Believe it or not, there are still people doing big business by handshake. When there was less mobility, lack of written contract was less of an issue. You knew the people you were doing business with, and you might have even grown up with them. You knew they weren’t going anywhere, and if there were any problems, you would deal with them. But if you’ve never been burned, you’ve either been extremely lucky—or not done enough business to stay in business.
Even when you have a written contract, there are terms that are understood between the parties, but not recorded in the written contract. And if the deal goes south, what can you do about it?
In contract law, you will be bound by the terms of the written contract. Any verbal quid pro quo, or handshake, will have little impact on how the judge views your case. It might make you look like the one who is trying to get away with something, like a bad actor.
The size of a deal is not judged against how it would look in the Wall Street Journal, but by how much it means to your business. Even a small deal can have a big impact. Recently, I looked at an unfulfilled contract. The breach was to the tune of six figures. The unpaid party thought there was a remedy at law, but that same party missed the deadline for filing his remedy. As a result, his claims—those not barred by procedural or technical limitations—are not very strong.
Don’t you put your business on a high wire without a net. Get a written contract, and make sure both parties understand the deal. Put all the terms in the document. Get legal advice from an attorney before you need it. It’s just good business.