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I worked for a startup which I have since left but part of my employment package involved being given shares in the company. About 5 weeks ago I was sent a very informal email asking if I would accept an offer to purchase my shares back at slightly below par value. I replied saying that I would accept their offer. Fast forward 5 weeks to today and I have heard nothing from them regarding the offer and have emailed them multiple times looking for an update.

I am now of the mind to hold onto the shares, admittedly somewhat out of spite, and also because I now know they will going for a series B soon that I wasn't aware of at the time I accepted the offer. My question is my original acceptance of the offer in anyway binding? Was it ever binding being so informal? Is there a time limit on the validity of the offer?

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    Probably a question for Law.SE. – Rupert Morrish Feb 1 '18 at 20:17
  • why don't you call them? – quid Apr 26 '18 at 15:54
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    Were they actually offering to buy your shares, or trying to gauge interest in such an offer? "If we were to offer to buy your shares at $X/share, would you sell them?" is very different from "We are offering you $X/share for your shares; do you accept?" – chepner Jul 25 '18 at 13:57
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Caveat: IANAL, and this is just an explanation how this situation should be understood from the point of view of contract law. If this involves a large amount of money, you should consult a lawyer.

My question is my original acceptance of the offer in anyway binding? Was it ever binding being so informal?

Yes, and yes. Contracts don't need to be formal to be binding. They don't even need to be written.

Is there a time limit on the validity of the offer?

If there was no time limit specified anywhere in your communication, then there is no time limit. They could still at any time execute the purchase to fulfill the contract.

What should typically happen when one party delays the fulfillment of a contract is that the other party sends them a written ultimatum to fulfill the contract within a reasonable timeframe, or have the contract cancelled (and possibly become liable for damages).

But since you don't anymore want the contract to be fulfilled, the situation is more complex, and complicated additionally by the fact that the contract involves a stock price, which is something that is fundamentally volatile so that one could easily argue that the conditions the contract was based on don't apply anymore.

Basically you have these options:

  • Send them an ultimatum and hope they still don't react. Then after it expires, your position is bullet-proof. But of course they could react by executing the purchase and you don't want that anymore.
  • Do nothing and hope they forget about it. Maybe this will happen, but if they suddenly do excute the purchase you'd have to get them to reverse it, and if they refuse and it goes to court, you'd have to argue why the contract should be considered void if you never stated an ultimatum or retracted your agreement. You might win this, but it's not certain.
  • Write them and tell them that since they failed to react to your emails and in light of information you have recieved in the meantime, you retract your agreement to the purchase. This puts you into a much better position in a lawsuit if they try to argue that the contract still stands, but of course it might remind them of it in the first place.
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When you replied that you intended to accept their offer you entered into a contract to provide the x number of shares specified in return for y amount of payment. Provided that the mail reached them they could have traded with you in a timely fashion (The industry standard worldwide is payment after exchange t+2 days). But since they didn't respond, regardless if this was by incident design, you have no obligation to stand by that trade.

I guess from your question that this is not a very professional counterpart, and that you're happy to hold onto the shares. Had this been a professional counterpart and you had an interest in having executed the trade you could have tried to enforce it 4 weeks and 3 days ago (going by your time here). But since this is not the case you're free to ignore the earlier offer. Strictly speaking you both failed to perform the agreed transaction, as you still have the shares and haven't been paid for them either.

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