Wednesday, September 17, 2008

We Shook Hands On It

I can think of two times over the past few years in which I've shaken hands with someone over an agreement and then the person has broken the deal. Nothing was in writing and there was no major harm done by their failure to come through, but it is something I'll place on the minus side of their ledger.

One of my business partners, Lou Rodarte, recalls his father purchasing a car with a promise and a handshake. I had lunch recently with a man who recounted how in rural Arizona, where a cattleman was as good as his word, sizable numbers of cattle were sold over the phone without a single piece of paper being exchanged. Not even a handshake was required.

The idea behind the handshake was that it sealed the deal. It was symbolic of an agreement between people of honor and not to be taken lightly.

I can understand the necessity for written contracts and this is not a plea to return to the world of buggy whips. We've lost something, however, with the diminishment of the less formal. An implicit lack of trust often accompanies the necessity to get everything in writing.


Anonymous said...

I found your blog through a link from Labor Law Blog. What I wish I could have said there (but saw no comment link) was that in the employment context, in an employment at will state, is there really an advantage to having a written contract? Or doesn't it introduce ambiguity into what should be a very straightforward matter?

I could be wrong, but I've always wondered why an employer would want an employment contract in that context.

Michael Wade said...


Interesting point. An employment contract would be honored in an employment at will state. Employment at will would be the default mode of the employment relationship in that it would kick in unless there is evidence that a contract exists or one of the other exceptions to the employment at will doctrine is present.

One advantage for an employer would be the contract can specifically spell out the obligations of each party. One fear of many employers is that an implied contract may be claimed to exist. It may be better to have an express understanding.