Consideration is given to the two-phase flow problem in laminar film condensation which arises when induced motions of the vapor are included. The shear forces at the liquid-vapour interface, heretofore neglected, have been fully taken into account. It is shown that the problem can be formulated as an exact boundary layer solution. From numerical solutions of the governing equations, it is found that the effects of the interfacial shear on heat transfer are negligible for Prandtl numbers of ten or greater and are quite small even for a Prandtl number of one. For the liquid metal range, the interfacial shear was found to cause substantial reductions in heat transfer.