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Facebook Wants Ownership Case Thrown Out
crimeandpunishment writes "Attorneys for Facebook and a New York man claiming majority ownership of the site faced off in a Buffalo courtroom Tuesday, and if Facebook gets its way there won't be too many more days in court. The site wants to get Paul Ceglia's claim thrown out of court. He claims a seven-year-old agreement with Facebook founder Mark Zuckerberg entitles him to 84 percent of the company. Facebook acknowledges Ceglia and Zuckerberg worked together, but says the contract Ceglia submitted was full of 'things that don't make sense.'"
http://www.businessinsider.com/well-these-new-zuckerberg-ims-wont-help-facebooks-privacy-problems-2010-5
"They were pure niggers." – Noam Chomsky
Contracts don't need to be written by lawyers to be legally binding.
No, but it helps. A lot.
Lawyers know what things have to be in a contract to make it a contract. IANAL, so a little wikipedia check (ymmv) shows it's these things:
* Agreement (Offer and Acceptance)
* Capacity to contract
* Consideration
* Legal purpose
* Legality of form
* Intention to create legal relations
* Consent to contract
* Vitiating factors: Mistates, undue influence, misrepresentation, duress
If Ceglia covered all of those things in this one, then he's got a valid contract and is going to score.
if he missed even one, or if he failed to carry out some of them, then he's going to become a trivia question.
From the claims he's made, it sounds like he has the basics down. It's claimed the thing was signed, so the offer was made and accepted (in fact, it sounds like Zuckerberg made the offer). Capacity: if Zuckerberg was 18 and owned the website, that's enough. Consideration: Ceglia traded money for ownership rights; so both sides got value from the deal, and fair value at the time, plus the agreed-upon increase in ownership as the project was delayed. Purpose and form: simple trade of cash for ownership; an investment; happens all the time without event. Intention to create legal relations: it's not as though anyone was forced or tricked into this. Consent: Zuckerberg was the one who entered into the deal.
So it's down to what wikipedia calls Vitiating Factors, and that's where his lawyer is going to go. Things like the amount of time Ceglia waited, any informalities or irregularities in the documents, etc. And really, given the current value that Ceglia is chasing and Zuckerberg stands to lose, lawyers can find a lot of potentially vitiating circumstances to tie up the case in court.
The judge who gets the case first may skip all that and render summary judgment based on the hard evidence. Which I haven't seen so I won't play judge, yet.
Hopefully Zuckerberg will realize he's actually bound to comply with his agreement, and will find a way to settle with Ceglia. I doubt Ceglia will take less than 50%, but I won't be surprised if he takes that if he's offered it, and let the production delays slide. Unless he's hung up on a few $billion here and there...
Holy Smokes. He's got them by the balls. Unless they can find a state specific reason to invalidate the contract they are smoked beyond belief. There is no way they could make a settlement offer. This guy has a standard work for hire contract for Facebook. Zuckerberg never owned it, he was hired to develop it for $1000 dollars. I'll type up the key paragraph here as the PDF is a bitch to read:
"2. Entire Agreement
The contract between the Purchaser and Seller as a purchase agreement and "work made for hire" reflects two separate business ventures, the first being the work to be performed directly for the StreetFax Database and the Programming language to be provided by the Seller.
Second it is for the continued development of the software, program and for the purchase and design of a suitable website for the project Seller has already initiated that is designed to offer the student of Harvard university access to a website similar to a live functioning yearbook with the working title of "The Face Book".
It is agreed that Purchaser will own a half Interest (50%) in the software, programing language and business interests derived from the expansion of that service to a larger audience."
It's a standard pull out of a book and make some modifications work for hire contract and it appears he had his lawyer review and modify before everyone signed. These things are generally pretty simple (the entire agreement is 2 pages long) and they are very legally binding generally as all the terms are previously tested and pulled from successfully litigated contracts. It's got everything from Patent indemnification to Liens to Subcontracting rights, it's a very thorough and succinct contract. This Ceglia guy is in a very very good position. From the terms he owns more than 80% of Facebook (due to a late opening). Any value that Zuckerberg sold came out of the percentage that Zuckerberg owned, not Ceglia's portion. IMO the reason there is no settlement is that Ceglia is in such a good legal position he has no reason to settle and Facebook either wins or loses the whole company. His company "StreetFax" owns Facebook lock stock and barrel. Zuckerberg was hired to develop it and manage it, that's it and all for $1000. Call that the best investment of all time.
All I can say is WOW. Zuckerberg is history. Might take a few years with all the Legal wrangling and Zuckerberg is going to get his ass sued for failing to disclose this contract when he took the VC money and he might even end up in Jail if the VC guys can convince the government to prosecute for fraud.
My question: why didn't this come out like, say, 5 years ago instead of a full 7 years after facebook's launch?
As people pointed out in a previous story: Ceglia apparently had no reason to believe Zuckerberg was acting in bad faith until Zuckerberg tried to sell something Zuckerberg didn't own. Once that occurred, Ceglia could pounce (and did, like a three toed sloth, but well within the statute of limitations).