Let’s Just Shake On It!

Summary

• When someone says they don't do contracts because of examples like Warren Buffett making deals on a handshake, I remind them that such trust is built over many years of positive deal-making.
• In my experience, I can only name two friends I trust enough to do a handshake deal with. It's rare, and for most situations, it's just not practical.
• Even if you start a deal with a handshake, there will always be details that need to be clearly defined.
• Contracts are like layers of paint; they allow you to think through every possible scenario, especially negative ones, and memorialize those details.
• Conversations can be many and varied, but writing things down is the logical step, especially when the stakes are high.
• If someone doesn't want to write down the terms of a deal, consider it a red flag and avoid the deal.

Video

How To Take Action

I would suggest implementing clear communication and documentation in your business or personal dealings. Start by always writing down the terms of your agreements. This doesn't have to be a complex process. Even simple notes can make a big difference. Writing things down helps avoid misunderstandings and ensures everyone is on the same page.

A good way of doing this is to treat contracts like layers of paint. Each layer makes the agreement clearer and more robust. You don't have to think of a contract as something intimidating. Instead, see it as a helpful tool to think through all the important details, especially potential challenges. This upfront clarity saves time, money, and relationships.

Consider this—if someone hesitates to write down the details of a deal, view it as a red flag. It’s a sign that they might not be fully committed or trustworthy. Trust is great, but clarity is essential. In practice, even if you trust someone, putting things on paper safeguards the relationship and sets clear expectations.

Lastly, understand that while legendary figures like Warren Buffett might operate on handshakes after years of trust-building, most of us need written agreements. It's not about trust; it's about precision and preparedness. By doing this, you create a solid foundation for growth and success.

Full Transcript

if someone says I don't do contracts they then cite warrren Buffett and Charlie merer being able to do the deals on a handshake it's like yeah totally once we have 40 Years of positive deal making totally down for us just shaking hands but the thing is is in my experience I have maybe two friends that I could actually do a deal with a handshake but the thing is is this you could shake hands and then say cool let's get to Contracting CU there's always details that have to be ironed out like there's no way fundamentally that you can imagine every possibility that could happen especially negative ones when you're just having a conversation it's like coats of paint like you need some time to think about like o if that happened well how would we do with that right if you think through every one of those situations often times it's like you want a document to memorialize all of those things otherwise it's like you had a lot of conversations you had a lot of back and forth writing it down is just logical especially if it's something that's got any kind of stakes related to it and so the idea that if we have to write it down I don't want to do the deal it's like just run the other way