. Investor A could file a law suit in their own jurisdiction, the claims would include but not necessarily be limited to fraud in the inducement, and the parties name might include but not be limited to a) the company who owns slock.it, b) the individual(s) who wrote the code for the DAO, c) the individuals who wrote the marketing materials the investor relied on, and d) the unknown individual(s) who were responsible for writing the smart contract that appropriated the investors funds without a vote (this may sound odd, but it is a regular occurrence typically naming defendant(s) John Doe(s)) Now it is almost impossible to say how the lawsuit would actually unfold. One example, none of the parties answers the lawsuit and the investor plaintiff can obtain a default judgment. In this example, the investor/plaintiff may take the judgment against defendant #1 (company behind slock.it, which I believe is company based out of Germany) and try to have the judgement enforced in Germany. Again I can't say for certain how that would play out. Another example, could be the defendants actually answer and defend the lawsuit, in which case the investor/plaintiff must prove their case at trial (but as we know, judgement can be obtained before trial at a motion like motion for summary judgment, but that would be rare in contract cases) or more generally the parties would settle. Now I'm just trying to give varying examples, and I can't stress enough this analysis is in no way exhaustive, the various defendants would certainly be able to raise defenses not discussed, the plaintiffs could bring claims not mentioned, and a default against John Doe(s) would be nearly impossible to enforce (unless at some point John Doe(s) identity comes to light. The major take away is the fact that the law provides remedies separate and apart from unwinding the DAO or getting the money back from the john Doe(s) who may likely never be identified.

marcus_holmes 10y ago

My MBA legal lecturer was absolutely clear that when signing a contract what was said was irrelevant, what was in the contract was what was important. I think you're talking about a retail position maybe? Or possibly there's differences between US and Australian law in this regard. I'm not sure I see the point of having words in a contract if it can be voided because someone said something different once...

will_brown 10y ago
There certainly could be differences in US and Australian law in this regard. >I'm not sure I see the point of having words in a contract if it can be voided because someone said something different once... It is not a simple as a one time statement being inconsistent with the contract, though the could be enough. Also there are many different theories of law I could pursue, but just one example: Fraud in the Inducement[1]: 1. The defendant made an intentional action, statement, or omission 2. The misrepresentation was material to the decision to enter into a contract 3. The plaintiff reasonably relied on such misrepresentation, and 4. The plaintiff suffered some degree of injury, usually economic harm And don't get me wrong I understand all the counter arguments as it relates to this single theory of law (but trust me there are more) which including: reliance on the marketing materials/solicitations were not reasonable because the included disclaimers to the effect the marketing materials were not accurate and the contract/code is controlling. In this case I don't think it would matter, because there is no doubt investors relied on these representations from the creators of the DAO including, the DAO was "100% safe", investments were subject to voting, there were safe guards allowing investors to "pull the plug" and get their investments back...not of that was true, was likely the reason investors invested and resulted in damages when it turned out they weren't true. [1] http://www.legalmatch.com/law-library/article/fraudulent-inducement-lawyers.html http://www.legalmatch.com/law-library/article/fraudulent-ind...
- marcus_holmes 10y ago
  It appears that Aussie law is similar but different (I'm learning new things!): An actionable pre-contractual misrepresentation occurs where a party makes a 'false representation' (orally, in writing or by conduct), the representation is one of fact (rather than a statement of opinion of law or a prediction about the future), it must be made to the other contracting party and it must induce the contract. Where established the key remedy is rescission (generally damages are not available unless the misrepresentation constitutes a tort - that is, it is also fraudulent or negligent - in which case tortious (but not contractual) damages may be available). Even where misrepresentation is established there are some limits on rescission - most significantly, if restitution is not possible the right to rescind will be lost. [1] So yes, in this case, if the DAO contract was induced by a mis-representation of fact about the contract, then it could be rescinded. I guess this will be an interesting aspect to Ethereum and "smart contracts" - if there is a legal right to rescind them, how does that work? Can you unwind the blockchain transactions to rescind the contract? [1] http://www.australiancontractlaw.com/law/avoidance-misleading.html http://www.australiancontractlaw.com/law/avoidance-misleadin...
  - will_brown 10y ago
    Thank you for cross referencing the Australian law, it does seem similar and as you noted the legal issue can trigger additional claims, and the same is true in the U.S. To take a stab at your questions regarding how such a claim might play out in the U.S. Say investor A put money into the DAO, based on statements in the marketing materials (example "the DAO is 100% secure") and said funds were lost. Investor A could file a law suit in their own jurisdiction, the claims would include but not necessarily be limited to fraud in the inducement, and the parties name might include but not be limited to a) the company who owns slock.it, b) the individual(s) who wrote the code for the DAO, c) the individuals who wrote the marketing materials the investor relied on, and d) the unknown individual(s) who were responsible for writing the smart contract that appropriated the investors funds without a vote (this may sound odd, but it is a regular occurrence typically naming defendant(s) John Doe(s)) Now it is almost impossible to say how the lawsuit would actually unfold. One example, none of the parties answers the lawsuit and the investor plaintiff can obtain a default judgment. In this example, the investor/plaintiff may take the judgment against defendant #1 (company behind slock.it, which I believe is company based out of Germany) and try to have the judgement enforced in Germany. Again I can't say for certain how that would play out. Another example, could be the defendants actually answer and defend the lawsuit, in which case the investor/plaintiff must prove their case at trial (but as we know, judgement can be obtained before trial at a motion like motion for summary judgment, but that would be rare in contract cases) or more generally the parties would settle. Now I'm just trying to give varying examples, and I can't stress enough this analysis is in no way exhaustive, the various defendants would certainly be able to raise defenses not discussed, the plaintiffs could bring claims not mentioned, and a default against John Doe(s) would be nearly impossible to enforce (unless at some point John Doe(s) identity comes to light. The major take away is the fact that the law provides remedies separate and apart from unwinding the DAO or getting the money back from the john Doe(s) who may likely never be identified.