Topic: Scammer tag: PatrickHarnett - page 20. (Read 39315 times)

Joel - show us an example where your thoughts regarding "common mistake" are upheld in any court of law.

There was a common mistake that Patrick's loan portfolio did not have significant correlated risk due to Pirate exposure. If not for that mistake, neither side would have entered into the agreement.

Did you read the transcript? The agreement was not as simple as you make it seem, it was specifically a loan to finance a particular lending strategy. Neither side would have entered into the agreement if not for their mistaken common belief. The lender specifically wanted the assurance that the loans were backed by the strength of Patrick's portfolio. The agreement ties one to the other.

Aug 10 08:06:54   hey. your deposits still bs&t free ?
Aug 10 08:07:21   I run a slightly complicated business, but most of the deposit accounts I run are BS&T free
Aug 10 08:07:39   that's what the market wanted
...
Aug 10 08:10:17   in the event BS&T goes bust, I have more than enough assets to cover that
Aug 10 08:10:41   mainly because the 15,500 coins I hold on deposit are not invest in BS&T
Aug 10 08:10:56   well that works. i'd like to put 500 bitcoins with you

What do you think "well that works" means here? It's right before the offer.

Great. Except none of that applies. Which is why i've made the remark i've made.
THERE IS NO common mistake here. The contract was simple.

A lends X to B
B is obliged to return X+interest to A

That. Is. All.
Everything preceding that has no bearing on that contract. Can you understand that?

On the contrary, that's *all* a contract is. A written agreement may be evidence of what the agreement was. But the agreement itself is purely thought. A "contract" is a meeting of the minds.

There is no "thought" in a contract.

You would find it a more productive use of your time to spend the five minutes it would take to understand what a "common mistake" is rather than showing off your ignorance to the world.

A "common mistake" is when a contract is predicated on a belief that both parties shared without which they would not have entered into the contract and wherein the incorrect belief is not due to significantly greater fault on the part of either party. In essence, the parties made an argument that is about something that does not exist. In that case, it may impossible or inequitable to enforce the contract as agreed.

Simple example: Two parties both believe a truck contains 5,000 pounds of cherries. They make an agreement that one party will buy the 5,000 pounds of cherries in the truck from the other party. Due to a mistake equally attributable by both parties, the truck actually contains 4,500 pounds of cherries. It is now impossible (or inequitable) to enforce the contract as agreed -- would that mean the buyer must put 500 pounds more cherries in the truck? Or would that mean the seller must accept the 4,500 pounds of cherries?

First, your last sentence is factually untrue. They did not have to rely on Patrick's promise. They could have asked for any evidence they wanted. Second, it wasn't a "promise". It was Patrick's statement of his belief. Lastly, this smacks of the same "due diligence" argument rightly ridiculed regularly in this forum. You can't fault someone for not doing the impossible.

Exactly. In this case, the loans that formed the basis of the contract turned out not to be what both sides thought they were through a failure shared equally by both sides.

You are making no sense. Are you living in the vicinity of a strong reality distortion field of some kind?

1) you ask me for money,
2) i ask you if you're a reputable, honest member of the society, with a steady income,
3) you say yes,
4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
5) you gamble 1/3rd of it, waste 1/3rd on hookers and snort the last 1/3rd
6) you fail to return the principal
7) you fail to pay the interest

In the JoelKatz world, that means we're both equally guilty. And it's a "common mistake", whatever that means.
Here's how the above sequence of events looks like in the real, grownup world:

4) i lend you the money, we sign a contract agreeing on the interest rate and date of return,
6) you fail to return the principal
7) you fail to pay the interest

THERE IS NO SUCH THING as a "common mistake" in contracts. Contracts are an if-then thing. IF i give you X, THEN you return X+Y. IF you fail to return X+Y, THEN you default. That's all there is to it.

That's a bad analogy. Patrick Harnett had full control over who he lent to in order to reduce correlated risk. He had information on what exactly applicants claimed to be using the money for and the ability to demand as much evidence of this as necessary. Based on this evidence, he falsely assumed that his borrowers weren't exposed to Pirate and got screwed - that's the incorrect belief that's the problem here, and the people who loaned Patrick money didn't have this information! They had to rely on Patrick's promise that he was competent to vet applicants and that he'd made sure not to lend money to people who'd just invest it in Pirate.

A closer analogy would be if one party entered into a contract in which they gave another party money which the second party was to buy a lorry-load of cherries with, and they'd split the profit from reselling them. If the second party then goes and buys off the back of a truck in some parking lot and gets crates full of rubble instead, which party should be liable?

Another use of the word "default".

I propose a "Default Tag" be used for this type of situation until the principle is paid.  The defaulter could apply for removal and we could have a 1 week comment period where if people who are actually owed principle and dispute the request with hard evidence only.  If all disputes are settled or none of the known creditors come forward, then the tag is lifted.

