I have over the years made deals with both a contract and without, the majority without. As any businessman I have incurred my fair share of loses over the years, many thousands of dollars. This is not uncommon in business and it would be naïve for anyone to think they would some how be exempt.
Today I rely on a handshake for the majority of my business, all of my losses to date have always been with a contract not a handshake.
A handshake is still a legal contract in the court of law here in the US. The trouble is when you need to sort out the gray areas when things go wrong. To be honest running into glitches is not un-common in any deal. The handshake or the contract does not mean there will not be troubles. What I would like to share are some of the things needed to make a handshake work, or at least what has worked for me.
Being a good communicator is the most important part. just as in any agreement business or otherwise a clear understanding of what is being offered needs to be crystal clear.
As someone who is negotiating a deal the most important part is to make clear what the other guy wants and expects. It is up to you to address all of the potential areas of concerns. Go over in detail each area that may cause a problem. Go over in detail each area that may cause a problem. I wrote that twice for a reason. For someone to remember information you need to repeat it twice, preferably in a little different way but saying the exact same thing. This is the single most important part of a verbal contract. You will always need to go back and say, "Remember when I said"
Look someone in the eye when talking, make sure you pickup on their concerns and their comfort level. I have found over the years that dishonest people are never comfortable with this kind of deal, honest people have little trouble with it.
Before I close on the deal go over the details again, I make a point in letting them know that I am counting on their honor and integrity.
Look them in the eye and shake hands.
I have made millions of dollars of deals with a handshake and have not had one go bad, I can not say the same for some of the deals I have made with multi-page contracts.
The best advice I can offer is that if you really feel you need a contract, you might want to consider doing business with someone else. It is far cheaper to walk away from a bad deal before it starts than pick up the pieces afterwards. Don't ever second guess your initial gut instinct when dealing with people, it is seldom wrong.
I share this after a week where I had a very large deal go potentially wrong. I went back over the our verbal deal and asked if I had mis-understood his intentions. I had not and we needed to just re-visit some things where I could plainly go back and say. "Remember when I said."
Anytime there is a chance to make money there is a chance to lose money, don't' ever forget that