What Happens When a Handshake Deal Goes Wrong

You agreed it over coffee, shook hands and got on with the work. Now the other side remembers a lower price, a narrower scope, or that there was never really a firm deal at all. Two things are true, and only one of them helps: a verbal agreement in England and Wales is usually every bit as binding as a signed one — and that will not decide your argument, because the fight is almost never about whether a contract exists. It is about proving what its terms were.

A verbal deal is a contract

Nothing has to be written down for an ordinary commercial deal to bind. You need four things: an offer on clear terms, acceptance of those terms as they stand, consideration (each side gives something of value), and an intention to create legal relations rather than do a favour between mates. A handful of things must be in writing to work at all — guarantees, contracts for the sale of land, assignments of copyright — but a deal for goods or services agreed on a call is a contract. Anyone telling you "it wasn't in writing, so it doesn't count" is usually wrong on the law. Note too that consideration does not have to be a fair price: the law asks whether something of value passed each way, not whether the deal was a good one, which is why a rushed agreement you would love to escape can still bind you.

Why they fail: proof, not validity

Eighteen months later, two people genuinely remember different things and there is nothing to settle it. Was the price £6,000, or £6,000 plus VAT? Did the scope include the extra work, or was that always going to be a separate job? The case then turns on whose account a judge finds more convincing on the day, which is the most unpredictable kind of case there is — and expensive to run even when you are plainly in the right.

What counts as evidence when nothing was signed

You are rarely left with nothing. Pull these together in one place, in date order, before you do anything else:

Emails, texts and WhatsApp messages that confirm or refer to the deal.
The quote or estimate you sent, and every invoice.
Bank records showing payments that match what you say was agreed.
How both sides actually behaved — someone who paid the first invoice without objection has a hard time arguing the price was never agreed.
Diary entries, notes, and anyone who was in the room.

The two-minute habit that prevents all of this

Send a short confirmation the same day as any verbal agreement. Four lines covers it: what you are supplying or buying, the price and when it is payable, the timescale, and anything either side specifically promised — plus a line asking them to come back if any of it is wrong. It takes three minutes, it does not read as aggressive, and silence in response is very hard for the other side to walk back later. If you have standard terms, attach and reference them in that message, because terms sent after a deal is agreed generally bind nobody.

In practice — illustrative example

The "we said £4,000" job

A freelance designer agrees a brand project "for about four grand" over lunch. She delivers the work; the client pays £2,500, saying the rest was for extras they never signed off. With no written scope and only a couple of vague texts, she faces a choice between chasing £1,500 through the small claims track on thin evidence or writing it off. A single line at the start — "confirming the brand project at £4,000 plus VAT, covering the logo, brand guidelines and stationery" — would have made the figure almost impossible to dispute.

Where handshake deals leave the gaps

A handshake fixes the big idea — you build the thing, I pay you — and leaves out the details that cause every argument: the exact scope, when payment is due, what happens if the work runs late, who owns what has been created, and how either side walks away. Scope creep is the most common of them, because the extra work gets done as a favour and invoiced as a job.

"Subject to contract" cuts both ways

If negotiations are marked subject to contract, neither side is normally bound until a formal written contract is signed. That protects you while you are still talking, and traps you if you have already started work on the strength of it. Two practical points: use the phrase consistently in correspondence if you are relying on it, because conduct that looks like performance can undermine it; and if work has begun under a subject-to-contract arrangement, get something in writing about what happens to that work, and who pays for it, if the deal never completes.

Is it worth chasing?

Do the sums before the principle takes over. Weigh the amount at stake against the time and cost, and against whether the other side could actually pay a judgment. Claims up to £10,000 usually go on the small claims track, where costs recovery is limited, so a modest claim can be proportionate; above that the costs risk climbs sharply.

In most cases a factual, measured demand settles it — what was agreed, what went wrong, what you want, and a reasonable deadline, sent in a way you can prove was received. An angry letter weakens a good case and gets read out later. Conducting litigation and advocacy are reserved activities handled by RHF Solicitors (SRA no. 324115); the preparation that makes settlement likely is not, and it is the part that decides most of these.

What to do next

If a handshake deal has already gone wrong, gather the chronology and the documents above and book a legal review. We will tell you what you can actually prove, what it is realistically worth, and the proportionate way to push for it — the approach is set out in preparing for a dispute.

