4 ms·

Just a passing note here without commenting on the substance of these claims. Many founders do a "quickie LLC" on their own "just to get started" with the expe

by grellas 15y ago

Just a passing note here without commenting on the substance of these claims. Many founders do a "quickie LLC" on their own "just to get started" with the expectation that they will get a lawyer later to clean up the paperwork. When they do this, the two classic mistakes they make are: (1) not imposing vesting requirements on grants made to founders; and (2) not requiring that founders assign all IP rights into the company in exchange for the grant. In most cases, this becomes no-harm-no-foul and is simply cleaned up at a later stage. If there is an early falling out, though, you can have founders who leave the company and subsequently assert expensive legal claims even though their contributions to the venture may have been slight. In such a case, the do-it-yourself attempt to save a few dollars at the outset becomes a very expensive lesson in just how badly things can go wrong when you cut corners on such matters. Don't know the facts here and am not commenting on OP's position, which might be entirely legitimate and which can only be evaluated by those who know the facts.

JabavuAdams 15y ago
A lawyer friend once described to me (but did not advise me) that a large part of contract disputes is figuring out what the original intent was. If that's true, is there any benefit practically speaking to having a simple e-mail that records the main points of agreement? It's perhaps not legally ironclad, but could provide evidence of the intent of both parties. I think there's a mental hurdle of going to the lawyer versus just exchanging a few emails.
- grellas 15y ago
  A business contract typically tells a story about what two or more people hope to achieve by a mutual exchange of items of value in their deal. For most such contracts, a "meeting of the minds" lies at the heart of what the contract means and how it will be interpreted. If you don't have a formally executed document that itemizes the deal in total, it usually helps in documenting your intent if you have contemporaneous emails that set forth that intent. Note a couple of points: 1. It is important that they be "contemporaneous" - after-the-fact emails that try to paint a self-serving picture do not help and can sometimes backfire. 2. It is important that they be clear. In emails, we sometimes ramble or make ill-conceived statements or simply incomplete ones, and all this can be twisted against you in any later dispute. Best advice here: be yourself and set forth the terms as you see them honestly, clearly, and in keeping with the nature of the relationship (no CYA stuff), preferably without legalese; don't document pointlessly but only as needed to add clarity to what you are hoping to achieve. 3. Watch out for "merger" clauses in any final documentation if your expressions of intent as set forth in emails are contradicted by what the final contract says. A merger clause says that the written contract sets forth the entire contract between the parties and that nothing that has previously been said or even tentatively agreed in prior exchanges between the parties is valid if it contradicts what is set forth in the final written contract. When you sign a contract that has such a clause, you will be hard put to push any contradictory interpretation that you might have previously documented in emails. The emails still matter if all they do is help interpret otherwise ambiguous expressions in the final contract but not if they contradict clear provisions of that contract. The lesson here: don't assume that, simply because you have documented something in an email, it will necessarily help you in the end. 4. Get good legal advice before signing any important contract and normally document it in a formal contract if it is at all important. If it is a smallish, then the ebb and flow and the informality of email documentation can work just fine but do be aware of the limitations of any such approach. A good lawyer will also help think through the issues and help eliminate problem areas concerning whether the contract expresses your true intent. Do not use a lawyer slavishly but use one when it matters. This is really the theme of my GP post where I essentially say be careful not to be penny-wise and pound-foolish when it comes to using legal help on things that matter.
- dctoedt 15y ago
  > ... perhaps not legally ironclad, but could provide evidence of the intent of both parties Be careful, because "just exchanging a few emails" can be legally binding. For example, in the Stevens v. Publicis SA case [1], the owner of a PR firm sold out to a French company and stayed on as CEO pursuant to an employment agreement. Things didn't go especially well after that. Eventually the French company removed the former owner as CEO, who stood to lose out on a $4MM earn-out. The French company proposed modifying the arrangement to put the former owner in a different role, so that he would still have a shot at getting his earn-out. In the course of an email exchange on that subject, the former owner responded, "... I accept your proposal with total enthusiasm and excitement ...." The former owner later sued (on grounds not made clear in the court's opinion); the court held that the email exchange constituted a binding agreement to modify the original contract. PS I second Grellas's comments in response to JabavuAdams. [1] 50 A.D.3d 253, 854 N.Y.S.2d 690 (2008) (affirming judgment on jury verdict in favor of French company), http://scholar.google.com/scholar_case?case=6414256789563157662&hl=en&as_sdt=2,44 http://scholar.google.com/scholar_case?case=6414256789563157...

