Trust is not a substitute for verification, confirmation, and documentation
It is prudent to do business only with those people and institutions that we trust. However, far too many people think that because you trust someone you should forgo the formalities of business—i.e. having a good contract and due diligence. Some may think it an insult to expect a friend, family member, or close associate to answer standard questions, pay a deposit, or sign on the dotted line.
This can lead to immense problems and expensive legal bills if something goes wrong down the road. It can also cause a troublesome blurring of the lines between your personal and professional relationship. Instead of seeing the need for a contract as an insult, see it as a sign of respect for the relationship and a desire to make sure everyone is on the same page and protected. Business formalities have stood the test of time for a reason—they work!