My grandfather often talked to me about how business was conducted when he was a young man and said that “we did it on a handshake”.
While you can make deals this way, often these deals can lead to issues when disputes arise because what you believe is the agreement is not the same as what the other party recalls.
Disputes arise over a variety of issues, from costs of items, time frames for payment to the scope of works for a service. When the deal is done on a handshake with no written confirmation of the terms, you rely on memory and goodwill to ensure that an agreement will be honoured. This also makes enforcing an agreement more difficult because the terms are completely in the parties’ memories.
In today’s world where businesses are regularly sold, where business structures change and where the person you shook hands with may be with a business today and gone tomorrow, documenting your agreements is essential to ensuring both parties are clear with their obligations and responsibilities. There are also some instances where legislation and case law require that agreements must be documented and even documented in a specific manner, such as agreements regarding the sale of land.