That doesn't mean that a "scammer" tag is what is needed.  It sounds like we have another label and needs to be invented for things of these nature ("In Default" tag, etc...).   There was risk involved when you put deposited your money.  He is making a solid effort to pay people back and keep is creditors apprised of the current situation.  Scamming in my book is a very specific thing that has facts surrounding it that show the person's true intent. 

Intent is the most important aspect of giving this tag out.  We need to make the distinction on someone one intends to do something and someone who doesn't.   If you think otherwise, I would like to see reasoning what else is more important.  Don't mentioned, be broke his word, that isn't scamming per say, externalities do happen and when it did happen in this case, he didn't disappear like a scammer, he is putting real effort forward to make good. 

Well I think he just admitted that patrick should not have his liability decreased just as a robber would not, so he deserves the scammer tag. Now that that's settled, I'm wondering why Joel cares about bitcoin at all. The only way to have a totally secured loan is with a central bank, you could secure it with a car, home, precious metals, but all could collapse in price. So I guess bitcoin is doomed to fail.

Explaining that the failure that resulted in the loans going bad was due to a mistake made jointly by both parties and thus not equitably allocatable entirely to one of them. Patrick is as much a victim here as those who loaned him money -- assuming he eventually makes some kind of reasonable settlement for a portion of the principle.

Then what exactly are you doing here in the robber punishment thread?

There's nothing wrong with blaming the victim when the victim is in fact at fault. The error in blaming the victim is when you attempt to use blame for the victim to excuse or reduce the culpability of the perpetrator.

If you walk through the worst neighborhood on a dark night with $100 bills sticking out of your pockets and get robbed, you're an idiot who deserves some blame for the robbery. However, the robber certainly can't use this to reduce his culpability. There's no "he was asking for it" defense to robbery.

Nope. I never said that.

Well, I don't because my checking account is insured by the government. If it wasn't, banks would likely make provisions to cover runs in their deposit agreements.

No, there are other ways to secure deposits. It's kind of complicated to discuss in the thread, but so long as there's sufficient equity, you can protect against a liquidity crunch. It's hard to protect against an equity crunch though -- if a large number of loans go bad, then lenders will lose money. So far as I know, there's no fix for this other than specifically buying insurance. Even then though, of course, if things get bad enough, the insurer can go broke, as happened during the recent global economic collapse. If don't know how to fix that.

That's correct. That was Patrick's mistake. And I agree that gives him partial culpability for the loans going bad. However, those who loaned Patrick money also believed that his loans had little Pirate exposure and not because Patrick said so, but because Patrick explained his business model.

The blame the victim mentality here is getting ridiculous. We don't blame women when they are raped so why do we blame people for getting thieved. Everyone takes risks in life they regret and misjudges others' characters, I'm sure even Joel has done it. It doesn't make them an immoral person

I did, so your saying that you shouldn't expect to be able to withdrawal your money from a bank anytime you want? You can easily look up the most popular us banks and see that they loan out your money 10 to 20 times their deposits, so they are just as risky if not more than Patrick. But you don't question being able to make a withdrawal from your checking account. By your ideas there wouldn't be any secured deposits with bitcoin as bitcoin won't ever have a "federal reserve". All investments have risks that's why banks make a profit is to calculate risks and remove them from the customer. Patrick basically said it was a secured loan, when he said he had money to cover it if pirate would fail.

If I were to take Bitcoins from someone and told them I was going to put those Bitcoins in my special MoneyMultiplier™ and they agree that is fine and lend me the money then it turns out I have no such thing and don't have their money anymore because my MoneyMultiplier™ ate it and never multiplied money in the first place, it's a common mistake because they believed me when I said I had a working MoneyMultiplier™ therefore the contact is null and I'm not considered in default when I can't repay them like I agreed?

Because when there's a common mistake, the contract is about something that doesn't actually exist. For example, if both the buyer and seller believe there's 5,000 pounds of cherries in a truck and agree to sell the 5,000 pounds of cherries in the truck for $10,000, the contract is void. There's no way to enforce it because its subject doesn't actually exist.

The issue is not that one side can't live up to the agreement. This issue is that the agreement was about a loan portfolio that both sides believed had particular attributes it didn't actually have. The agreement was about something that both sides believed to exist but that did not actually exist.

That's correct. However, don't forget that this assumption was shared by those who loaned money to him. Read the transcript.

Somehow, I think we're talking past each other. Please re-read what I wrote. If you don't understand it, perhaps I can find a way to make it clearer. Your response reflects a complete misunderstanding of the clear meaning of my words. My whole point is that both sides believed there was no significant Pirate exposure in the loans, and had either side believed otherwise, the agreement would not have happened. I think you agree with me on this, right?

So you're against lending, btc business, money, whatever. Your problems, I don't care and they don't amount to arguments against contracts. Seek help.