Agree on things in writing. The less the contract is subject to interpretation, the less likely it generates disagreements. Verbal agreements leave the most room for interpretation and rely on our incredibly unreliable human memory. While written agreements should be a given, verbal agreements are common, especially in small to medium-sized enterprises (SMEs). People often consider drafting a comprehensive written agreement or obtaining written approval from the other party too cumbersome and fail to appreciate the risks associated with verbal agreements.
It is, however, important to understand that a written agreement does not necessarily mean 100 pages of expensive legal jargon. It can just as well mean a post-it note with the key terms listed as bullet points. Even with its limitations, such a note is much better than a verbal agreement when the content of the agreement is explored years later in a conflict of interest situation.
It is often appropriate to make notes on verbally agreed matters, which are then sent to the counterparty. This is to ensure that the parties have a shared understanding of the outcome of the negotiations. It will also be difficult for the counterparty to refer to errors in the notes later if they did not react to them initially.
If your contracting party breaches the contract, make a written notice immediately and carefully document the breach and the possible damage caused.
You must document things continuously. A good agreement will turn bad if it is forgotten in a drawer for years, so that the parties’ real life practices no longer resemble what was agreed.
Of course, keeping clear records is only useful if the documents can be found later. So it is worthwhile to carefully archive your documents (preferably electronically).