How to Keep the Handshake Deal Alive and Well

This is actually an article that I did not want to write. However, I have to take business realities as they are and listen to popular requests. I find oral contracts to be bad business decisions, something I wouldn't advise for any client and a complete recipe for disaster. 

Reality is that some businesses and individuals still believe that a handshake and their word is the only way business should be conducted. Certainly a handshake and trust are a lot easier to understand than a two-page contract with fine print and the use of legalese that only your attorney can understand. However, you cannot put your attorney in your back pocket every time you make a deal or enter into an agreement. 

Please note that while most oral contracts are enforceable (although it's nearly impossible), there are some contracts that must be in writing to be valid. These types of contracts include:

1. An administrator of an estate to pay a debt from his or her own accounts
2. Paying the debt of another person
3. Sale of real estate or granting an interest in real estate
4. Leases longer than one year
5. Services that last longer than one year
6. Health care provider guarantees
7. And, my personal favorite, newspaper subscriptions.

There are likely other statutes hidden in the Florida statutes I am not aware of that require a written contract as well. 

How to Protect Yourself in a Handshake Deal

Those of you who despise written contracts and believe a handshake is the way to go should at the very least engage in these simple and effective ways to increase your protection. 

First, before the work starts, send a nice email or letter to the other side thanking them for doing business that also includes all the terms of your agreement. 

For example, if you shook hands with a painter to paint your garage, send a letter saying, “I wanted to thank you for agreeing to paint my garage. I am sure the flamingo pink we agreed upon will go very well with my house. I have paid the agreed amount of $300. You said you would be here Tuesday to start and complete the job and I will have everything ready for you. Should you have any questions or if my understanding of your work is incorrect, please let me know.  Thank you again.”

In essence, you are sending a thank you letter to the painter that encompasses your agreement and yet comes across as a welcoming introduction to your business relationship. If the painter simply files it away, and there is a dispute in the future, you are in pretty good position to demonstrate what the terms of your agreement were. The painter could always respond or call if he or she believes your letter does not accurately reflect your agreement. 

On the flip side, when the painter is finished painting the garage flamingo pink, he or she would be well served from a good-will perspective and from a business perspective to thank the homeowner perhaps in the following manner:  “Thank you for the opportunity to serve you this past week.  After I completed my work, you said that you were very pleased with the final product, which is what we strive for. Please remember that if you experience any chipping or problems with the paint, the paint manufacturer has a warranty to replace your product. Now that my work is complete and finalized, please feel free to contact me with any additional painting needs you may have in the future.”

The painter in this scenario has confirmed that the homeowner accepted the work, that the work was satisfactory, that the painter has completed his obligation to the client, and that any warranty issues regarding the paint should go through the manufacturer. The homeowner can either file the letter away or respond with any specific issues he or she experienced to create a paper trail. 

These simple steps for those with “contractophobia” can go a long way in any future disputes and also increase the goodwill between you and the other party. Of course, I believe that detailed contracts, invoices, and written negotiations are absolutely preferred. However, for those who live in the real world with business practices that revolve around handshakes, these steps can help memorialize the meaning behind the handshake. 

Notably, the flamingo pink is based on the color of my father’s house for many, many years, and he continues to absolutely refuse to enter into written contracts. Despite two lawyers in his family, he requires a handshake and trust. When he learns about this whole “Internet” invention, perhaps he will read my article too and take my advice and your responsive comments into consideration.