Have you ever sold a used car to a private party and didn’t fill out a “bill of sale”? Or bought a new car without signing a contract? Generally the answer is no. Contracts and promissory notes are critical to ensure both parties’ interests are protected. As an example, without that bill of sale signed by the buyer, you could be liable for damages if the buyer failed to register your former vehicle in their name.

Contracts and promissory notes are what makes the world go round — everything you buy, sell, transfer, or convey to another party, or vice-versa, creates a contract between you and the other party. Even as you sign your credit card receipt after you paid for dinner, that signature you placed on the receipt is your agreement to pay the credit card charge — it’s a contract to pay.

These documents — contracts, promissory notes, bills of sale, etc. — are simply written promises made by one person to another to do or not do something, or to repay a debt owed, or for some other specific reason, and the written document spells out the specific terms to which one person is obliging themselves to another, and/or vice-versa.

A well-written contract or promissory note is critical in protecting your interests. Without one, you could be putting yourself in harms way, financially or otherwise.