Often, when talking to other business owners or vendors, you'll find people who want to do a deal without a contract. They may just not want the hassle, or it may be a direct scam. No matter what, it's a huge risk, and businesses have been ruined by people who skipped critical legal steps.
If you talk to someone who is trying to convince you not to use a contract, they may say one of the three following phrases. These can tip you off and warn you to stay far away from that deal.
1. What's wrong? Don't you trust me?
They'll try to make your legitimate fear sound like a personal insult. Don't fall for it. Don't put yourself at risk just to avoid offending someone else who has no right to be offended in the first place.
2. I do this all the time.
That may be true. A lot of people make these deals. That doesn't mean it's a good idea. In fact, you may want to be more wary of someone who does it all the time. They clearly have a motive, and it could be that they're just trying to scam you -- and everyone else.
3. It's a great deal and we have to hurry so that we don't miss out.
This a trick used to create a false sense of urgency. They're trying to get you to do something without thinking, to make a rash decision. It's the same trick stores use when advertising sales and claiming that items are selling out quickly. They want to make you buy on impulse, though you may realize it wasn't a good deal later on.
Don't risk your company. Understand when and how contracts should be used to protect yourself with any deal.
Source: Entrepreneur, "How a Handshake Can Destroy Your Business," Mark J. Kohler, accessed Sep. 19, 2017