Is a Handshake enough?

[Killter]

Just a quick question everybody.

I've always wondered if a handshake - or gentlemans agreement- is a legally binding contract. I have been taught it was in my limited study of contract law, but the real world often turns things like this upside down.

One of the lads I work with agreed on a price for the purchase of a house, shook hands on it and now the seller has reneged on the price, selling it to a higher bidder.

Thanks in advance folks.

 

[Wicklow]

A handshake makes the contract binding but not enforceable when to do with the sale of land / house. The contact needs to be in writing when to do with the sale of land. Its just tough look on your mate im afraid.

 

[monkeyboy]

"subject to contract/contaract denied"

A hand shake or verbal is good in most situations just not for the sale of land where a dispute arises. Say the transaction proceeded wothout issue then a contract would be recognised but not where there is a dispute.

CONTRACT STAGE

The sale and purchase of land and houses are governed by Section 2 of the Statute of Frauds (Ireland) Act, 1695. The general rule according to this statute is that all contracts for the sale of land must be in writing.

Staute of Frauds Ireland Act 1695

Hence developers have been able to "gazump" as is similar to what you describe after a deposit on singing of "subject to contract" documents.

 

[mickeyg]

In the same situation but accompanying the handshake was a deposit of money would this change the situation regarding the enforcability of the "deal"??

 

[monkeyboy]

In the same situation but accompanying the handshake was a deposit of money would this change the situation regarding the enforcability of the "deal"??

No, its still the same as above, no written contract exists and even the deposit does not help. ( must be refunded )
The gazumping scenario is where a deposit is handed over "contracts" are signed but stamped "subject to contract", then all of a sudden the builder wants a higher price and can rewquest this as no contract exists ( subject to contract means the doc is not a contract!)

Interesting story where a developer sold out a development off plans, collected deposits, used promises of purchase to finance project and on completion, the foolish purchasers, who had let slip that proper contracts were never issued , were asked for a higher sum than what they thought was agreed.
The options here were either take the higher purchase price, or take their deposit back ( plus interest ). This is a well known develper still plying their trade!
the "contracts" signed with the deposit were "subject to contract".