People often feel tempted to skip the step of writing out a contract and signing it. They just discuss the details, shake hands and assume the other person will hold up their end of the deal. In fact, if that business partner is also a friend, they may even feel like it is insulting to ask for an official contract.
You can legally enforce a lot of different oral contracts — often called handshake deals. The problem isn’t that they don’t count. It’s just that they’re hard to prove.
Say you put an order in with a business owner in the area, and you expect it to be dropped off on Thursday. Thursday comes and goes with no delivery. You now have angry customers or clients that you can’t serve — say you’re a roofing contractor who now has no shingles or no materials. You may even lose a job or suffer damage to your reputation.
When you tell the other business owner that they hurt you financially by missing the drop-off date, they just tell you that no one ever specified a date. They knew you wanted the order in the next month, not by Thursday. It’s still coming, and they expect you to pay full price. If you refuse, they accuse you of breaking the contract.
You can know that they’re lying, but can you prove it? With no paperwork, the whole case is now based on weighing what you claim they said against what they claim they said. That doesn’t mean you can’t win that case, but it’s much harder. With a written contract, you protect yourself and your company.
No matter where you are in this process, be sure you know what steps to take.