A handshake agreement could very well be a valid, binding contract if certain conditions are met. I would be very cautious about backing out of such an agreement without talking to a lawyer. (And it's a pretty bad look to go back on your word, even when you're legally in the clear.)
I am not a lawyer, but from the legal point of view, a handshake agreement is not a legal binding contract. An exchange is needed to make it binding, even if it's a small amount like a dollar.
At least, that's what I (mis-)remembered from a Contract Law 101 course taken long ago during my undergrad days.
That's not really correct - you just have to promise to exchange something. If you and I shake on a deal to buy your car for $100, that can certainly be legally binding if we intended it to be so.
Usually, though, handshake deals mean "these are the commercial terms, let's go draw up the contract", which isn't legally binding. In many places, though, they're respected by convention and protected by reputation.
A valid contract requires consideration. That's one of the conditions I was referring to. A handshake and a deposit, for instance, could result in losing a lot more than just the deposit. However, not all consideration is monetary, which is why it helps to consult an expert.
I am not a lawyer, either. Just an engineer with the minimum legal training required for licensure, which is basically, "know when you should ask for help."
