When doing business in New Zealand, it`s common to hear about a “handshake agreement.” This kind of agreement works on the principle of informal communication between parties. But what exactly is a handshake agreement NZ, and how does it work?
A handshake agreement is a verbal agreement made between two parties without any written documentation. The agreement is made based on mutual trust between the two parties, and it`s usually sealed with a handshake. It`s a common practice in New Zealand, especially when dealing with small transactions or informal arrangements.
In most cases, a handshake agreement is used in situations where the cost of creating a formal legal document is not justified. For example, a handshake agreement may be used in situations like renting a property, hiring a freelancer, or agreeing on payment terms with a service provider. In these cases, a handshake agreement can provide a quick, easy, and informal way to establish a contract.
However, it`s important to note that a handshake agreement is not legally binding. While it`s still a contract, it`s more difficult to prove in court than a written agreement. This means that if there`s a disagreement between the two parties, it can be challenging to enforce the terms of the agreement.
In New Zealand, the contract law does recognize handshake agreements as being legally enforceable. However, it`s important to remember that proving the existence of the contract can be difficult. A handshake agreement may be seen as a promise or a commitment between the two parties, but it`s not a substitute for a written agreement.
To protect yourself in situations where a handshake agreement is being used, it`s recommended to get a written agreement if possible. This can provide a more formal and legally binding contract that will hold up in court. If it`s not possible to get a written agreement, it`s recommended to keep detailed records of the agreement, including notes of the conversation and any relevant emails or messages.
In conclusion, a handshake agreement can be a useful tool in New Zealand for small or informal transactions. However, it`s important to understand the limitations of a handshake agreement and to take steps to protect yourself when using one. Whenever possible, it`s always best to have a written agreement to ensure that both parties know exactly what they`re agreeing to.