Ironically, one of the most common mistakes when starting a business with one or more business partners is not having a contract. Too many new business owners or start-up founders choose to agree on their terms of working together orally because they have known each other for a long time and believe that they would never do anything to hurt or deceive one another. As a result, they choose a handshake deal over a formal agreement. This is also in part because they want to show that they trust each other and are afraid that suggesting signing a contract might suggest otherwise and even be insulting.
This type of thinking is misguided and can lead to unnecessary and nasty disputes. First, a person who has no intentions of deceiving you should have no problem signing a fair and well-drafted contract, which would reflect the terms of your working together.
Secondly, the main reason you should agree on as many specific terms as possible in writing is not in order to avoid a risk of being defrauded, but in order to make sure that you are actually on the same page about your operations, sharing of profits, losses, liabilities, etc… Oral agreements are known to be understood and interpreted very differently by different people. Memories of what was said and heard fade, and all too often different business partners to a venture have a very different recollection of what they said, heard, and what they meant by what they said. The main purpose of a partnership contract is to help avoid these types of misunderstandings when the time comes to take an important action with regard to the operations of that business, such as selling or liquidating that business, withdrawal by one or more of the partners from that business, allocating profits and losses, expelling a member, etc.
And, even if you have litigated your dispute in court, having a contract will still be helpful to your attorney and the court to better determine the respective rights and obligations to that dispute. Thus, you have nothing to lose but quite a bit to gain by making sure that the terms of your business partnership are as clear and unambiguous as possible, and they are in writing.