The Three Biggest Mistakes People Make When Entering Into a Contract

Entering into a contract is something we all do at one point or another—whether for services, construction, home development, or even smaller everyday agreements. Yet, despite how common it is, we’ve all seen firsthand how easy it is for retail buyers to make critical mistakes that can cost them time, money, and peace of mind.

Over the years, I’ve watched people place enormous trust in professionals—people who have done the work hundreds of times—without protecting themselves, only to watch it all go badly wrong.

I’ve seen contracts overlooked, disputes mishandled, and legal strategies mismanaged, often leaving the buyer at a significant disadvantage.

Here’s the truth: it’s not just about trusting someone’s reputation or hoping things will go smoothly.

There’s an entire ecosystem of pitfalls that exist precisely because one party knows far more than the other. I want to share with you what I’ve learned about the three biggest mistakes people make when entering into a contract, and how you can avoid them.

Mistake #1: Not Having a Written Contract

The first—and in my experience, the biggest—mistake people make is not insisting on a written contract. I can’t stress this enough: expectations, money, trust, and knowledge gaps are too big to leave to verbal agreements.

Many retail buyers, especially when engaging service providers for construction or development projects, shy away from contracts. They don’t want to spend money on a lawyer, or they feel it’s inconvenient. But this avoidance creates a massive imbalance. You’re going into an arrangement with someone who may know far more than you and who is often under no obligation to disclose their success rate or the risks involved. Take construction, for example. There are hundreds of points along the way where things can go wrong. A professional might cut corners to save money or time, and you might never see it.

I’ve encountered cases where a borehole was commissioned, and the driller skipped the mandated cement casing for the borehole (a regulatory necessity) because it was easier and cheaper to ignore the law. You wouldn’t know it until it’s too late anyway—that its until theres a dispute and most likely until a regulator, lawyer, or judge is involved, and even then, proving negligence is complicated, expensive, and slow.

Online reviews might seem like a way to mitigate risk, but as we all know, most reviews are either AI-generated, or curated by the service provider.

Talking to prior clients can help, but luck and timing play huge roles. One client might have had a perfect experience, while another, facing issues that only surface months later, could end up with serious problems.

Without a written contract, you’re leaving too much to chance. A contract is not about mistrust—it’s about clarity.

It should spell out:

Project milestones and deadlines

Responsibilities of each party

Tests and quality thresholds Limits, accountability, and recourse

You cannot simply rely on “trusting the expert.” The very experts you hire often have everything to gain and nothing to lose by cutting corners.

This asymmetry is where most retail buyers get trapped, and why I always insist on a detailed, written contract before any work begins.

Mistake #2: Not Specifying an Alternative Dispute Resolution Process

The second mistake people make is failing to plan for disputes before they happen. It might sound pessimistic, but every contract carries a risk of conflict—and if you don’t address where disputes will be managed, you’re leaving yourself exposed to legal imbalance. When a disagreement arises, the typical path—going through courts or public legal systems—creates layers of complexity and asymmetry: Judges and experts may be anonymous, impartial in name only Lawyers might drag out proceedings to bill more hours.

Evidence can be contested, misinterpreted, or difficult to prove.

Without a clear, pre-defined dispute resolution forum, you lose control.

Alternative dispute resolution (ADR) methods, like mediation and arbitration, allow you to define:

Who will resolve disputes

What criteria will measure competence and negligence

How quickly and efficiently conflicts will be addressed

In my experience, specifying ADR upfront saves time, money, and stress. It limits opportunities for manipulation and ensures that both parties know the ground rules before problems arise. Not having this framework is a silent mistake that can turn even minor disagreements into protracted, expensive battles.

Mistake #3: Handing Over Unchecked Power to a Lawyer

The third mistake is one I’ve seen repeatedly, and it’s deceptively subtle: giving a lawyer broad authority by way of signing a "Power Of Attorney" document, without fully understanding the implications.

I’ve watched almost all clients, frustrated by long disputes, hand over a power of attorney to their legal counsel, thinking it will make life easier without a glitch or a second thought.

The lawyer now controls the strategy, decides how much work is needed, and essentially has a blank check in your name. The convenience feels good—but it’s a trap.

Here’s what happens:

The lawyer might adjust the strategy in ways you wouldn’t approve of if you had direct oversight

Costs can balloon unpredictably

Switching lawyers mid-case becomes nearly impossible without losing all prior work.

It’s much like hiring an architect halfway through a house project and expecting them to pick up exactly where the last one left off.

Rarely does it work smoothly. Instead, and more often you're starting all over, where entire strategies need to be rewritten, and previous work now untrusted has to be redone, creating unnecessary waste and cost.

The lesson here is simple:

retain full control over critical decisions.

Sign letters yourself.

Limit the power you give your lawyer to the bare minimum necessary for each task.

Convenience is tempting, but until you know exactly what the lawyer is capable of and how they operate, giving broad authority is a risk you may not recover from.

Lessons from My Experience

Over the years, I’ve seen contracts that lacked written clarity, failed to specify dispute resolution, and gave unchecked authority to lawyers. Each mistake individually is costly; combined, they can devastate a project or business relationship.

The common thread? Asymmetry of knowledge and power. Professionals, lawyers, and service providers often know far more than the retail buyer—and without proper contracts, oversight, and control, that asymmetry works against you.

Even small oversights—like assuming a task was done correctly, or that a dispute will be easy to resolve—can multiply into months of frustration, thousands in unexpected costs, and damaged reputations.

I’ve learned that the key to successful contracts isn’t just hiring the right people—it’s having the right structure in place from the very beginning. You protect yourself, manage expectations, and retain power over your decisions.