Say you’re talking to a new vendor and you decide that you want to order from them. You offer to email them a contract, but they tell you not to worry about it. They just want to do a handshake deal without all the formal paperwork.
There are benefits to doing it this way, such as increased flexibility if there are unforeseen changes in the future. When you don’t have strict rules that you have to follow, you can adjust as the circumstances change. But there are also some serious problems with using a handshake deal.
You can’t look back on those details
There are obvious risks to doing a handshake in the sense that the vendor may simply breach this verbal contract and then claim that they never agreed to the terms that you remember. And this makes it very difficult because you can’t look back at the details and check and see what was agreed upon. If they say the price was different than what you remember, how do you decide who is right? What if you really did forget some of the details? Whether you’re right or wrong, you don’t have anything down in black and white that you can refer to.
This may make it harder to take legal action if you believe the vendor has broken the contract, or it could lead to a dispute where you both honestly believe that the other party is wrong. You also may find that you don’t like the flexibility because you feel that the vendor is going to abuse that flexibility, rather than using it to make things go more smoothly.
Most of the time, it’s best to have a written contract in place, and you need to know exactly what legal steps to take at this time.