A handshake deal often feels like a good idea when it is proposed. You know the other person. You both want to work together. It seems like a great partnership. If anything, you worry about coming off as insulting if you demand that the two of you sit down and write out a contract.
But is a handshake deal really a good idea?
What you have to ask yourself is just how much risk you are willing to take. A handshake with the wrong person can ruin your business.
That's a problem when you have put everything you have into that company. Your life savings. All of your time. Your entire career. You're depending on this to work out. When someone breaks a deal because they think they could earn a little more money working with someone else, they don't often consider what it means for you. But it could be the end of everything you have worked for.
You may know that a verbal contract is valid in the United States. And that's true. The problem, though, is what you can do if someone breaks that verbal contract. What if they simply deny the entire thing? If they say that they never made a deal with you in the first place, can you prove it? What if they try to break the terms of the deal, saying you agreed to something else entirely? Where does that leave you?
If someone does breach a contract with you, whether it was written down or not, make sure you know exactly what steps to take.