Contracts, Agreements, Documents of Understanding or whatever you may call them is a necessary tool in order to move forward on a majority of business relationships. Handshakes are good as well however the dynamics of business have changed. You may want to careful with handshake agreements.
First of all a written agreement is no good if two people are not willing to work together. So if you are looking to sign an agreement with a person that you are uncomfortable with you will be making one of the worst mistakes in business that you could possibly make. There is no contract in the world that can force two or more entities that do not want to work together to begin working together and achieve a productive outcome.
The great thing about a well thought out agreement is that everything is spelled out in black and white. If someone says there are going to do something then make them put it in writing. This way there is no misunderstandings and hopefully the parties will never have to look at the agreement again.
Contracts have little to do with trust and everything to do with interpretation. Just think if something unfortunate happens to the other party or the other party mismanages the spirit of the relationship, what will be the next step? Who will fulfill their end of the obligation? What recourse do you have? More importantly if someone else has to mediate the issue how will they know who is responsible for what? Contracts are really for parties outside of the relationship if the two parties in the relationship are working together productively.
Of course there are exceptions to the rule however you will find out those exceptions by your own error. As a rule of thumb, Mean what you say and say what you mean on paper. Those that matter don’t mind and those that mind don’t matter.