Finance:Handshake deal

From HandWiki

A handshake deal is a verbal commitment to a transaction.[1] For the deal or agreement to become binding, one must witness the deal take place; have a follow up email or some form of communication to the other party; have any correspondence or other documentation that could be used as "evidence" in court or other legal needs; and/or begin to perform to the agreements in the deal.[2]

Examples

[citation needed] Example 1:

  • A owns a business, as does B.
  • A wishes to make a merger with B.
  • B agrees to the business merger by handshake deal.
  • Six months later, A wishes to begin the merger, but B declines.
  • B does not have to accept because the deal was not binding.

Example 2:

  • A owns a business, as does B.
  • A wishes to make merger with B.
  • B agrees to the business merger by handshake deal.
  • At the time C sees the Deal occur.
  • Six months later, A wishes to begin the merger, but B declines
  • Since C saw the handshake deal occur, it was binding and B must perform the merger.

Example 3:

  • While in a bar together, A and B want to begin a business.
  • On a napkin, they agree to share profits, 50/50.
  • Some time later, A and B make a very successful business.
  • A finds out that he was receiving 40% of profits while B was receiving 60% of profits.
  • Since the deal was also written on a napkin, it became binding.
  • In court, it was decided that A must be reimbursed by B for the total money A has been cheated out of.

See also

References

  1. Graham, Paul. "The Handshake Deal Protocol". website. http://ycombinator.com/hdp.html. Retrieved 1 November 2013. 
  2. Thorpe, C. P.; Thorpe, Chris P.; Bailey, John C. L. (1999). Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements & Promises. Kogan Page Publishers. pp. 72. ISBN 978-0749428426. https://books.google.com/books?id=EKw3cYLg4yUC&dq. Retrieved 2013-11-04.