Legal Risks of Handshake Deals in Business Maine
- Nationwide Legal Assistance
- Aug 7
- 5 min read
Understanding the Legal Risks of Handshake Deals in Business Maine can help business owners avoid expensive disagreements and uncertainty. Although verbal agreements can sometimes create legally enforceable contracts, relying on a handshake can make it much harder to prove exactly what the parties agreed to.
Business relationships often begin with trust. Two business owners may discuss a project, agree on a price, and shake hands. Problems can arise later when one person remembers the agreement differently.
A written contract can provide important evidence of the parties' intentions. Nationwide Legal Assistance can help Maine business owners connect with attorneys who can provide guidance regarding contracts, business disputes, and other legal matters.
Are Handshake Deals Legally Binding in Maine?
A handshake agreement may be legally binding if the parties establish the basic elements of a contract. Generally, a contract involves an offer, acceptance, consideration, and an agreement on sufficiently definite terms.
However, not every verbal promise creates an enforceable contract.
The circumstances surrounding the agreement matter. The nature of the transaction, the terms discussed, the conduct of the parties, and applicable laws can all affect whether a court will enforce an alleged oral agreement.
Nationwide Legal Assistance can help business owners seek legal guidance when they are unsure whether a verbal business agreement is enforceable.
The Biggest Problem: Proving What Was Agreed
One of the primary legal risks of a handshake deal is proving the terms.
Consider a situation where two business owners agree verbally that one company will provide services for $20,000. Later, they disagree about the project's scope.
One owner claims the agreement included five services. The other says it included only three.
Without a written contract, proving the original agreement can become much more difficult.
Emails, text messages, invoices, payment records, witnesses, and other documents may provide evidence of what the parties intended. However, these records may not answer every question.
1. Unclear Payment Terms
Money frequently causes disputes involving handshake agreements.
A verbal agreement may fail to establish:
The total price
Payment deadlines
Deposits
Late fees
Refund policies
Expenses
Change orders
Payment methods
A written contract can clearly establish these terms before work begins.
Nationwide Legal Assistance can help business owners find attorneys who may assist with reviewing or preparing business contracts.
2. Disagreements Over Responsibilities
Business owners may remember their responsibilities differently.
For example, one party may believe that a contractor agreed to provide materials, while the contractor believes the customer was responsible for purchasing them.
A detailed written agreement can identify who must perform each task and when the work must be completed.
Clear responsibilities can prevent misunderstandings and provide evidence if a dispute develops.
3. Problems With Deadlines
A handshake deal may establish that a project will be completed "soon" or "by the end of the month."
Those phrases can create uncertainty.
A written contract can establish specific deadlines, milestones, delivery dates, and consequences for delays.
Businesses should avoid vague language whenever possible.
4. Difficulty Resolving Disputes
When a written contract exists, the parties can review the document to determine their obligations.
A handshake deal may require the parties to reconstruct conversations that occurred weeks or months earlier.
That can lead to conflicting memories and expensive litigation.
Nationwide Legal Assistance can connect business owners with attorneys who can evaluate contract disputes and discuss potential legal options.
5. The Statute of Frauds Can Matter
Certain types of agreements must generally be in writing to be enforceable under the statute of frauds.
Depending on the circumstances, this can include certain transactions involving real estate, agreements that cannot be performed within one year, and certain sales of goods.
The specific rules and exceptions can be complicated.
Business owners should not assume that a handshake agreement is enforceable simply because both parties intended to make a deal.
Nationwide Legal Assistance can help business owners locate legal professionals who can evaluate whether a particular agreement needs to be in writing.
6. Ownership and Partnership Disputes
Handshake arrangements can become especially risky when business ownership is involved.
Two people might verbally agree to become business partners, divide profits, contribute money, or share responsibilities.
Later, they may disagree about ownership percentages or decision-making authority.
Written partnership or operating documents can establish important rights and responsibilities and reduce uncertainty.
7. Employee and Contractor Agreements
Businesses also use verbal agreements with employees and independent contractors.
Although some employment arrangements can exist without a traditional written contract, certain terms may need additional documentation or may benefit from written agreements.
Confidentiality, intellectual property, compensation, duties, and other terms can create significant disputes if the parties have different understandings.
Nationwide Legal Assistance can help businesses find attorneys who handle employment and business law matters.
Written Contracts Protect Both Sides
A written contract does more than protect the person who wants to enforce it.
It can protect both parties by clearly establishing what everyone agreed to do.
A strong business contract may address:
Services or products
Payment
Deadlines
Responsibilities
Termination
Confidentiality
Dispute resolution
Liability
Insurance
Ownership
Governing law
The appropriate provisions depend on the transaction and the parties involved.
What Should You Do After a Handshake Deal?
If you have already reached a verbal agreement, consider documenting the agreement as soon as possible.
You can send a written summary confirming the important terms and ask the other party to review and sign it.
Keep copies of relevant emails, text messages, invoices, proposals, receipts, and other communications.
If a disagreement has already developed, avoid making assumptions about your legal rights. Consider speaking with an attorney before making significant decisions.
Nationwide Legal Assistance can help Maine business owners seek connections with attorneys who may be able to evaluate their specific circumstances.
How to Avoid Handshake Deal Problems
Business owners can reduce their risks by making written contracts standard practice.
Before beginning a significant business transaction:
Put the agreement in writing.
Identify every party.
Clearly describe the services or products.
Establish payment terms.
Include deadlines.
Address termination.
Identify how disputes will be handled.
Have the parties sign the agreement.
Keep copies of the final contract.
Update the agreement when the relationship changes.
Taking these steps can prevent misunderstandings and provide valuable evidence if a dispute occurs.
Nationwide Legal Assistance can help business owners find legal professionals who can provide contract and business-law guidance.
Frequently Asked Questions
Are handshake agreements legal in Maine?
Some verbal agreements can be legally enforceable in Maine. However, enforceability depends on the circumstances and the type of transaction. Certain agreements must meet additional legal requirements, including written documentation in some situations.
Can I sue someone over a handshake business deal?
Potentially. Whether you can successfully enforce a handshake agreement depends on factors such as the terms of the agreement, evidence supporting the agreement, applicable law, and whether the agreement falls within a category that requires a writing.
How can I prove a handshake agreement?
Evidence may include emails, text messages, invoices, payment records, business documents, witnesses, and other communications showing what the parties discussed and how they acted.
Should business agreements always be written?
Putting important business agreements in writing is generally a safer practice. A written contract can clarify responsibilities, payment terms, deadlines, and other important provisions.
Can Nationwide Legal Assistance help with a business contract dispute?
Yes. Nationwide Legal Assistance helps connect individuals and businesses with attorneys who handle a variety of legal matters. Maine business owners can seek assistance finding legal professionals who may evaluate contract disputes and other business concerns.
What if the other party refuses to sign a written agreement?
Do not assume that the refusal automatically ends the relationship or proves that no agreement exists. The legal effect depends on the circumstances. Consider speaking with an attorney before proceeding.
Why should Maine business owners avoid relying only on verbal agreements?
Verbal agreements can create uncertainty about important terms and make disputes harder to resolve. Written contracts provide a clearer record of what the parties agreed to.
Nationwide Legal Assistance helps business owners connect with attorneys for business law, contract disputes, civil matters, employment issues, and other legal concerns. If a handshake deal has already resulted in a disagreement, obtaining legal guidance early may help protect your business interests.
Comments