Handshake Agreements Cause Problems
Practicing law in Montana, I see handshake agreements all the time. An attorney in New York City would be used to detailed and complex written contracts, but we do things differently out here. For everything from employment to equipment rentals to grazing land leasing, handshake agreements are common. Montanans are good people, and most of the time I see these verbal agreements work with no problem.
Of course, the attorney in me is here to tell you that handshake agreements are a bad idea. You want to have things written down and signed in case there is ever a dispute. Most people agree with me when the deal involves a third party or a company. But, when there is an agreement between family members or close friends, clients will tell me that a contract is not necessary because they completely trust their brother. Well, I am sure your brother is a great guy, but you may not have considered the complications that these issues could create upon your death. If you pass away, the personal representative of your estate is left to figure out how to deal with an unwritten agreement based solely on the word of the other party. Or, what if your brother passes away and now you are left to work with your sister-in-law and try and sort out an agreement where nothing was written down?
Recently, a client was administering their mother’s estate. Their mother’s brother came to us and claimed that he had a handshake agreement with the mother to lease farmland for a certain amount per acre per year. “Fair enough,” the client said, we could see the lease payments in Mom’s banking records and see that this agreement did exist. Then, when the lease period ended, the brother claimed that part of the handshake deal was that the brother supposedly installed irrigation systems and fencing and had the right to remove them when the lease was up. We had no way to prove or disprove whether the pivot and fencing belonged to the brother. The farmland had already been appraised for the estate and the appraisal was for irrigated land. Now, the brother was attempting to rip out an expensive irrigation system based on a supposed handshake agreement that none of us could review. It ended in a lawsuit between family members that could have been avoided if the siblings had gotten their agreement in writing.
I know you may believe in the old-fashioned way of doing business. But trust me, handshake agreements cause problems — even if you trust your brother.
-Trevor P. Funseth
