Here’s another contract mistake to avoid: Never agree to do a deal on a handshake.
A verbal contract is the worst kind of contract there is. It’s still a valid contract just like a written one, but the costs of enforcing it go up exponentially.
If people do what they agree to do, you wouldn’t need contracts. But that’s not what contracts are for – they’re there for when people don’t keep their word.
My clients Greg and Denise learned this the hard way.
They are husband and wife and were excited to start a new beer brewery with Greg’s college friend, Lance. They had been talking for six months about how each would contribute $10,000, and who would do what in the company.
They shook hands on it.
Over the next several months, Greg and Denise spent $8,000 toward startup costs. But every time they tried to reach Lance, he took days and weeks to get back to them and was very evasive. When they finally got a hold of him, he just pretended like he didn’t remember ever making an agreement.
Had they known that he wasn’t serious, they wouldn’t have invested so much of their own money without making different plans.
Just Don't Do It.