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IANAL, but AFAIK returning money means, legally, that you agree that you did something wrong, therefore if you return the money the investor might be able to sue you with further litigation.



Not trying to sound like I am "Mr. Lawyer", but I did take a class on evidence this semester. But, more to the point:

If (s)he were to try and settle the dispute, it cannot be used against the defendant in court to prove negligence or wrongdoing. Ironically, this is so that people will be willing to settle disputes out of court, instead of clogging the court system with tons of suits.

So, giving the money back, in an attempt to settle the dispute, does not enable further suit.


Is that a blanket rule for attempts-to-resolve-disputes, or does it only apply to negotiations after a lawsuit has been filed?


All attempts to negotiate or compromise cannot be offered in court as proof of liability.

Rule 408. Compromise and Offers to Compromise

(a) Prohibited uses.—Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction:

(1) furnishing or offering or promising to furnish or accepting or offering or promising to accept a valuable consideration in compromising or attempting to compromise the claim

Those are the Federal rules. They vary from state to state, but most are pretty close.


furnishing or offering or promising to furnish or accepting or offering or promising to accept a valuable consideration in compromising or attempting to compromise the claim

Does "the claim" here mean "anything people were arguing about", or does it specifically mean a lawsuit which had been filed?


A claim means any dispute for which one party believes it is entitled to a remedy. Its not necessary that a suit have been filed.

If you're worried about ways settlement offers can potentially be used against you, remember that the rule only bars using such evidence for the purpose of proving liability. As long as its offered for some other purpose, it can be allowed in. And once a jury hears the evidence, in practice it doesn't really matter for what purpose they were told to consider it.


Thanks! I doubt I'll ever need to know this stuff (I certainly hope I'll never need to know it!) but I always like learning about how such systems work.


I think lawyers usually draft agreements as "the parties agree that X is making a voluntary payment to Y and admits no wrongdoing" or suchlike in order to avoid that problem. Hopefully the submitter is having their communications reviewed by a lawyer in order to avoid glitches like that.


This doesn't necessarily follow. It depends on the terms of the deal. The OP should talk to a lawyer.


Not really. He's an investor. You can buy back shares from investors and troublesome co-founders, it happens all the time.




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