It is easy to get tired of all the paperwork that comes with running a business. Hence, you may be tempted to take a more casual attitude to working with certain people you believe you can rely on without the need for a formal contract. That could be a mistake.
One of the things any good contract will do is to set clear deadlines along with penalties for failing to meet them.
You take over the running of a small bakery from your parent. Everything is going fine until one morning, you notice your supply of flour is low. You ring the supplier to ask where the usual weekly delivery is. They reply that they will get some to you when they can in the next few days. They explain they never really had a written contract with your parent. They just dropped some by when they were passing, which usually turned out to be each Monday. Would you be happy? Would you lose money if they don’t deliver today?
You have asked a friend who is an architect to design a new beachfront premises. You need to begin construction so you can complete the build in time for summer, which is when you do most of your trade. The architect tells you they have not started yet as they did not realize it was urgent. Would you be content? Would you have to scrap your plans to open next summer?
In both cases, creating contracts with clear deadlines could have avoided such problems. The people you contract with know when they must deliver and what consequences or penalties they could face if they do not do so on time.
However reliable someone has been, and however much of a friend they are, when it comes to doing business together, a contract can set clear boundaries for your working relationship and expectations of each other. Making the effort to institute formal contracts in business is almost always a good idea.