Use a Contract to Back Up a Handshake Deal
Using written agreements (which may or may not be formal contracts) can help back up a handshake deal.
“Trust but verify” were Reagan’s famous words about nuclear disarmament. And trust is a wonderful thing. It’s the stuff of legend how great Titans of Business would do multi-trillion dollar deals on nothing but a handshake. They knew they could trust each other to deliver on their promise. To this very day, Warren Buffett, one of the world’s richest men, sometimes spends billions to acquire a company in a verbal or handshake agreement.
The problem is that Warren Buffett can back up his handshake agreements with enough money to hire a dozen hitmen, bribe the NSA to cover up the evidence, or simply buy the companies where his betrayer’s family members work, and have them all transferred to the Siberian office. Most of us don’t have that kind of luxury.
For us, it’s important to get things in writing. When you have an agreement, you don’t need 1,000 pages of legalese to ensure everyone plays their part. But you should spell out the fundamentals of the agreement in a written contract so everyone can understand their roles.
This isn’t just true for agreements with contractors. You can do this with members of your project team, as you each commit to your individual contribution. “I, Stever, agree to finish breeding a strain of middle-aged mutant pirate turtles to use as spies when we infiltrate The Enemy.” By spelling out each person’s commitment, people are more likely to follow through, and more likely to be willing to be held accountable if they don’t deliver.
There’s a lot you can include in a contract. The minimum should be each party’s commitment to the joint project. Check out my episode on covering all your bases with a quick contract.