Can a handshake deal be enforceable? Sure. So can a spoken (oral) agreement when the terms are clear. We enter into countless oral agreements every day and we don’t even think twice about it. When you see that item at a garage sale that you can’t live without you might make an offer to the owner. Have you ever asked, “will you take $10 for this?” You just made an offer. And, when the owner says, “sure,” the deal is done—offer and acceptance.
In Montana, it’s still common for people to make a deal (enter into an agreement) by a handshake. I find this tradition admirable and foolish all at the same time. To clarify, I think it is very practical to shake hands and be done with it in many situations. However, the higher the stakes the more foolish this becomes. I’m reminded of the 37th verse of Matthew, chapter five, where the Lord said, “let your communication be, Yea, yea; Nay, nay: for whatsoever is more than these cometh of evil.” In a perfect world, we would all keep our promises and nobody would get hurt or taken advantage of, but we don’t live in a perfect world. I strongly believe in the concept that our word is our bond—whether oral or written. In another instance, the Lord said, “be ye therefore wise as serpents, and harmless as doves.” See Matthew 10:16. Whether your agreement is written or spoken keep your word. If the stakes are high, be wise, and put your agreement in writing.
Is a written agreement necessary…we’re best friends (or family)?
A written agreement is a good idea, especially when dealing with family or friends. I love the saying, “the weakest pen is better than the strongest memory.” I have three brothers and a sister. I love them each dearly, but we all have different personalities and we all remember things a little differently—that’s normal. In my practice, it’s unfortunate when I see family disputes over oral deals involving land, homes, or other precious items. In every situation, so much heartache and frustration could have been avoided by having a writing. In fact, there is a rule called the Statute of Frauds that helps avoid this type of drama. This rule makes it a requirement that certain types of agreements be in writing to be enforceable. For example, the conveyance of an interest in land should be in writing and a contract which cannot be performed within a year should also be in writing. Now there are ways to overcome these requirements through a showing of performance, meaning one or both parties to the agreement did what they were supposed to do under the terms of the agreement, but that involves unnecessary work. Had a written agreement been used in the first place the parties could at least go back and reference the exact terms of the agreement.
When there isn’t a written agreement you open yourself up to litigation and nobody wants to get into a “he said, she said” argument, especially when the parties were once best friends, good neighbors, or even related. Let me put it this way, if a hypothetical deal between brothers were to go south and it would cause either brother to skip Thanksgiving with the family then it should have been in writing (and probably not entered into in the first place). In summary, there is no clear-cut right or wrong answer as to what you should or should not contract for when dealing with family or friends—it’s based on personal preferences and comfort levels. However, it’s important to remember that family relationships and good friends are worth more than any agreement and if you think there is a high possibility of an agreement changing the dynamics of the relationship don’t enter it.