Next Lecture: Contracts & Fraud

Part 1 — Contracts (Lessons 3 & 4)

“The Social Network” (the film version of our assigned book “Accidental Billionaires”) depicts an ill-fated promise. After the Winklevoss twins introduce themselves to fellow classmate Mark Zuckerberg, they pitch him their idea for a social network website: the Harvard Connection. In the movie version of these events, Mark tells them “I’m in” without hesitation, and then, in the very next scene(!), we see Mark and his best friend Eduardo Saverin negotiate an informal partnership agreement with the purpose of launching a new rival website (which Mark would eventually christen “thefacebook”). Assuming the veracity of the movie version of these critical events, here is the key question for today’s class: are either of these oral agreements legally binding?

Part 2 — Fraud (Lesson 5)

“Fifty-two emails between Mark, the Winklevosses, and Divya, a half-dozen phone calls—and always, the kid had seemed as thrilled and excited about the project as he had been during that first dinner meeting.”–Ben Mezrich, The Accidental Billionaires, Ch. 12.

In the second half of our next lecture, we are going to re-enact a pre-trial “motion hearing” in the real-life law case of ConnectU versus Facebook (Case No. 04-11923), so we will need several student volunteers for this activity: two co-counsel to represent the Plaintiff (ConnectU, the firm owned by the Winklevoss twins), and two co-counsel who will represent the Defendant (Facebook, Mark Zuckerberg’s firm). In brief, the attorneys for Facebook will present at least two reasons why the Court should dismiss the Plaintiff’s “fraudulent misrepresentation” claim from the Complaint. For their part, the attorneys for ConnectU will provide at least two reasons why the Court should not dismiss the fraud claim. Generally speaking, fraud occurs when one party intentionally deceives another party. So, here is the main question we will discuss in class: even if the informal agreement between Zuckerberg and the Winklevoss twins was not a legally-binding contract, did Zuckerberg commit fraud by allegedly pretending to work on the Harvard Connection website when, in fact, he was really working on his own website?

“The Social Network”

Postscript: In preparation for our next class, we have asked our students to write up a sample contract or “agreement in principle” between Mark Zuckerberg and the Winklevoss twins before coming to class. Our goal in creating this assignment is to put our students in the same position that Mark Zuckerberg, Eduardo Saverin, and the Winklevoss twins found themselves in the fall of 2003.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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