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Let's Just Shake On It!

Name: Let's Just Shake On It!
Uploaded: 2024-10-18T21:00:09+00:00
Duration: 54 s
Channel: Shanli Liu, CPA, CTP
Description: In this monologue, the speaker challenges the notion that contracts are unnecessary by citing the popular claim that legendary investors Warren Buffett…

18 Oct 2024 · 1 min

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In this monologue, the speaker challenges the notion that contracts are unnecessary by citing the popular claim that legendary investors Warren Buffett and Charlie Munger can close deals with a handshake. He argues that, based on his own experience, only a handful of people can be trusted enough for handshake agreements. Even then, a handshake should be followed by a written contract because contracts capture detailed terms, anticipate negative scenarios, and provide a permanent record of the parties' intentions. The speaker emphasizes that without documentation, conversations become ambiguous and risky, especially when significant stakes are involved, and that rejecting contracts altogether is an unreasonable stance.

Chapters

If someone says, I don't do contracts, they then cite Warren Buffett and Charlie Munger being able to do the deals on a handshake. It's like, yeah, totally. Once we have 40 years of positive dealmaking, totally down for us just shaking hands. But the thing is, is in my experience, I have maybe 2 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 because 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, oh, if that happened, well, how would we deal with that, right? If you think through every one of those situations, oftentimes it's like you want a document to memorialize all of those things, because 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.