Should a deal still be done by handshake?

A Handshake or Contract?

If you ask anyone who knows me, I have been a Formula 1 fan since the early 1980s. Alain Prost, Williams, and the thrill of racing on Sunday alongside Fleetwood Mac’s The Chain and of course the superlative tones of Mr Murray Walker.  Having listened to, and very much enjoyed, Tom Clarkson’s recent Beyond the Grid with Paul Stoddart I would like to provide you with a quote, something that resonates with me. For some background, the Minardi team was in financial trouble…

"Stoddart, what do you need to keep going?" I said, "Bernie, I need the fighting fund." He said, Well, how much should you need?" I said, "I don't know. I need four mill now." He said, "right, you've got it, I own half your team. Now get on with it and stop calling press conferences." Now that was it, that was it Tom. Tom, it was a handshake!

And this is why. You asked me why I've got so much respect for Bernie Ecclestone. That was on June the 13th, 2003. In August of 2003, myself and my finance director went up to Princess Gate to see Bernie, to actually give him the shares and to do our deal. So, I went up to his office and he said, "Stoddart are you out of the s***?" I said, "well, Bernie, you know I am. I said, most people don't want paying anymore." He said, "fine, keep your shares." That's the testimony to Bernie Ecclestone.

Later in the interview, Paul Stoddart talks about selling the team to Dietrich Mateschitz… the whole deal was agreed once again in Bernie Ecclestone’s office, and once:

“…[I stated] my conditions, [and] we just shook hands and that was a quick meeting…”

“…I will not have a word said against Red Bull or Dietrich Mateschitz. They just honoured everything, [that was agreed] and where there was any doubt on anything, they honoured it anyway. Just brilliant, brilliant, proper people to deal with.”

I have been through something similar, however, in the opposite direction! I therefore thought about what does a handshake really mean, was I simply naïve or just true to my moral standards?

The handshake has long been a symbol of trust and respect in many cultures around the world. It is a simple gesture that communicates sincerity, commitment, and mutual understanding. In business, the handshake has historically been used to seal deals and agreements, and while many may see it as an old-fashioned approach, the value of honouring agreements with a handshake cannot be overstated.

Today, however, many businesses are primarily focused on making money, and as a result, they may overlook the importance of honouring agreements with a handshake. This approach leaves customers and clients feeling let down and disappointed, devaluing the trust that once existed between businesses and their customers.

One of the key benefits of honouring agreements with a handshake is the trust it establishes between parties. When two parties shake hands, they are making a verbal and nonverbal commitment to fulfil their part of the agreement. This trust is built on a foundation of honesty, respect, and integrity. It communicates a willingness to be held accountable for one's actions and to honour one's word. This type of trust is invaluable in any business relationship, and it is essential for building strong, lasting partnerships.

Moreover, the handshake approach to agreements is not just about trust but also about honour. Honouring an agreement with a handshake means taking responsibility for one's actions and upholding one's moral obligations. It is a sign of integrity and self-respect, which can be deeply appreciated by customers and clients alike.

In contrast, today's money-oriented businesses often prioritize short-term gains over long-term relationships. These businesses may use legal jargon and complicated contracts to protect their interests, but this approach can make customers feel like they are being taken advantage of, leading to a lack of trust and respect.

While contracts have their place in the business world, they can also be impersonal and often leave little room for flexibility. When disputes arise, legal battles can be costly and time-consuming, leading to further distrust and animosity. In such situations, it is easy for businesses to lose sight of the human element, and the handshake becomes a mere formality.

Trust is the best contract, and the value of a handshake should never be underestimated. A handshake agreement represents a personal commitment that cannot be easily broken. It communicates that the parties involved trust each other and are willing to take responsibility for their actions. A handshake also allows for greater flexibility and understanding, and when disputes arise, it is often easier to find a solution that satisfies both parties.

Another benefit of the handshake agreement is that it promotes open communication and transparency. When two parties agree to a deal with a handshake, they are essentially putting their trust in each other's hands. This trust can encourage open communication and a willingness to work together to achieve common goals. It also fosters transparency in business dealings, as parties are more likely to be upfront and honest about their intentions and expectations.

Ultimately, the decision to use a handshake or a contract in business dealings depends on the situation at hand. However, the value of honouring agreements with a handshake cannot be overstated. While contracts may be necessary in certain situations, the human element of business should not be overlooked. The handshake represents a personal commitment and a mutual understanding that goes beyond legal jargon and complicated contracts. It communicates trust, respect, and a willingness to uphold one's moral obligations.

In conclusion, the benefits of honouring agreements with a handshake are numerous. It establishes trust, promotes open communication, and fosters transparency in business dealings. While today's businesses may be primarily focused on making money, it is important to remember the human element of business and the value of honouring one's commitments with a simple handshake. Trust is the best contract, and a handshake represents a personal commitment that goes beyond legal obligations. I wasn’t being naïve, I was open to trust and believed that a deal would be honoured. Be careful who you shake hands with.

I hope that you enjoyed this article. I wish you luck in your handshake deals!