To stop it happening again, write down how you sell. A set of business terms and conditions starts at £695 +VAT and does the job a handshake cannot: it fixes price, scope, payment terms, what counts as done, who carries the risk when something slips, and how either side gets out. The mechanics matter as much as the drafting — the terms have to be in front of the customer at quote or order stage, not on the back of an invoice. More in our guide to business contracts and in the clauses that quietly cost you money.

This is general legal information, not advice on your situation. For advice tailored to your business, book a legal review. Buzz Legal provides non-reserved business legal support; reserved legal activities are carried out by RHF Solicitors, authorised and regulated by the SRA (no. 324115).

Common questions

Is a verbal contract legally binding in England and Wales?

Generally yes. Most verbal business agreements for goods or services bind both sides if there was an offer, acceptance, consideration and an intention to create legal relations. A handful of things must be in writing to work at all — guarantees, contracts for the sale of land, assignments of copyright — but the ordinary commercial deal agreed on a call is a contract, and neither side can walk away from it because nobody signed anything. The difficulty is never whether it exists; it is proving what its terms were. In a dispute about a verbal deal a judge is choosing between two honest accounts, and the account supported by documents written at the time almost always wins.

How do I prove a verbal agreement?

With the paper trail around it: emails, texts and messages, the quote you sent, invoices, bank payments, delivery notes, and how both sides actually behaved afterwards. Conduct is powerful evidence — someone who paid the first invoice without objection has a hard time arguing the price was never agreed. The single strongest document is usually a short confirmation message sent immediately after the conversation, because it records the terms while they are fresh and gives the other side the chance to correct them. Silence in response to a clear written summary is worth a great deal when the argument arrives eighteen months later. Keep it all in one place rather than scattered across inboxes and phones.

What should I send after agreeing something verbally?

A short email the same day, before anyone's memory improves. Four things cover most of it: what you are supplying or buying, the price and when it is payable, the timescale, and anything either side specifically promised. Add a line asking them to come back if any of it is wrong. It takes three minutes, it does not read as aggressive, and it converts a conversation into a record. If you have standard terms, attach them and reference them in that email — terms sent after a deal is agreed generally bind nobody, so the same-day message is often the last moment they can be brought in properly.

Does “subject to contract” mean we do not have a deal?

Usually yes, and that is exactly what the phrase is for. It signals that neither side intends to be bound until a formal written contract is signed, so a deal that felt settled in the room may not be enforceable at all. That is useful protection while you are negotiating and a trap if you have already started work on the strength of it. Two practical points: if you are relying on it, use it consistently in correspondence, because conduct that looks like performance can undermine it. And if you have begun work under a subject-to-contract arrangement, get something in writing covering what happens to that work, and who pays for it, if the deal never completes.

Is it worth going to court over a disputed handshake deal?

Sometimes, but do the sums before the principle takes over. A disputed verbal deal turns on whose account a judge prefers, which is the most uncertain kind of case there is. Weigh the amount at stake against the time and cost, and against whether the other side could actually pay a judgment. Claims up to £10,000 usually go on the small claims track, where costs recovery is limited, so a modest claim can be proportionate; above that the costs risk climbs sharply. In most cases a firm, well-evidenced demand settles it first. Conducting litigation and advocacy are reserved activities handled by RHF Solicitors (SRA no. 324115); the preparation that makes settlement likely is not.

The other side is denying a term we definitely agreed. What now?

Get organised before you get angry. Build a dated chronology of every contact, pull the emails, messages, invoices and payment records that touch the disputed term, and note what each one proves. Then work out what you actually want — the money, the work finished, or simply to end it cleanly — because those lead to different letters. Write something factual and measured setting out what was agreed, what went wrong, what you want and a reasonable deadline, and send it in a way you can prove was received. An angry letter weakens a good case and gets read out later. If proceedings become likely, the matter is contentious and moves to RHF Solicitors with the preparation already done.

What can Buzz Legal do to stop this happening again?

Write down how you sell. A set of business terms and conditions starts at £695 +VAT and does the job a handshake cannot: it fixes price, scope, payment terms, what counts as done, who carries the risk when something slips and how either side gets out. Just as important is the mechanics of making them apply — putting them in front of the customer at quote or order stage rather than on the back of an invoice, where they arrive too late to bind anyone. Drafting terms is non-reserved work and does not need a solicitor. Most businesses burned by a verbal deal did have terms somewhere; they had just never put them in front of the customer.

What happens when a handshake deal goes wrong