A handshake deal is similar to a contract in that you and another party or another business owner are agreeing to work together in some fashion. This is common when two people know each other before they enter into negotiations. They feel like they’re on good terms and they can trust each other, so they just shake hands on the agreement and move forward.
This can work, and it does in many cases. But it is still better off to have a written contract to back up what the two of you have discussed
If anything goes wrong, that record protects you
A handshake deal works best when both sides uphold their end of the bargain and there are no complications. And while this is always the goal with a business deal, it’s worth noting that it doesn’t always go that smoothly. If the other person doesn’t do as they said, having a signed record of what you agreed to can help protect you and assist you if you need to take legal action.
A written contract also helps to avoid any sort of confusion. For instance, maybe you thought the job was supposed to be done on a certain date but the other person didn’t realize there was any deadline. Or perhaps you thought you agreed on a certain price for the services, but they thought you settled on an entirely different number. These types of mistakes can lead to serious disputes in the future, things that you never intended, and having a written contract makes it far easier to clear up the details.
Whether you’re crafting these contracts are trying to resolve a dispute involving your business, it’s very important to understand all of the legal options at your disposal.