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Without a Sign

Don't get roped into a deal before you know it.

This story appears in the September 2005 issue of Entrepreneur. Subscribe »

Think a deal ain't a deal until everyone signs on the dottedline? This is not only wrong; it's a dangerous misconception. Ahandshake or an oral agreement are obvious exceptions. But did youknow that an exchange of letters or a simple promise can legallybind you?

The problem in a nutshell: In that inevitable windstorm ofcommunication that accompanies most deals, you never know when ajudge or will say you've crossed the line from courtshipto commitment. There is no neat litmus test. Even if you neversigned, courts will look at everything: whether anyone is actinglike they have a deal, whether one would expect the to waituntil more comprehensive papers (as opposed to short deal letters)are signed, whether they've issued press releases or thrownparties, and so on.

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