For many businesses, trust plays an important role in how they operate together. Many long-term customers, suppliers and business partners work together for years without signing a formal written contract. In many cases, a handshake or verbal promise feels enough for an arrangement, as the relationship is usually based on trust.
This approach can work for years, but the challenge often starts if parties remember the terms differently or when circumstances change.
A handshake might create an enforceable agreement
An oral arrangement can have legal effect even if there is no written contract creating an agreement. Whether a verbal arrangement can be enforced depends on the specific circumstances and the available evidence showing what the parties agreed to.
The difficult part is not proving if the conversation happened but proving what exactly was agreed on. When there is no written contract, there can be disagreements over pricing, deadlines, responsibilities, and even whether there was an understanding at all.
This is one reason why many businesses choose to put all important agreements in writing, even when the relationship is built on mutual trust.
Some agreements should always be in writing
While verbal arrangements are sometimes enforceable, Massachusetts law recognizes that some contracts can be of higher risk if left undocumented. Some agreements generally must be in writing to be enforceable, including certain real estate contracts and agreements that cannot be performed within one year.
The legal requirements of having a written contract are less about trust and more about creating clarity when significant obligations are involved.
Good business relationships still benefit from clear records
Business relationships often evolve as companies grow, ownership changes or new employees become involved. A written agreement gives everyone a shared reference point, making it easier to continue the relationship even as circumstances change.
A handshake can still reflect confidence between two parties while making important business decisions, but having a written contract can protect both the relationship and the business itself.
