Credible Testimony Can Save A Disputed Contract -- Even When It Isn't Written Down

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Credible Testimony Can Save A Disputed Contract -- Even When It Isn't Written Down

9 August 2017
 Categories: , Blog

A handshake deal between business people used to be enough to rely on -- reputations were ruined if the deals were broken -- but there aren't many people willing to rely on them these days. And many industries have grown so large and cover so much ground that local reputations are no longer at stake.

A Handshake And A Verbal Agreement Sealed The Deal

A Florida power company thought that it wouldn't have to honor a verbal deal between one of its top officers -- the guy in charge of project development for the entire company -- and the real estate agent who brought the company information about a large parcel of land that was part of a family-owned ranch that would be perfect for the power company's development needs.

The ranch hadn't yet hit the open market for sale, so the realtor was really giving the power company's project developer a significant advantage by telling him about it. In situations like this, the land's owner benefits by not having to even list the property -- avoiding the traditional realtor fees -- and the company benefits by not having to bid for it on the open market (where they are likely to have competition). They can make the landowner an attractive offer before any other company even has a chance. The realtor is usually given a significant "finder's fee" by the company that's benefiting from the advance knowledge in lieu of his or her normal fee from the seller.

That was the deal that the two men shook hand on. Granted, they were at a highly-informal event: a tailgate party during a Parent's Weekend at the university their daughters both attended. 

Then The Company Decided That A Verbal Contract Couldn't Be Proven

When the power company made the deal, they cut the realtor out of the $1.5 million he was due. 

Essentially, the power company said that the deal never happened and dared the realtor to prove it -- so he did. He was able to clearly and consistently explain to the court exactly how he came to hear about the property that was coming up for sale and exactly how the conversation took place with the power company's executive. The power company's executives, by contrast, couldn't keep a straight story about how they'd come to hear about the property. While no one exactly heard the conversation, witnesses did notice the intense conversation and the handshake between the two and testified as much.

Reliable Testimony Helped Save The Day For The Plaintiff

In Florida, perhaps to the power company's surprise, a handshake deal and oral agreement is just as binding as a written one. Attorneys noted that this case was a classic example of how important clear, credible testimony about the intentions behind a deal and the nature of the deal itself can be invaluable in any contract dispute.

Contracts are some of the most heavily litigated issues in business. People often sign them without carefully thinking through the implications of every clause and then want the court to relieve them of their burden. Or a vague bit of wording will be interpreted two different ways by the parties involved, leading to a lawsuit that asks a judge to decide what the understanding was at the time of signing. 

If you're involved in a contract dispute, don't attempt to negotiate for yourself -- talk to a business litigation attorney today.