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Termination Email from Ripple to R3 (actual court documents)


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Hey guys,  A few months back, this community heard about the start of a legal spat between Ripple Labs, Inc. and R3, in which Ripple's CEO Brad Garlinghouse emailed R3's CEO David Rutter and term

I have to be really careful what I say here because this is before the courts and although I'm not a US citizen, I don't want to jeopardise the litigation. So let me discuss this from the standpoint o

This reads as a 'it's not you it's me (but really you jerk)' kind of breakup

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I have stated awhile back, that it is likely that both companies failed to staff and put in places the necessary procedures and resources for this alliance to proceed. Given, this scenario, it is to R3's benefit to drag out the settlement date... hoping for a higher XRP valuation and payout. Who signed this agreement?

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Yes, Pablo if you search in XRPchat you should find references to the most of the court filings.

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It's written in a you're-my-friend and at the same time business-like style, and rather specific:

Quoting:

Quote

"... where Ripple is (and I am) continuing to constantly nudge and pester R3 to action, to no avail - frustration will grow."

So there must be (hopefully written and documented) correspondence about the lack of action.

Further says,

Quote

"And our agreement tied to that goal - beginning with an XRP liquidity trial, and culminating in a full commercial partnership..."

That's pretty clear.

Then Brad throws in some more specifics. R3 neither signed a term sheet nor a commercial partnership...

Ultimately, he refers to article V.3(b)) of the initial agreement being key to cancel the agreement.

Do we have that article?

If this course of action is documented as outlined in this termination email, Ripple should have a pretty solid case.

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4 hours ago, Pablo said:

Let’s hope the lawyers at Ripple take a closer look at this type of correspondence in future. I’ve been working as an IT lawyer for a very long time and that is definitely NOT how it’s done.

Does anyone have the terms of the actual agreements and the options the subject of the dispute?

Hey Pablo, would you mind elaborating? I’m super curious as to what you mean and would love some insight. Sounds really interesting.

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1 hour ago, Hodlezerper said:

Hey Pablo, would you mind elaborating?

I have to be really careful what I say here because this is before the courts and although I'm not a US citizen, I don't want to jeopardise the litigation. So let me discuss this from the standpoint of general principles about how these things are usually handled (and I encourage you to not discuss the specifics of Brad's letter here):

  1. A termination letter or any other correspondence that is issued in anticipation of litigation/dispute is one of the most critical pieces of correspondence a company prepares, given the consequences. That means nothing should be left to chance and every word needs to be carefully calibrated. I teach all the lawyers working for me the importance of that principle every day. In fact, I go further: I explain to them the importance of carefully calibrating every word they utter in a professional context whether it be written or verbal, particularly with clients and partners.
  2. Unless we are preparing depositions/affidavits where a full statement of facts and context is required, I would never allow dispute related correspondence to go off-topic. You decide the aim of the letter and focus every word to achieve the stated purpose. Not a single word more.
  3. I like my correspondence to be compact - that's different to point 2 in that one choses words and phrases that have maximum impact with the least amount of verbiage. If any of you have a coding background, you probably know what I mean here. I know my US legal colleagues have a tendency to go the other way here, judging by the contracts produced by the large US companies. It might seem counter-intuitive but more words don't give you more legal protection. In many cases, a lawyer needs more words to cover the angles (and weaker lawyers usually cover those angles twice without knowing it). That results in internal contradictions and illogicality. It isn't uncommon to find long-winded clauses imploding but it's usually the case that something said early in the contract/letter contradicts something said later in the same document. That's bad because a court might decide to strip the clause out or read it down (against you).
  4. I would never allow any emotive, colloquial or colourful language in dispute related correspondence. You never know how it will be received in the heat of a dispute and it fails the test in point 2 above.
  5. I would never allow language that suggests or proposes alternative readings or summaries of agreed contract principles or clauses. You might find yourself offering a reading or interpretation that is more generous than the court ultimately decides on or which is a complete mis-reading of the clause/obligation. I generally build the actual contract language into the paragraph. It can be done to look natural but is extremely powerful and prevents the letter going "off the reservation".
  6. Dispute correspondence should stick to the contractual mechanisms provided to deal with such matters. If there is a dispute resolution clause, the letter should clearly state that it is being issued in relation to that mechanism and follow the contractual process. Same goes for termination provisions (which are usually very programmatic in their operation).
  7. Drilling down into termination: if the termination clause requires a certain notice period, certain wording, certain addressees, you follow that mechanism exactly. If you don't, you might find that the other party can accuse you of wrongful termination/repudiation, even if you otherwise have grounds to terminate.

