Shake on it.

We all love a handshake agreement. But dependable relationships can become a source of constant headaches and nuisance when things turn sour. With the benefit of hindsight, you may wish you were better prepared with a well written contract. Here are 5 basic reasons why you should put your handshake agreements in writing.

1. Accountability

A written contract holds the parties accountable to a set of expectations and deliverables. It creates certainty by detailing:

• what goods or services are to be supplied;
• the timeframes for delivery; and
• the payment terms.

2. No surprises

A written contract creates a duty between contracting parties. If a party is unwilling to commit to a written contract, don’t be surprised if that party fails to perform its obligations when the time comes.

3. Enforcement

Whilst an oral agreement can be valid, a written contract is easier to enforce at law. A party’s rights and duties in an oral agreement can be difficult to ascertain. That’s why courts are often hesitant to enforce oral agreements.

4. Confidentiality

It’s crucial to keep any sensitive business information confidential during negotiations, and during the term of a contract. If a written contract clearly states each party’s confidentiality and non-disclosure duties, they can be held responsible for misusing that information. Clearly defining what information is confidential can also help prevent inadvertent disclosure, which as we know, can have significant consequences.

5. Standing on shaky ground

A written contract is an official record setting out the terms agreed by the parties. If a disagreement or dispute arises between the parties as to the terms of contract, the parties can defer to the contract to resolve any misunderstanding. Following a dispute resolution process (eg mediation) set out in a written contract is often a more efficient alternative to litigation, which can be time consuming and expensive.

Shake it off

‘Handshakes’ should be documented via a detailed, well written and unambiguous written contract. This will likely result in numerous practical and cost-saving benefits in the future. Most importantly, it will help prevent disputes.

Reach out for a handshake with a Bespoke lawyer to make sure that your business transactions are documented in writing, because remember: the devil is in the detail!