In some cases, rather than drafting an official contract, you may be tempted to use a handshake deal. You may trust the other party and feel that it is just faster and more efficient.
For example, perhaps you run a business, and you are buying parts and supplies from a materials provider in town. You sit down for a meeting with the owner of the other business, and the two of you agree on the terms. It seems natural to just shake hands and expect the other party to honor their position.
But there are some significant issues with doing this, and it is often better to use an official contract.
Disputes and misunderstandings are more common
To begin with, misunderstandings and disputes are more likely if there is not a contract in place. Since there is nothing written down, it could be a simple miscommunication error. You may think that you agreed to certain terms that the other party genuinely believes they never agreed to. So, while a handshake deal can go smoothly, there are far greater odds that you are going to find yourself in a complex dispute than if you did the paperwork upfront.
Breaches are harder to prove
Additionally, without a contract, it can be very difficult to prove that the other person actually breached the agreement.
For instance, say that you believed the supplies were supposed to be delivered on a Monday, but they did not show up. Your business lost tens of thousands of dollars in productivity, and you want to sue the other party for that loss. But they say that they never agreed to make a delivery on Monday anyway, and that delivering the materials on Friday was always the plan. Even if you know that you are right, how can you prove it without a contract?
Contracts and disputes
Whether you are looking to draft a contract or resolve a dispute, it is critical that you know exactly what legal options you have. It can help to work with an experienced law firm at this time.