Was There A Contract?

in #steemit9 months ago (edited)

If Ned's stake was under a true obligation, it would be in the form of a contract. Setting aside the fact that there is no written, much less signed contract that looked anything like the one I'm showing below, we can assume that it's closer to a verbal contract.

TL;DR: No, Both Ned and the community was in full breach of contract by HF17/18 and the witnesses did nothing to avoid it. Therefore, no valid contract currently exists.

There are requirements under many juridictions, like:

  1. Both parties must know of the existence of the contract. Let's stipulate that Ned and the community were aware of the contract.
  2. The contract must have an expiration. Let's stipulate that Ned and the community implied 99 years as the contract term, so we don't have to worry too much about when it began and when it would end.

Therefore, let's walk through it to see if the obligation currently has the rest of the elements of a contract, as it evolved and became more specific:


An offer is a promise to act or refrain from acting, which is made in exchange for a return promise to do the same.

For example, Ned makes an offer (promise) to the community: If you invest in Steem, I will hold on to this large pile of pre-mined Steem out of the reward mechanism as if it didn't exist, and off exchanges, thereby functionally reducing the supply. In addition, if any part of it ever does go to an exchange, it is only for development of the platform.


Acceptance of an offer is the expression of assent to its terms.

Community accepts this offer from Ned with the intent to devote resources to the Steem project in the form of time, effort, mining, and funds.

At this point, mining also begins (anticipating price speculation down the road), though it's not really part of the contract yet.


Each party to a contract must provide something of value that induces the other to enter the agreement.

Ned keeps the funds off the exchange and refrains from using them to vote for witnesses and content. The community begins to mine and design a plan to improve the platform.

Price speculation continues. At this point, if this were a timeline, the community is, in theory, already taking profits on their investments. Some people get into speculation, some people get out of speculation.

At this point, many in the community have already benefitted from the contract if they mined/speculated, even though it's only in Consideration phase.

Also during this phase, HF14 introduces the ability to decline voting rights, which Ned never enables. This should be seen as a warning to witnesses that they may need to act because, although late to the discussion, this operation would ratify half of the Consideration element on-chain.

It should be noted that some founder funds are being used to vote for witnesses and content, but this is not part of the contract and should be excused for this evaluation.

Mutuality of Obligation

Both parties become bound to perform their obligations or else the agreement as if neither party is bound to perform.

Ned continues to keep the stake locked up, never utilizing it for anything, as promised, with the one exception of only selling in certain amounts to directly fund development. It should be noted that the price of STEEM has risen enough for this to be feasible.

The community works on the platform and/or buys STEEM to hold as a store of value.

This is where we have a problem. Ned did not keep the stake locked up. As blockchain features were added, (e.g.: delegation), the stake became partially unlocked.

Remember that both parties are bound to perform their obligations or else the agreement as if neither party is bound to perform.

Therefore, the community was under the false assumption that the contract existed, when in fact, it (or some of it) was in breach the moment the stake became delegated.

This does not mean Ned was the only person who needed to breach the contact to make it invalid. It means the community has justification to do something.

One could speculate that this is when the community was in its rights to bring a class-action lawsuit against Ned, but they didn't.

More importantly, the witnesses knew, or should have known, that they could have deployed a softfork to bring Ned back into the contract, but they didn't. Instead, they authorize the breach for an additional 6 hardforks.

The witnesses may not have had the technical ability to deploy a softfork to limit Ned's activity. But their job was to authorize hardforks and they continued to do so, knowing Ned was in breach.

Furthermore, by HF16, the witnesses authorized the 13-week powerdown which further undermined the effectiveness of declined voting rights.

By this time, I assert that the contract is functionally abandoned.

Competency and Capacity

Just means that the person is not a minor, not mentally incapacitated, and not intoxicated.

An interesting note is that people who assert that Ned had a contract with the community must also assert he was not a minor, was not mentally incapacitated, and not intoxicated when the contract was agreed upon.


Pretty much my thoughts, just with fancier words.

Why Steemians are so naive?

Fact: Ned has gozilion Steem

Option 1: He wants to sell it at some point. This situation

Option 2: He doesn't want to use it

  • Option 2.1: Why was it produced, at all - makes no sense
  • Option 2.2: He can burn it, so all of us can be sure - makes no sense
  • Option 2.3: Ha can just give it to the community - pointless + makes no sense

Are you people 3-years old children or grownups?

 9 months ago 

I guess they want Ned back./s

Complete morons, just they always been

They've always been.
They don't think he'd want to sell his stake if he wanted out. lol What a fucking joke.

There was no contract. I have no doubt Ned made promises. Companies are started and founders receive stake or common shares. It's Ned's property to do with as he wishes. He decided to sell it. If the witnesses wanted to pin this down, it should have been done many, many moons ago through the chain. I believe Justin Sun can and will put more stake in to protect his investment.

What the exchanges did should not surprise us knowing how it has been preached for years what a terrible idea it is to park tokens there.

Prepare for the inevitability of a fork.

But what will happen now @inertia,justin and his team said they didn't know? What will be the future of steem since he's not willing to use his share (steemit.inc) as an improvement to steem?

