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Is the Handshake Deal Gone or Is It Still Enforceable?

I was talking the other day with a friend about how different our legal culture was in the US regarding contracts when compared to other countries. He said that he felt that handshake contract was all but dead in the US.

Unfortunately, there is some truth in this statement, but there is also a great deal of misunderstanding.

Yes, a handshake can still be considered a contract in a majority of instances. What has to be determined is whether something else may be needed to either insure enforceability or to show that the parties did agree to do something together.

Here are just a few questions to be asked to see if you have a valid contract:

  • What is the custom and usage in the industry?
  • Does the contract require some other actions, such as signing over a title or deed?
  • Has one party taken some reasonable and foreseeable action based on that handshake that was to his/her detriment?
  • Was there some objective consideration being promised by each party? (You do this and I will do that.)

The answers to these questions may affect whether an enforceable contract has been formed with just a handshake.

There are many other questions that may have to be addressed based on the particular handshake contract, but don’t think you don’t have a contract just because it’s not in writing.

In the US, we prefer written contracts to make sure the parties have reached a clear understanding of what is expected of each other, but that does not preclude the validity of the handshake as an enforceable contract.

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