“Let’s shake on it.” We have all said it at least once in some form or fashion. The handshake agreement goes back centuries to the stone ages. Two parties agreeing to perform some task, exchange some currency, or abstain from doing an activity in exchange for an agreement or action by the other party is the building block of modern contract law in the United States. An agreement that is solidified by a handshake, usually witnessed by others, is what we have come to understand to be a gentlemen’s agreement. Believe it or not, these handshake agreements or gentlemen’s agreements can be legally binding. Who knew?
Many oral contracts have been called into question and scrutinized by our Court system and it seems as if there will be another “gentlemen’s agreement” in question on February 2, 2016 in the Cosby case. In case you have lived under a rock without Internet, television, or any connection to the outside world let me fill you in on the recent events.
Bill Cosby faced allegations of sexual assault in 2005; the case resulted in no criminal charges and things laid dormant for about ten years after the conclusion of that case. Last year, additional rumors of allegations of sexual assault against Bill Cosby sprung into national news again after a deposition from Cosby’s 2005 was released. The deposition showed Cosby giving answer that might make him appear less that favorable. (A deposition is a series of questions asked from an attorney to party under oath. The information is used for an upcoming court case or settlement.) In December of 2015, a Philadelphia D.A. filed official charges against Bill Cosby for sexual assault just before the 12-year statute of limitations expired, in January 2016. (Statute of limitations (SOL) is a set time where an aggrieved party can bring charges for an action. In this case the SOL for sexual assault is 12 years. The SOL allows the alleged offender to know how long he or she is on the hook for a criminal act. It wouldn’t be fair to turn 85 and be charged for a crime you committed when you were 18, right?) However, the charges were met with a dismissal from Cosby’s attorney who alleges that the acting D.A. in the 2005 case made a gentlemen’s agreement or oral contract with Cosby concerning his deposition testimony, stating that the deposition would not be used for criminal charges. The deposition was taken for a civil law suit after the criminal case in 2005 had already been dismissed for a lack of evidence though. If the Judge upholds this oral contract-the charges against Bill Cosby will be dismissed. Let’s briefly explore the merits of this oral agreement.
Historically, there are two major types of legally binding contracts, oral and written. An oral contract is simply an agreement that is not reduced to writing. In order to have a valid contract, oral or written, there must be an offer, an acceptance and consideration. It is easy to see the potential complications with oral contracts; the major complication is proving the oral contract actually existed.
The former D.A. in September of 2015 went on record stating that he did promise Cosby the deposition would not be used for criminal charge but neither party reduced the agreement to writing. Now, the current D.A. seeks to prove that the oral agreement is invalid.
One of the arguments that the current D.A. will present to the Judge on February 2 is that the oral contract was not properly formed, Contracts 101. Consideration is the portion that the Cosby defense team will have to prove. Consideration is a “bargain for exchange.” More simply stated each party has to be getting something or giving something up in order to have a valid contract.
The prosecution will argue that sure-the former D.A. made a promise to not prosecute Cosby but Cosby never gave anything to the Prosecution as a result of that promise, no consideration. Cosby didn’t give the prosecution any information for the 2005 case, (the case settled outside of court) he didn’t plea to criminal charge, he wasn’t a leading witness in another case; he effectively got a deal from the prosecution for nothing.
It is likely that Cosby’s defense will argue Cosby did give something to the prosecution in 2005. Cosby could have failed to answer any and every question in the 2005 deposition by asserting his right against self-incrimination. Because Cosby didn’t assert that right and he did answer every question openly and freely he gave something to prosecution; namely his cooperation and waiver of his 5th amendment rights.
Oral contracts are good for simple agreements; however, when the devil is in the details, oral contracts usually fall short. Details of what is being exchanged normally need to be reduced to writing. Now a Judge will decide if he believes Cosby gave consideration in 2005 without being able to look at a document for help. Consideration is not an issue for written contracts. All written contracts have written terms or a provisions stating, “The proper consideration has been made for this agreement.”
The legacy of Bill Cosby could hang on a contractual element that was established before mankind discovered fire. A little bit of lawyerly advice, it’s best to just to reduce all of your agreements, no matter big or small, to writing…just to be safe.