It is common for some people to get business done with a hearty laugh, a handshake and that quick verbal guarantee, “we have a deal!” The problem is, without a proper contract, that friendly promise is just that – a promise with no clear terms, no paper trail and zero protection if anything goes wrong. In Florida, this can mean a costly courtroom battle that could go on forever.
Verbal agreements, especially if done with someone you have known a while and trust, are more common than you think. But remember that not having the proper contracts in place means you may be gambling with the future of your business.
Why verbal agreements are risky
Trust is invaluable. But as much as it is a good thing to have in your business partner, it will not hold up in court like a proper contract will. The Statute of Frauds states that business agreements must be in writing for them to be enforceable. The hard truth is that it is just impossible to prove verbal promises however detailed they can get.
When you need to convince a judge about what the verbal agreement included, it is unlikely that they will believe it without documentation. Without the paper trail, everything comes down to credibility. If you are new to the industry, you might not have built enough to use in court.
Common disputes from handshake deals
When verbal agreements fail and two parties end up in a courtroom, their issues usually fall into a few familiar categories. These disputes normally include:
- Payment disagreements
- Partnership misunderstandings
- Real estate or lease promises
- Quality standards
- Profit splitting
Imagine having to spend all that money on litigation that eats up time, money and energy when you should be focusing on your business instead. All that unnecessary stress when you could have just put everything in writing at the beginning.
How to protect your business
Thankfully, there are many ways for you to avoid these issues. For one, you can put everything in writing, even the simplest details. You also need to create a paper trail with texts or even emails. Use language or phrases like, “confirming that we are good to go as agreed” to establish that the conversation is not one-sided. If you are investing a huge amount of money, you can have professionals review the agreement to avoid loopholes or vague wording.
Put that promise on paper
Although handshake deals feel lighter and friendlier, they can easily turn into expensive courtroom nightmares. Prevent losses on both sides by taking the legal route and making sure you have all the necessary documentation. Follow proper procedure and save yourself the trouble of having to deal with a legal battle later.