Handshake agreements are great; still, get it in writing.
At least include basic deal elements in your contract:
Who does what? How do you know they’ve done it? We agreed I’m “raising money” to fund our development of the world’s most awesome doggie sweater. Does it count if I close a deal that was in the works before I joined?
Which things are due when? Be specific. Sure, I said we’d have a prototype sweater done “by March.” That means the end of March. What do you mean we need it March 1 to get the sweater approved by the FDA?
Payment terms. When and how much? Does payment depend on milestones? Who decides if they’ve been met? Is “a million sequins” a metaphor, or do I have to number them? Oops.
What if someone doesn’t follow through? Agree on consequences in advance (more on that here), so you can proceed if something happens. If you wait until a problem to decide what to do, you’ll end up in court, and the lawyers will end up very rich.
For each category, brainstorm what could go wrong and decide up front how you’ll handle those cases. For example, if one person don’t follow through, does that mean neither of you have to? You can even set penalties in advance, “If either person flakes out, they’ll pay the other $10,000 and dissolve the contract."
Use Plain English Contracts Whenever Possible
Plain English is valid and legal for contracts! The book How to Write Plain English by Rudolph Flesch teaches lawyers how to make legally precise contracts readable by a five-year old. Then I can understand them. In plain English, “No” means “No.”
I’ll ask my lawyer to review a plain English agreement to make sure I’ve covered all the bases. If not, we talk it through. He suggests 9,816 pages of legalese. I turn it into three sentences of plain English.