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"He signed away any and all rights to due diligence in the agreement." Why do more fraudsters not use contracts If people can sign away due diligence, sign up f

"He signed away any and all rights to due diligence in the agreement." Why do more fraudsters not use contracts If people can sign away due diligence, sign up for a Diamond, get a Lemon, and have no recourse, surely scammers would be doing this instead of structuring their scam in a way that has the potential of sending them to jail

AlexandrB 4y ago
Scammers are doing this. It's called cryptocurrency.
ncallaway 4y ago
I mean, that’s how a lot of immature markets without regulations work, until laws are added to say “you can’t do that for this kind of transaction”. That’s why many states have lemon laws for used car sales, to prevent exactly that kind of behavior in that market. Sales of corporations often don’t have consumer protection style regulations, because consumers don’t often buy corporations. The assumption is if you’re spending enough money to buy a corporation, you’re a big boy and can pay a lawyer to review your contracts. So, if you’re spending $54B to buy a company, you should have your lawyers closely review the terms of the contract. Every lawyer I’ve heard that reviewed the contract Musk signed is gobsmacked by its terms and would have strongly discouraged Musk from signing the contract as written, because it’s so one sided in Twitter’s favor.
- jjeaff 4y ago
  We also can't forget that there was time for due diligence before the contract was signed.
Spivak 4y ago
You don’t deserve the downvotes here. Agreeing to buy Twitter as-is does not absolve them if they’re found to have misrepresented what they’re selling which is what the legal angle they’re gunning for is. I don’t buy it but it at least logically follows.
- _djo_ 4y ago
  That’s not what Musk is claiming though, when you cut through the noise. He has zero actual evidence showing that Twitter made false misrepresentations. His entire argument really centred around the argument of “Twitter has lots of bots” which is orthogonal and immaterial to the question of mDAUs. Twitter could be 75% bots and its SEC filing claim could still be entirely above board if it was able to filter them out. Musk’s opportunity to verify that statement was during due diligence. He chose not to, and can’t legally try to perform due diligence after the fact because he has cold feet.
jjeaff 4y ago
Sure, indemnity doesn't always work, especially in the case of scammers going after your average consumer. But clauses like this are highly binding when dealing with high stakes deals between sophisticated parties with highly sophisticated teams of attorneys on both sides of the deal. And you certainly couldn't break a deal like this on a hunch that the number of daily active users might be wrong. That would be like holding up a national presidential election because the losing team believes there was fraud but has no evidence yet.
megablast 4y ago
He was allowed to do due diligence, he chose not too. People said it was dumb at the time.
jacquesm 4y ago
The default is that you have the right to perform due diligence prior to making a binding offer. If you make a binding offer and waive the right to due diligence doing it later and using whatever you find to back out of the deal or change the price likely will not work. Musk can't claim he's a business newbie and besides that was spelled out black-on-white.
rsynnott 4y ago
This absolutely happens in commercial contracts. Consumers have more statutory rights, though even for stuff that consumers might buy there are examples, notably property. “Caveat emptor” has been knocking around as a phrase for two millennia now for a reason.

AlexandrB 4y ago

Scammers are doing this. It's called cryptocurrency.

ncallaway 4y ago

I mean, that’s how a lot of immature markets without regulations work, until laws are added to say “you can’t do that for this kind of transaction”. That’s why many states have lemon laws for used car sales, to prevent exactly that kind of behavior in that market. Sales of corporations often don’t have consumer protection style regulations, because consumers don’t often buy corporations. The assumption is if you’re spending enough money to buy a corporation, you’re a big boy and can pay a lawyer to review your contracts. So, if you’re spending $54B to buy a company, you should have your lawyers closely review the terms of the contract. Every lawyer I’ve heard that reviewed the contract Musk signed is gobsmacked by its terms and would have strongly discouraged Musk from signing the contract as written, because it’s so one sided in Twitter’s favor.

jjeaff 4y ago
We also can't forget that there was time for due diligence before the contract was signed.

Spivak 4y ago

You don’t deserve the downvotes here. Agreeing to buy Twitter as-is does not absolve them if they’re found to have misrepresented what they’re selling which is what the legal angle they’re gunning for is. I don’t buy it but it at least logically follows.

_djo_ 4y ago
That’s not what Musk is claiming though, when you cut through the noise. He has zero actual evidence showing that Twitter made false misrepresentations. His entire argument really centred around the argument of “Twitter has lots of bots” which is orthogonal and immaterial to the question of mDAUs. Twitter could be 75% bots and its SEC filing claim could still be entirely above board if it was able to filter them out. Musk’s opportunity to verify that statement was during due diligence. He chose not to, and can’t legally try to perform due diligence after the fact because he has cold feet.

jjeaff 4y ago

Sure, indemnity doesn't always work, especially in the case of scammers going after your average consumer. But clauses like this are highly binding when dealing with high stakes deals between sophisticated parties with highly sophisticated teams of attorneys on both sides of the deal. And you certainly couldn't break a deal like this on a hunch that the number of daily active users might be wrong. That would be like holding up a national presidential election because the losing team believes there was fraud but has no evidence yet.

megablast 4y ago

He was allowed to do due diligence, he chose not too. People said it was dumb at the time.

jacquesm 4y ago

The default is that you have the right to perform due diligence prior to making a binding offer. If you make a binding offer and waive the right to due diligence doing it later and using whatever you find to back out of the deal or change the price likely will not work. Musk can't claim he's a business newbie and besides that was spelled out black-on-white.

rsynnott 4y ago

This absolutely happens in commercial contracts. Consumers have more statutory rights, though even for stuff that consumers might buy there are examples, notably property. “Caveat emptor” has been knocking around as a phrase for two millennia now for a reason.