Is it Risk-Free to do Business on Trust and no Written Contracts?

Majority of the SME business entities do not give any attention nor are intended keenly in executing any written contract forget about executing legal documents and most of the business is just done on a Trust basis or you can say by keeping it simple by minimizing documents at least. Well, trust was earlier had a great role to play in doing business and in fact, was a great way to deal with but with the change in time, the nature of doing business have also changed and also the factor which runs the market. It is also a fact that it is not wrong to say that executing legal document does call for complicated paperwork and most of the SME business entities avoids getting into this complication of the legal process. But is this the way to do the business and there is no risk? Well, it is very certain to say that it is a huge risk in doing the business with no written contract and some of the risks which can be discussed are as under:

  • Conflict between two business parties regarding payment method, product specification, service SLA, etc and this basically becomes the majority of times in relationship breakdowns and thereby customers and thereby goodwill and reputation in the market and devalue of the brand image;
  • A business done without invoice comes with a major risk of non-payment

There is no doubt that business done on Trust and no written contracts are good and simple but in an increasingly complex legal environment, it’s not worth taking these kinds of risks.

An experienced and skilled lawyer will any time provide the business entities with the right kinds of documents and in fact can be of huge assistance in taking his guidance to develop the business templates which can be used in business on regular basis. The contracts if used properly can help business entities to minimize risk and maximize profit and also help in anticipating the risk in any business deal. The aim of any good law firm is to allow the business entities to just get on with business, rather than wasting time sorting out messes?