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Danger of handshake deals

Updated: Feb 17

Many years ago, when I first hung out my shingle, I wrote about the danger of “handshake deals.” At the time, coronavirus was not even a consideration; the number of verbal agreements turned bad simply alarmed me. Today, handshakes are ill-informed, not only because of the challenges of proving the formation of a legal contract, but also because we can now contract a deadly virus by touching another human being.

Friendships, romances, and business relationships all begin with trust. The parties put a lot of faith in each other. Business people used to shake hands and enter into arrangements blissful and starry-eyed. Then, they ask me to give a quick once-over to the documentation of their relationship.

Call me jaded, but I ignore the declarations of complete faith the business people express about each other. Instead, I examine every word, because contracts often contain hidden traps that could come back to bite my client if things go sour. To me, each contract is like its own world containing the rules for governance of the relationship. When things go well, it will be filed away and maybe even disregarded; I’m thrilled if that’s the case.

A well written contract aims to protect parties when things don’t go as planned. True, if things go completely sour, even invoking certain provisions of the document may not be enough. In that instance, lawyers may need to be summoned, dispute resolution contemplated, demand letters drafted, litigation considered. The written agreement will still probably be in the spotlight at the heart of the controversy, though. Isn’t a solid contract so much more reassuring than a handshake deal based on trust?

Photo by Chris Liverani on Unsplash

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