End of masterclass for today. B)

Edited by Pablo
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5 hours ago, Pablo said:

Let’s hope the lawyers at Ripple take a closer look at this type of correspondence in future. I’ve been working as an IT lawyer for a very long time and that is definitely NOT how it’s done.

Does anyone have the terms of the actual agreements and the options the subject of the dispute?

It seems after price went up they knew it will go to litigation so wrote the letter to show the world that they didnt back off but also didnt want to start litigation themselves.

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I know I'm a bit late to the party but I've just gone through the court filings and it is very revealing to see how Ripple handled the negotiations with R3 and the subsequent fall-out. It  paints an unfortunate picture of the decisions made at the time by Ripple. To put this in plain English: Ripple is alleging they were duped by R3, that they believed things about R3 that turned out not to be true, that they would never have signed the Options contract or TPA had they known otherwise and finally, that they realised soon thereafter that they actually didn't need R3 in the first place. Huh?

I managed to find the Options Contract (Exhibit A to the R3 complaint) but not the TPA. The Options Contract looks slick, doesn't it? But I kept saying "where's the rest of it?" Maybe the TPA was better drafted - I don't know. I suspect not because the Ripple counter-claim barely refers to the TPA provisions where I would naturally expect them to appear. Structurally, the agreements are not how I would have put them together.

I can understand a start-up like Ripple and its leadership team trying to get traction and making some regrettable decisions along the way. Hopefully the latest round of hiring includes a few extra lawyers. Who knows, maybe I'll come and work for them one day. That would be very cool.

Edited by Pablo
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27 minutes ago, Pablo said:

I know I'm a bit late to the party but I've just gone through the court filings and it is very revealing to see how Ripple handled the negotiations with R3 and the subsequent fall-out. It  paints an unfortunate picture of the decisions made at the time by Ripple. To put this in plain English: Ripple is alleging they were duped by R3, that they believed things about R3 that turned out not to be true, that they would never have signed the Options contract or TPA had they known otherwise and finally, that they realised soon thereafter that they actually didn't need R3 in the first place. Huh?

I managed to find the Options Contract (Exhibit A to the R3 complaint) but not the TPA. The Options Contract looks slick, doesn't it? But I kept saying "where's the rest of it?" Maybe the TPA was better drafted - I don't know. I suspect not because the Ripple counter-claim barely refers to the TPA provisions where I would naturally expect them to appear. Structurally, the agreements are not how I would have put them together.

I can understand a start-up like Ripple and its leadership team trying to get traction and making some regrettable decisions along the way. Hopefully the latest round of hiring includes a few extra lawyers. Who knows, maybe I'll come and work for them one day. That would be very cool.

It just reads so "matter-of-fact" or "laissez faire" like I regret to inform you, but..... The correspondence did state that a formal correspondence would be sent as well. Hopefully, V.3(b)) of the initial agreement will share some insight as to the stipulations involved.

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10 hours ago, Sharkey said:

Thanks for sharing @brjXRP17

it would be interesting to read the wording of Article V.3(b)), regarding material breach of contract.  

Here is the Technology Provider Agreement or TPA, @Sharkey. See page 7 for that specific clause. 

https://www.xrpchat.com/topic/12051-technology-provider-agreement-ripple-and-r3-actual-court-documents/

 

 

11 hours ago, Pablo said:

Let’s hope the lawyers at Ripple take a closer look at this type of correspondence in future. I’ve been working as an IT lawyer for a very long time and that is definitely NOT how it’s done.

Does anyone have the terms of the actual agreements and the options the subject of the dispute?

TPA is linked above, @Pablo. You can view the original complaint (both jurisdictions) and the option agreement in my post here.

https://www.xrpchat.com/topic/9857-ripple-labs v-r3-actual-court-documents/

 

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