Handshake Deals would Ruin your Business

Unless you have agreements in writing, you might not have a proverbial leg to stand on.

We’ve all done it before: you get an offer, you like what you hear and you shake on the terms.

Sure, it might help get the job done more quickly, save you legal and admin costs and more often than not you’ll get exactly what you agreed on. But quite often nowadays an unexpected issue can rear its ugly head. Bad weather might kick in, sales targets might fall short of what was promised, or perhaps a quote balloons out to triple what you budgeted.

Handshakes might still seem like one way to do business, but in the big and complex world in which we live, handshake deals are not getting much of a shake anymore. In Nigeria, like the rest of the world, there are a few contracts that by law must be in writing, but most contracts do not have to be in writing to be valid and enforceable.

Like any contract, to be enforceable the handshake deal must have an offer that is accepted in exchange for some form of compensation. The problem with handshake deals and other oral contracts though is that it can be exceedingly difficult to prove their existence, let alone that the three necessary elements to make a contract valid were there at the time the contract was made.

Written contracts have an advantage over handshake deals in this respect in that their very existence is proof that there was a “meeting of the minds.”

Written contracts have an advantage over handshake deals in this respect in that their very existence is proof that there was a “meeting of the minds.”

For handshake deals and oral contracts outside of the real estate sales context, the party seeking to enforce the contract will almost always have an uphill battle to prove the agreement existed at all. This is where written communication and witnesses can come in extremely handy. While neither can take the place of a written contract, both can be used to prove the existence of an agreement.

For example, if two parties meeting at a public conference within earshot of others or (even better) along with others agree to a deal, the witnesses to the deal can be called to testify as to what they heard and saw. E-mails sent by one party to the other seeking to enforce the agreement can also be valuable in proving the existence of the agreement and its terms.

Given the numerous obstacles that a party seeking to enforce an oral contract will face, the best way to proceed if there is an oral agreement is to have it reduced to writing. This means the agreement is written down, the parties agree to its terms, and both indicate their agreement (usually by signing). This simple act can save a great deal of difficulty and litigation expenses down the road.

Consider also that it is very possible to find yourself in an oral contract without realizing it and certainly without recognizing that it really needs to be put into writing. In this situation, it is best to look at the value of the contract – is it for a N500k purchase or a guarantee that a warranty for millions of Naira will be honored? The more the contract is worth, the more wary you should be of not getting something in writing to memorialize the parties understanding.

The moral of the story is: don’t risk your business’.
Instead, save the handshake for a ‘thanks, job well done’.

This is also an excellent time to seek out legal advice from a qualified and experienced business lawyer who can assist you with evaluating the situation and, if need be, turning the oral contract into a written one.

At AffordableLaw you can get a well drafted agreement for as low as N15,000 ($41). Visit www.affordablelaw.ng to get your legal documents drafted for you today.

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