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Handshake deals are a thing of the past

Posted by CM Whitener on September 11, 2013 at 2:10 PM Comments comments (0)



Are you a fan of Judge Mathis or The People’s Court? They are both shows that center on deals gone wrong. Each show has a disclaimer that identifies the authority under which these TV judges can make a ruling. Both Judge Greg Mathis and Judge Marilyn Milian have extensive legal backgrounds and serve as arbitrators for these cases.


An arbiter is different from a judge in that parties sign documentation agreeing to have their cases heard in a mediation style format where an arbiter makes the final legally binding decision. The parties get to agree to who the arbiter will be prior to entering into any agreement or after. A judge has cases assigned based on the jurisdiction he covers.


“The litigants are not actors…” is part of the disclaimer for The People’s Court. So these are ordinary people who find themselves having to battle before an arbiter often because they disagree on the terms of a handshake deal they’ve made. The typical litigants are landlords and tenants, lenders and borrowers, entertainment promoters and talent, or sellers and buyers.


The more aware litigant often brings a written document purporting to show the terms of the deal. Sometimes that document is insufficient and does not cover all that the two parties had spoken of when making the deal. So what happens then? The judge or arbiter can rely on some information outside of the document, depending on the type of agreement the parties have, but it is best practice to have all terms and contingencies hashed out and reduced to writing.


Documentation is key to running a successful business and/or entering into a successful deal. Yes, verbal contracts are legal, but there are certain agreements that must be in writing in order to be enforceable. Those types of agreements are covered by the Statute of Frauds.


The better practice is to always have written proof instead of relying solely on word of mouth evidence, specifically when you’re involved in a business venture. Not only will documentation provide proof in case of conflict, it will keep you organized and efficient. An efficient business is a productive business. A productive business is a successful business. A successful business is a profitable business.


Whether you have a business that employs multiple people or are a one person show, you need proper documentation to manage who you are and what you do. Employee guidelines, standard operating procedures, vendor contracts, volunteer applications, and company policies are necessary for most businesses. If you run a business or provide a service of any type, it is a best practice to consult with a professional and have your documentation in order.


Remember, what you say may be used against you, but what is signed can be your greatest defense.


If you have specific questions with respect to business related issues contact an attorney licensed in your jurisdiction. The information provided in this North Carolina law site blog is for educational purposes only.