Many people do not feel that a handshake agreement holds the same contractual commitment as a signed contract, and might try to change the agreed terms if the other person is unable to demand any proof of an agreement. A handshake agreement is not considered a legally binding contract unless a firm offer is submitted and accepted. Each party must give the other something valuable, such as money or even a promise to seal the agreement. According to the protocol, you have a handshake agreement if and only if this happens: It is also not possible to make a handshake agreement on an offer, to invest a certain amount of money. Investors will sometimes try to make a deal to invest, say, 50k to 150k. If a start-up agrees, they are forced to save 150k place, but the investor is only obliged to invest 50k. An offer to invest a certain amount of money is really two different things: an offer to invest the bottom of the range, plus an expression of interest to invest perhaps more. Therefore, we propose to startups to respond to each individually: make a handshake agreement for the bottom of the range and politely respond to the investor`s interest in investing more, but don`t feel compelled to take more money until the investor commits to invest it. Knowing that they are no more than the bottom of their reach should sometimes lead investors to commit to investing more. And if it wasn`t, it would have been a mistake for the startup to rely on having more. Why do we need a handshake agreement? Why not just wait until the actual transaction? Because in the world of startups, it can go fast.
In the absence of a legal agreement, all conditions agreed with a single helping hand will come into force. The conclusion of a handshake agreement could jeopardize a company that loses money not only in the original agreement, but also legal costs for the trials of a fraudulent client (unfair enrichment, quantum mering, etc.). Given that we are not in the southern Mississippi of the 1950s and few millennia know the importance of such hospitality in commercial transactions, a good rule of thumb for each company is to dig the handshake and ask for a signature that recognizes an iron treaty, with conditions of thought. These conditions should contain the most fundamental elements, such as: at least, this protocol will tell us who is responsible if we receive a report on a handshake agreement that will fail. But she should do more than that. A particular protocol, which follows in the footsteps, will prevent the founders from making mistakes themselves and preventing investors from misleading them. If developing long years of customer relationships is important, don`t forget to protect yourself and your business. Shake hands with your client and exchange a promise to honour the contract, but also take a few hours with your lawyer to write a “gentleman`s agreement.” The terms and conditions of your business can and should be largely the norm for each contract, so it will not be a common legal fee.
On the contrary, it will assure you knowing that if an agreement does not go as planned, you have a contract to protect your business. Finally, it is not possible to add conditions to a handshake agreement. For example, there is no way for an investor to use this protocol to offer, as some investors try to invest it when other people do – z.B. to say they will invest in a big ride if you can find a lead. In practice, this kind of commitment has no value as it is a mistake for startups to feel or feel connected to it. It is not even rightly regarded as an offer, but at best as a lead (and one that cools quickly). While the investor cannot add conditions to a handshake agreement, it is possible to change the time frames in which the offer must be accepted and the financing finalized.