Musk admits there was no written agreement with OpenAI when it was founded

Elon Musk admitted in court that no written contract on the terms of his donations to OpenAI existed, either when the company was founded more than ten years ago or later.

A founding without paperwork

OpenAI was created in 2015 as a nonprofit research organization backed by several tech entrepreneurs. Musk was among the first co-founders and donors, who put significant sums into launching the project.

According to him, the parties relied on verbal understandings: OpenAI was to serve humanity as a whole, remain nonprofit, and not answer to the interests of corporate shareholders. Musk considered this understanding the foundation of the project, but it was never put on paper.

In 2018 he left the board of directors, citing a conflict of interest with Tesla and SpaceX. No formal documents on the fate of the donations or the organization's mission were signed then either.

The admission weakens the lawsuit

In 2024 Musk sued OpenAI, alleging that the company breached its obligations to donors by starting a commercial restructuring. His argument rested on the existence of an "original agreement" that the organization would be nonprofit.

Now the plaintiff himself admits that no written terms existed. This significantly complicates his legal position:

• Without a written agreement, it is hard to prove a breach of specific terms
• Courts are reluctant to recognize verbal agreements in corporate disputes
• OpenAI can argue that there were no legally binding restrictions
• The organization's nonprofit status does not formally prohibit it from changing its structure

Context of the conflict

OpenAI is actively moving toward becoming a Public Benefit Corporation (PBC), a form that lets it bring in outside investors while formally keeping its mission. Meanwhile, Musk is building xAI as a direct competitor and publicly criticizes OpenAI's transformation.

The case is growing: the parties have exchanged dozens of procedural filings. At the heart of the dispute is whether OpenAI's conversion violated the founders' original intentions, even though they were never put on paper.

"There was no written agreement or contract on the terms of the donation,"

Musk admitted in his testimony.

OpenAI insists it acted strictly within its charter and corporate documents, which contain no restrictions on later commercialization.

What this means

Without documented terms, there is formally nothing to breach, which seriously weakens Musk's position. The outcome will depend on how the courts interpret the founders' verbal intentions and the corporate documents of 2015.

The precedent matters for the whole industry: it will determine how far AI companies are legally bound to their original nonprofit declarations.