A handshake agreement is also called a gentleman`s agreement and involves an informal agreement between two parties. A handshake agreement can be made for commercial or personal matters. It is based on trust and depends on the honour and integrity of the parties involved. While oral contracts and handshake operations can be enforceable, lawyers generally do not advise their clients to do business in this way. Written contracts are usually much better because they give the parties certainty about the exact terms of the contract. Most importantly, written contracts help prevent dishonest or unscrupulous parties from later claiming that the terms were different. However, if I advise on a contractual dispute, the same contractors will want to know how restrictive a handshake is. Until then, so good, and at that point, you and the designer might shake hands and think the deal is done. But there is one last element that must be sought, and it is a certainty. Both parties should be aware of the terms of the agreement they have reached. As described by Fair Trading NSW, three requirements make a handshake deal legally binding. First of all, there must be an offer in which a person offers an exchange.
Second, there must be a form of acceptance in which the other person accepts the offer. Many of the entrepreneurs I work with say they will only do business with someone they trust. They are quite happy to make a deal on a handshake and feel that written agreements somehow undermine the trust they have in each other. A handshake agreement is not considered a legally binding contract unless a binding offer is made and accepted. Each side must give something valuable to the other, such as money, or even a promise, to seal the deal. If your oral agreement was limited to repairing scratches that had been identified by the car owner at the time of the conclusion of the contract, you, provided that these scratches have been repaired, you have fulfilled your obligations under the contract and you are entitled to payment. Here, too, contract law varies from state to state. To determine whether it is possible to impose an oratory contract or a handshake case, consult a lawyer who is familiar with the contract law of the state in which you live. . . .