Handshake deals—simple verbal agreements sealed by mutual trust rather than paperwork—remain surprisingly common in the music industry despite the multimillion-dollar stakes involved. Artists and managers frequently begin relationships this way during early career phases when resources are limited and opportunities demand quick decisions. These arrangements usually outline commission rates on revenue from tours, merchandise, streaming, and licensing, along with informal discussions about exclusivity or post-termination “sunset” clauses over casual meetings or venue conversations. Nevertheless, such deals often collapse into expensive litigation when recollections diverge or parties interpret terms differently.
U.S. contract law generally upholds oral agreements in most states provided they contain essential elements like offer, acceptance, consideration, and mutual intent to create a binding obligation. States including Illinois, California, New York, and Florida treat oral contracts as valid except in cases governed by the Statute of Frauds, which mandates written form for certain extended or high-value transactions. Management agreements seldom fall squarely under those rules, allowing courts to enforce them through witness testimony, correspondence, or evidence of past conduct. The primary challenge arises from evidentiary gaps: absent documentation, disputes over precise percentages, agreement length, or extras like equity participation devolve into conflicting accounts that require lengthy court processes to resolve.
The ongoing trial in Chicago between Chance the Rapper (Chancelor Bennett) and his former manager Patrick “Pat The Manager” Corcoran vividly demonstrates these vulnerabilities. Their collaboration, which started around 2012 under a verbal 15 percent commission structure with no written contract, propelled Chance to independent Grammy-winning prominence via mixtapes like Coloring Book, Netflix projects, and merchandise ventures. The split occurred in April 2020 following tensions over the 2019 album The Big Day rollout and a contested equity interest in a UnitedMasters distribution arrangement. Corcoran filed suit in November 2020 seeking roughly $3 million to $3.8 million in additional post-termination commissions based on an asserted three-year sunset clause, while Chance countersued in 2021 claiming breaches of fiduciary duty and self-dealing.
On March 10, 2026, Chance testified at the Richard J. Daley Center that he had already disbursed $11 million in payments and could not recall any instance of failing to compensate for meaningful contributions; the jury trial, which began March 4, 2026, remains underway in Cook County Circuit Court.
Industry professionals highlight several benefits that sustain the persistence of handshake arrangements. They facilitate swift partnerships in a fast-paced field where a timely single or tour booking can define an artist’s trajectory. Trust frequently substitutes for formal language within close-knit communities such as Chicago’s hip-hop scene or Atlanta’s trap circles. Emerging independent acts particularly appreciate the approach for its low barriers—no immediate legal costs and no restrictive provisions that might stifle momentum. Managers often forgo competing clients to commit fully, wagering on collective success that appears equitable at the outset.
The disadvantages, however, frequently overshadow those positives and generate widespread cautionary tales. Ambiguities regarding “net” versus “gross” earnings or the survival of commissions after termination can lead to substantial financial losses and career interruptions. Establishing obligations depends heavily on testimony and indirect proof, which juries may scrutinize closely. In entertainment centers like Los Angeles, recurring verbal conflicts surface where emerging artists allege unfulfilled promises of promotion or production support from labels or producers. Historical patterns in music reinforce the issue: early informal pacts have left figures such as Little Richard or members of the Beach Boys pursuing owed royalties long after initial agreements, sometimes despite partial records. Contemporary advice from entertainment lawyers circulated on social platforms emphasizes a straightforward rule: without a contract, claims to ownership or ongoing payments remain precarious once revenue increases or relationships deteriorate.
Legal authorities in music consistently advocate transitioning to documented agreements once meaningful income emerges. A concise email recap or straightforward template can record core provisions—commission percentage, scope, notice requirements for ending the relationship, sunset duration, and authority boundaries—while maintaining the collaborative tone. Numerous managers today require standardized templates that safeguard interests on both sides without undermining rapport. Independent performers who previously depended on verbal understandings now engage entertainment counsel sooner to create transitional setups that begin informally but promptly solidify in writing.
In the end, handshake deals endure because of the music business’s fusion of artistic expression and personal bonds, but they reveal how rapidly confidence can shift to courtroom contention. The Chance-Corcoran proceedings stand as a current example: arrangements that seem solid in the heat of creation seldom hold firm under judicial review without supporting records. Artists and managers who approach partnerships with comparable diligence to their creative output—by clearly memorializing mutual expectations—can sidestep the protracted and costly disputes that continue to teach harsh lessons across the industry.
