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Does a Handshake Count as a Legally Enforceable Contract?

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TV shows about legal disputes often leave viewers with the impression that the only difference between an empty promise and a legally enforceable contract is that the latter is written and signed, whereas the former is merely spoken. You would think that all business agreements are no better than tall tales exchanged over one drink too many until they are formalized in writing, but the truth is more complicated. You can have a chance of winning a breach of contract lawsuit related to an oral contract under some circumstances. The COVID-19 pandemic has required entrepreneurs to make quick decisions, including some business agreements, and there is not always time to put every agreement in writing. If you are involved in a dispute over an oral contract, contact a Maryland small business lawyer.

Which Contracts Are Required to Be in Writing?

As a general rule, it is always better to express promises and agreements in written form, so that you can have proof of what each person said and when they said it. Email is good, but documents with physical signatures are even stronger proof of formal agreements. When you verbally make agreements about financial matters but you don’t get them in writing, it is one person’s word against the other’s about how serious each party was about fulfilling the agreements.

According to Maryland law, the following types of contracts and agreements are not legally valid unless they are in written form and bear the signatures of the parties:

  • Agreements regarding the sale or purchase of land or the sale or purchase of a partial ownership interest in a piece of land
  • Agreements in which a party agrees to be responsible for another party’s debt in the event that the original borrower defaults on a loan or fails to repay the amount that it promised to repay a third party
  • Prenuptial agreements, defined as agreements about property rights concluded between people who will marry each other soon after concluding the agreement
  • Agreements about actions that the parties promise to take in the distant future, defined as one year or more after the date that the contract is signed

Formal Requirements for Written Contracts

To count as legally enforceable written contracts, not just any written document will do. The document must meet the following formal considerations:

  • It must be handwritten or typed on a typewriter, computer, or tablet
  • It must be signed by the part or parties making the promises (electronic signatures and handwritten signatures both count)
  • It must name the parties in enough detail as to make them identifiable; for persons, that usually means their full legal names, and for businesses, it means the name under which the business is registered
  • It must describe the property to which it pertains in enough detail as to make it identifiable
  • It must describe the obligations of each party in detail

Let Us Help You Today

A Washington DC small business lawyer can help you determine and exercise your rights in relation to promises made verbally. Contact Tobin, O’Connor & Ewing for help with your case.

https://www.tobinoconnor.com/pre-pandemic-tax-deduction-may-offer-big-savings-for-some-small-businesses/

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