 9 months ago 

Why do people think his stake is the only way he can improve Steem? He can use off-chain budgets for that if he wants to.

thanks.. that makes me feel relieved.. Well I trust our communities that will do their best to protect our lovely platform.


délégation could be seen as promoting/funding development on chain which is where the stake was meant for

Posted using Partiko Android

 9 months ago 

It's fine to argue that projects delegated to by Ned were all in the spirit of the improving the project, apart from the actual contract terms. Some would disagree, but let's assume that every single project that got delegation from Ned were seen as promoting/funding development.

My point is not that the delegations themselves were the problem. My point is that after HF14, Ned had the opportunity to make the contract formally recognized on-chain. Yet the witnesses instead continued to approve hardfork after hardfork.

HF14 - Ned can formalize the contract on-chain but doesn't.
HF15 - From a consensus perspective, these are bug fixes. Witnesses apparently prefer to hardfork than hold Ned's feet to the fire, which is perhaps understandable due to the bug fixes.
HF16 - Switched to chainbase and change to 13-week powerdown. Witnesses again prefer to hardfork over upholding the contract on-chain.
HF17 - Delegation added. Witnesses again prefer to hardfork over upholding the contract on-chain.

My point is, the opportunity to formalize the terms in HF14 were not enough of a sticking point to witnesses. They instead preferred to move forward, evolve the platform, and in my view, abandon the contract.

The witnesses had the opportunity and could have stopped further hardforks until the contract was adopted on-chain.

I see your point but in my eyes, there is no breakpoint of the verbal contract.

Not grabbing the chances to formalise the contract does not imply the verbal contract is broken. If me and you make a verbal contract, it doesn't have to be written to make it valid even if we do have pen and paper

So i am sorry to go straight to the point as lawyers do but as such, i am interested in the section obligation where you stated delegation was not adhering to the initial agreement while it may be argued it is, although....cases like sssweetsss will be hard to defend... :-)

Seriously good post though, nice to read the applicable laws

 9 months ago 

The thing about verbal contracts is that although they are enforceable, all parties still have to stipulate the facts and submit those facts as evidence.

In a sense, a verbal contract literally becomes written once there's a dispute to adjudicate. This is great because it avoids paperwork for simple agreements, only requiring such paperwork when there's a dispute. Verbal contracts cannot be argued until they are entered into evidence.

Judge Judy: Did you verbally agree to build a wall for the defendant in exchange for chickens?
Plaintiff: Yes.
Judge Judy: Did you verbally agree to give chickens to the plaintiff to the in exchange for building a wall?
Defendant: Yes.
Judge Judy: Did you build the wall?
Plaintiff: Yes.
Judge Judy: Did you give chickens?
Defendant: No.
Judge Judy: Why not?
Defendant: It was just a verbal contract.

That would be an invalid argument because the verbal contract was agreed upon and stipulated on the record.

I have a hard time imagining a scenario where all of the parties stipulate the facts related to the pre-mined stake situation, much less enter them as evidence for a trial.

So, it is OK to lie to us because lawyers?

 9 months ago 

Who said anything about lawyers? I'm talking about generally accepted definitions that reasonable people can use to logically determine if there's an obligation.

I'm happy to explore any consistent system that uses base principles to determine facts. But I also realize that many of those formal "law-based" system claim to look like one of those systems. And I know those law-based systems are fundamentally compromised.

What I think is hilarious is when I point out these ideas, I get not just caselaw thrown at me, as if caselaw is perfect, but I also get people like you who throw out all statist examples too. Isn't that at least interesting?

Very interesting.
Still wondering about the depth of your willingness to be deceptive and to profit from the advantage.

Clearly the community understanding, those here long enough to have an idea of the ramifications, was that that portion of the ninjamine was to fund development.
Had Ned clearly stated his stance that we were subject to his whims for a dump that could turn our thousands into pennies I think nobody would have agreed to continue putting energy into making only Ned richer.

Allowing us to move forward under this deception, and then to profit from it, shows a lack of class, iyam.

 9 months ago 

Fund development? You want Tron to put the stake into the SPS when all he has to do is set up a budget for development, if they want?

I don't want him bull dogging the chain with stake that has had its status changed from neutral to active.
Too many people would have the rug jerked out from under them.
I also don't want him swallowing the inflation by content voting.

As long as consensus is still community controlled, he can do as he pleases, IMO.
I think the exchanges need to learn a harsh lesson about what they did.
JS appears justified, to me.

I hope he dumps so I can pick up some penny steem.
I was hoping Ned would do it.

Ideally, he starts posting, tells us what he wants, and he makes the best steemizen, evah!

Let me sum it up:

  1. Witnesses didn't manage to put Steemit Inc.'s "promise" into a legal contract in the past
  2. Ned failed as a CEO of Steemit Inc. with so many broken milestones
  3. Ned looking for an exit, sold Steemit Inc. to Justin Sun
  4. Justin Sun as a "business man" is somehow going to cash out Steemit Inc.'s stake for a profit
  5. Ned and Justin made a profit at the expense of the Steem community