4 ms·

My read is that the poster felt that the accounting practices, which were likely legal and commonplace, violated implied contractual obligations.

Viliam1234 2y ago
It's technically legal -- the best kind of legal!
- fragmede 2y ago
  No. Fuck that shit. When the spirit of the law and the letter of the law conflict, I want us as humans to be able to step back and say that, hey, it doesn't make sense when you put it that way, and ignore the rules and do what's actually right.
  - dpc050505 2y ago
    As someone living in a country with common law and having taking business law 101 (so certainly NAL) this sometimes ends up being a bit of a guessing game as to how a judge will interpret jurisprudence. There's a lot of room for improvement in legal systems and they move extremely slow due to the political nature of things.
    - fragmede 2y ago
      totally, which is why we go to a jury of peers for things
    - cyanydeez 2y ago
      wouldn't you rather the 50/50 chance for some _seemingly_ impartial person to intepret a deal, than have to pay a lawyer more than somethings worth to enforce some complex 500 page word salad to keep a business run by a person whose dones this hundreds of times before?
  - pc86 2y ago
    Ah yes the cornerstone of any stable judiciary - "ignore the rules and do [what I want]."
__turbobrew__ 2y ago
That’s correct, I don’t believe anything illegal was done but certain things were done to dilute the employee share class which didn’t dilute founder shares. Just start reading about preferred stocks and you will realize they can basically be blank cheques to have any value and have voting rights to issue as much other common stock as they want. Additionally there was some liberty on what “sale price” actually was in the contract. This may be common operation, but the sale price according to my contract was much lower than the amount of dollars which was exchanged for the company.
JumpCrisscross 2y ago
There’s also a lot of plain fraud in private tech companies.
throwaway2037 2y ago
> implied contractual obligations What does this phrase mean? There is no way that any sound contract law will grant any weight to the term "implied". Either it is written (and agreed) or not. So, I would say anything that is not explicit is meaningless in term of contract law. (Again: I am only talking about jurisdictions with serious, mature contract law, not some banana republic.)
- datadrivenangel 2y ago
  If I say I'll give you 50% of the revenue we generate, and then the details of the contract allow me to bring on other people with the same deal of 50% of the revenue, and then you all share 50% it would likely feel unfair.
- awesome_dude 2y ago
  > There is no way that any sound contract law will grant any weight to the term "implied". Nobody is suggesting that any law would. > Either it is written (and agreed) or not. Yet you managed to infer things that weren't in the post. > So, I would say anything that is not explicit is meaningless in term of contract law. Again, where is anybody saying anything to the contrary?
- RHSeeger 2y ago
  Sometimes what the contract says and what the contract _looks_ like it says to a layman can read very different. - Granted $500k of stock on start, and then have it diluted as stock is added for new investors - Hollywood accounting - net vs gross There's lot of places where a contract can be represented as one thing, only to have it be far less than that.
  - throwaway2037 2y ago
    Then it is a poorly written contract, and the party that agreed to it was tricked or poorly advised. Plain and simple. We see this often with "fast and loose" term sheets for some corporate and sovereign bonds on less reliable names. There is a whole podcast (I forget the name at this very moment) that does nothing but discuss dubious bond contracts. Frequently, the co-hosts will ask: "Who in their right mind would agree to such a contract? This clause is totally unenforceable / provides no protection against event X/Y/Z." And, yet, these contracts still exist in the wild. Dumb question: Do you think the average dev in Silicon Valley pays a third-party employment contract lawyer to review the terms and conditions before agreeing? Sadly, I feel the answer is "no". Speaking personally, I would never agree to such complex employment compensation terms without third-party advice. Yes, I know it is not cheap (maybe 500 USD per hour), but the alternative looks much worse, and most people here facing these contracts can afford it.

Viliam1234 2y ago

It's technically legal -- the best kind of legal!

fragmede 2y ago
No. Fuck that shit. When the spirit of the law and the letter of the law conflict, I want us as humans to be able to step back and say that, hey, it doesn't make sense when you put it that way, and ignore the rules and do what's actually right.
- dpc050505 2y ago
  As someone living in a country with common law and having taking business law 101 (so certainly NAL) this sometimes ends up being a bit of a guessing game as to how a judge will interpret jurisprudence. There's a lot of room for improvement in legal systems and they move extremely slow due to the political nature of things.
  - fragmede 2y ago
    totally, which is why we go to a jury of peers for things
  - cyanydeez 2y ago
    wouldn't you rather the 50/50 chance for some _seemingly_ impartial person to intepret a deal, than have to pay a lawyer more than somethings worth to enforce some complex 500 page word salad to keep a business run by a person whose dones this hundreds of times before?
- pc86 2y ago
  Ah yes the cornerstone of any stable judiciary - "ignore the rules and do [what I want]."

__turbobrew__ 2y ago

That’s correct, I don’t believe anything illegal was done but certain things were done to dilute the employee share class which didn’t dilute founder shares. Just start reading about preferred stocks and you will realize they can basically be blank cheques to have any value and have voting rights to issue as much other common stock as they want. Additionally there was some liberty on what “sale price” actually was in the contract. This may be common operation, but the sale price according to my contract was much lower than the amount of dollars which was exchanged for the company.

JumpCrisscross 2y ago

There’s also a lot of plain fraud in private tech companies.

throwaway2037 2y ago

> implied contractual obligations What does this phrase mean? There is no way that any sound contract law will grant any weight to the term "implied". Either it is written (and agreed) or not. So, I would say anything that is not explicit is meaningless in term of contract law. (Again: I am only talking about jurisdictions with serious, mature contract law, not some banana republic.)

datadrivenangel 2y ago
If I say I'll give you 50% of the revenue we generate, and then the details of the contract allow me to bring on other people with the same deal of 50% of the revenue, and then you all share 50% it would likely feel unfair.
awesome_dude 2y ago
> There is no way that any sound contract law will grant any weight to the term "implied". Nobody is suggesting that any law would. > Either it is written (and agreed) or not. Yet you managed to infer things that weren't in the post. > So, I would say anything that is not explicit is meaningless in term of contract law. Again, where is anybody saying anything to the contrary?
RHSeeger 2y ago
Sometimes what the contract says and what the contract _looks_ like it says to a layman can read very different. - Granted $500k of stock on start, and then have it diluted as stock is added for new investors - Hollywood accounting - net vs gross There's lot of places where a contract can be represented as one thing, only to have it be far less than that.
- throwaway2037 2y ago
  Then it is a poorly written contract, and the party that agreed to it was tricked or poorly advised. Plain and simple. We see this often with "fast and loose" term sheets for some corporate and sovereign bonds on less reliable names. There is a whole podcast (I forget the name at this very moment) that does nothing but discuss dubious bond contracts. Frequently, the co-hosts will ask: "Who in their right mind would agree to such a contract? This clause is totally unenforceable / provides no protection against event X/Y/Z." And, yet, these contracts still exist in the wild. Dumb question: Do you think the average dev in Silicon Valley pays a third-party employment contract lawyer to review the terms and conditions before agreeing? Sadly, I feel the answer is "no". Speaking personally, I would never agree to such complex employment compensation terms without third-party advice. Yes, I know it is not cheap (maybe 500 USD per hour), but the alternative looks much worse, and most people here facing these contracts can afford it.