I`ve seen it many times: entrepreneurs make handshake agreements with others and try to save on legal fees. Counterparties are often contractors, employees, investors or co-founders. These entrepreneurs are not entirely wrong to do so. Oral agreements remain mostly enforceable. Here is a brief summary of when handshake agreements can be applied to the court, when agreements need to be written and why it`s always a good idea to write everything down. What you need to do to make an oral agreement enforceable Most agreements can be oral. An exception is agreements that must be entered into in writing by the Fraud Act (see below). Like any other contract, oral agreements are enforceable if they have all the required conditions: an offer, an unconditional acceptance of that offer and an exchange of counterparties. Contracting parties must be able to enter into contracts (no minors, please) and they must be consensual, i.e. have a “head meeting.” The existence of oral agreements can be difficult to prove: the word of a party may not suffice. You need to find other evidence of a contract, such as receipts, emails, photos, memos, third-party testimonials, etc.
We are always committed to making handshake agreements. Ordering a meal in a restaurant requires an oral agreement. You have agreed to pay for the meal the restaurant serves you. Filling your tank with gasoline requires a tacit agreement that assumes you pay for the fuel. There are state and federal laws on the application of oral agreements that constitute a contract between two parties. Individuals considering a major oral contract should seek legal advice. You will be surprised to learn that oral agreements may apply under Australian law. A handshake agreement is also called the gentleman`s agreement and means an informal agreement between two parties. A handshake agreement can be entered into in business or personal matters. It is based on trust and is based on the honour and integrity of the parties involved. As a general rule, the law does not require that most agreements be reduced to writing to be enforceable. An oral contract or handshake agreement may be applicable in the same way as a written contract.