Overcoming a Verbal Agreement that Goes Wrong

The agricultural community is a place where most people know one another well. In some communities, farms go back generations with neighboring farms working side by side, season after season. Doing business on someone’s word and a handshake is still the way many people prefer to work together.

Farmers favor oral agreements for a few reasons. First, in many cases, the agreement is with a neighbor, a friend, or a fellow farmer, and there is a history of trust between them. Requiring a written contract may give the erroneous impression they no longer trust or are on friendly terms with the other person. No one wants to offend someone else or be viewed as mistrustful or difficult.

Second, putting something down on paper takes time and there can be a cost associated with drafting an agreement. It may be that the issue is not worth the effort of getting it down in writing, or it may be that trying to remember everything and finding the right words to use is not within the comfort zone of the people making the agreement.

Relying on verbal agreements in many instances, works well….until there is a disagreement. At that point, the loss of trust, the breakdown in the relationship and the costs to resolve the dispute far outweigh the discomfort the parties might have felt in asking for a written agreement and what the parties would have spent had they decided to write the agreement down in the first place. Suddenly, the conversation turns on who has the better memory for details, on who said what and what each of them understood and turns into whose word is more believable than the other’s.

Our agricultural program mediates several cases each year in which the parties had a handshake deal that went sour. Our role in those cases is not to determine who is “right” and who is “wrong” but rather help the parties talk about what to do now that the situation has fallen apart. We help them talk about what is important to each of them and how they want to fix what went wrong.

Most importantly, we help the parties by drafting an agreement in writing, using the decisions they have made together. We help parties work through the many details that go into a solid agreement: discussing all of the terms, using clear language, putting in timelines, due dates and specific payment amounts and what the parties have agreed to do to resolve any other disagreements that they have about these issues in the future. Having dispute resolution terms and mechanisms in place for the future is a step in the right direction. In addition, HIAMP encourages parties to take their time as they review the options they talked about for resolution. Each party is free, and in fact, encouraged to seek advice from legal counsel, trusted advisors or accountants prior to signing any agreements reached in mediation. That way, they can take the time needed to make sure the agreement will work for them and covers all the issues they feel needed to be covered in order to put the dispute behind them.