CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - MONDAY, JULY 14, 2025

Handshake Deals Gone Wrong

Handshake between two people

It is not an issue of trusting the person you are working with, but rather, a lack of trust in how handshake deals may play out in court should a dispute ever arise.

May 22, 2023
Jessica Allain - ConsensusDocs

The construction industry has it fair share of “handshake deals”, oral agreements relying on the integrity of the people involved. But when it comes to protecting and enforcing legal rights, it is always a better idea to properly paper the deal and get it in writing. Otherwise, contractors relying on verbal promises may find themselves without any legal remedy should the deal go south. After all, it is not just a matter of trust, but also a way to document that everybody agrees on what the terms of the deal actually are.

For example, a recent case out of New York highlights the dangers of unwritten promises. In Castle Restoration, LLC v. Castle Restoration & Construction, Inc., No. 16349-15 (N.Y. App. Div. 2/9/22), 2022 NY Slip Op 50082(U), 2022 WL 402882, 2022 N.Y. Misc. LEXIS 485, Castle Inc. and Castle LLC entered into a deal for an asset sale to transfer equipment and a client list from Castle Inc. to Castle LLC. While that initial asset sale was properly papered with sale documents and a promissory note, the parties entered into a subsequent handshake/oral agreement where Castle LLC agreed to provide Castle Inc. with labor and materials on construction projects, and those goods and services would offset the payment obligation under the promissory note. But the problem was that the contract for the asset sale had a provision that the agreement could not be changed by oral agreement; rather, any changes had to be made in writing.

Reprinted courtesy of Jessica Allain, Jones Walker LLP (ConsensusDocs)

Ms. Allain may be contacted at jallain@joneswalker.com


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