by grellas 15y ago

JabavuAdams 15y ago

A lawyer friend once described to me (but did not advise me) that a large part of contract disputes is figuring out what the original intent was. If that's true, is there any benefit practically speaking to having a simple e-mail that records the main points of agreement? It's perhaps not legally ironclad, but could provide evidence of the intent of both parties. I think there's a mental hurdle of going to the lawyer versus just exchanging a few emails.

grellas 15y ago
A business contract typically tells a story about what two or more people hope to achieve by a mutual exchange of items of value in their deal. For most such contracts, a "meeting of the minds" lies at the heart of what the contract means and how it will be interpreted. If you don't have a formally executed document that itemizes the deal in total, it usually helps in documenting your intent if you have contemporaneous emails that set forth that intent. Note a couple of points: 1. It is important that they be "contemporaneous" - after-the-fact emails that try to paint a self-serving picture do not help and can sometimes backfire. 2. It is important that they be clear. In emails, we sometimes ramble or make ill-conceived statements or simply incomplete ones, and all this can be twisted against you in any later dispute. Best advice here: be yourself and set forth the terms as you see them honestly, clearly, and in keeping with the nature of the relationship (no CYA stuff), preferably without legalese; don't document pointlessly but only as needed to add clarity to what you are hoping to achieve. 3. Watch out for "merger" clauses in any final documentation if your expressions of intent as set forth in emails are contradicted by what the final contract says. A merger clause says that the written contract sets forth the entire contract between the parties and that nothing that has previously been said or even tentatively agreed in prior exchanges between the parties is valid if it contradicts what is set forth in the final written contract. When you sign a contract that has such a clause, you will be hard put to push any contradictory interpretation that you might have previously documented in emails. The emails still matter if all they do is help interpret otherwise ambiguous expressions in the final contract but not if they contradict clear provisions of that contract. The lesson here: don't assume that, simply because you have documented something in an email, it will necessarily help you in the end. 4. Get good legal advice before signing any important contract and normally document it in a formal contract if it is at all important. If it is a smallish, then the ebb and flow and the informality of email documentation can work just fine but do be aware of the limitations of any such approach. A good lawyer will also help think through the issues and help eliminate problem areas concerning whether the contract expresses your true intent. Do not use a lawyer slavishly but use one when it matters. This is really the theme of my GP post where I essentially say be careful not to be penny-wise and pound-foolish when it comes to using legal help on things that matter.
dctoedt 15y ago
> ... perhaps not legally ironclad, but could provide evidence of the intent of both parties Be careful, because "just exchanging a few emails" can be legally binding. For example, in the Stevens v. Publicis SA case [1], the owner of a PR firm sold out to a French company and stayed on as CEO pursuant to an employment agreement. Things didn't go especially well after that. Eventually the French company removed the former owner as CEO, who stood to lose out on a $4MM earn-out. The French company proposed modifying the arrangement to put the former owner in a different role, so that he would still have a shot at getting his earn-out. In the course of an email exchange on that subject, the former owner responded, "... I accept your proposal with total enthusiasm and excitement ...." The former owner later sued (on grounds not made clear in the court's opinion); the court held that the email exchange constituted a binding agreement to modify the original contract. PS I second Grellas's comments in response to JabavuAdams. [1] 50 A.D.3d 253, 854 N.Y.S.2d 690 (2008) (affirming judgment on jury verdict in favor of French company), http://scholar.google.com/scholar_case?case=6414256789563157662&hl=en&as_sdt=2,44 http://scholar.google.com/scholar_case?case=6414256789563157...