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by clevy
1570 days ago
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YC legal team here: first, we agree that if you have legal counsel, you should get their advice on how to handle. Second, other startups have had this happen to them and it's typically easily resolvable. The first line of the safe states "in exchange for payment by [Investor] of [$], on or about [date of safe] ... ." We drafted this line specifically to ensure that the parties understand that money MUST be exchanged for the safe to be valid. Without payment there is no "consideration," which means there is no valid contract. We decided that picking a hard date for "expiration" of an unfunded safe creates its own set of problems, so the safe is effective "on or about" the same date it is signed. Opinions can differ on the distance between "on" and "about," but we think its reasonable that "on or about" means just 1-2 days. Investors should not be signing safes if they don't have the money to invest within that time frame. A suggested course of action for OP's situation is to send the investor a written notice that the safe is terminated because there was no exchange of money on or about the date the safe was signed, as provided in safe. Take steps to ensure the notice is sent to whatever contact addresses you have for the investor (email, physical, email of the investor's legal counsel (if there is one). Keep a copy of the written termination notice and proof that it was sent. Then probably best not to do business with that investor again! |
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Ie, safe must be funded within 2 business days of date of safe. Can always do a new safe if the first doesn't go through and you still want to do business?