"What can I do for you?"
"Well, I loaned my son $25,000.00 for a car and he refuses to pay me back."
"Okay...may I see the promissory note?"
"Oh, no, we're family! We don't need anything in writing."
"We're going into business together!"
"Really? That's exciting! Are you going to incorporate or be an LLC?"
"Oh, no, we don't need anything formal, it's fifty-fifty. We've been friends since the third grade, I trust him like a brother!"
And so have gone any number of initial phone calls and office conferences in my 32 years of law practice, both as an Air Force judge advocate and in private practice.
Generally, people don't intend to cheat each other (I could share some stories about exceptions to that rule, but that's another blog). However, things change, promises get forgotten, and relationships can be ruined if agreements involving money or business aren't put in writing and signed. There's a thing in most states called the "Statute of Frauds" (not statues of frogs), which has a long legal history and which states that certain agreements, to be enforceable, must be in writing. The most common of those agreements involve real property (land, houses, etc.) and agreements involving $500 or more. If these agreements aren't in writing, you will be hard-pressed to get a court to enforce them.
My suggestions are that 1) you don't loan money to family without a formal agreement (Dave Ramsey says you may as well consider it a gift); 2) You don't cosign a car loan for family (kids, maybe, but better to buy the car and let them pay you); and 3) you don't go into business with ANYBODY unless you have a detailed agreement in writing. Just like the adage that good fences make good neighbors, getting it in writing makes everybody more likely to live up to their promises - and if the person says, "Hey, don't you trust me?", assume that you can't.
Musings, observations, the occasional whineage and some funny stuff.