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> This can't be a promise to invest X at Y valuation no matter what, which it might be if it were treated as a legal contract. Legal contracts don't work they
by jcampbell1 14y ago
> This can't be a promise to invest X at Y valuation no matter what, which it might be if it were treated as a legal contract.
Legal contracts don't work they way you think. If there is a discrepancy between what is offered and reality, the contract can fail, or the courts can find a reasonable interpretation, or both parties can agree to change the contract (most common). This happens in due diligence all the time.
- deleted 14y ago[deleted]
- legutierr 14y agoThanks for your response. Can you help me understand what would happen under this protocol were an investor to pull out because of something that is discovered in due diligence? Or if the proposed modification were not to be acceptable to the company seeking investment? I would imagine in that case that any dispute would be over whether the discrepancy was material enough to justify the modification or withdrawal. Either way, though, there is a clear difference between this and a verbal agreement in that if the parties cannot reach a reasonable compromise, a dispute around a verbal agreement will most likely (although not always) be dropped, and an email exchange such as this would provide a greater opportunity to litigate. From my point of view, one primary rational of having a written contract is to reduce the likelihood of litigation. With that in mind, a verbal agreement seems perhaps a better option than an email-based protocol, in a weird sort of way.