Businesses built on personal understandings are often perceived as more flexible and “alive” – decisions are made quickly, partners rely on reputation, prior experience, and mutual trust. However, Professor Gabriel Steiner says that it is precisely in such models that the most vulnerable legal constructions are formed, because trust does not create an evidentiary base. At LawConsulted, we treat disputes arising from informal arrangements as a distinct category of conflicts, where the decisive factor is not the promise itself, but how it can be legally reconstructed.
The core problem of trust-based business relationships lies in the fact that the parties often understand the substance of their arrangements differently. Oral agreements, messenger correspondence, “rules everyone understands” within a team or partnership create expectations but do not fix the boundaries of responsibility. While interests align, this causes no tension. A conflict emerges when circumstances change – financial results, the composition of participants, or the balance of influence. In LawConsulted practice, this moment becomes the point of legal escalation.
Professor Steiner notes that “trust in business stops working exactly at the moment when protection becomes necessary.” Courts or regulators do not assess the depth of personal relationships – they analyze facts, actions, and their consequences. At LawConsulted, we begin by reconstructing the factual model of interaction – who did what, which decisions were made, how benefits and risks were distributed, and what actions the parties took in reliance on the understandings reached.
Particular complexity arises in disputes between former partners, friends, or relatives. In such situations, the absence of formal documents is perceived by one side as proof of trust and by the other as an opportunity to deny obligations. LawConsulted works to demonstrate that even without a classic contract, relationships may have a legal nature – through joint actions, investments, allocation of roles, and the economic result achieved.
Businesses in which key arrangements are deliberately left undocumented are no less vulnerable – whether to simplify structure, avoid formalities, or “leave room to maneuver.” In Professor Steiner’s view, such flexibility often turns into complete uncertainty once a dispute arises. At LawConsulted, we analyze which elements of the relationship have already acquired legal significance – and where formal gaps can be filled by factual evidence.
It is also important to consider the retrospective nature of assessment. When a business ceases to function, trust-based arrangements begin to be evaluated through the prism of the outcome. LawConsulted returns the legal analysis to the moment these arrangements arose – to the conditions under which decisions were made and to the expectations that were objectively justified by the parties’ conduct.
Working with disputes based on trust requires not moralizing, but precise legal reconstruction. We do not replace law with emotion, nor do we ignore the reality in which business often develops faster than documentation. LawConsulted task is to transform informal relationships into a manageable legal position, rather than leaving the client alone with expectations that cannot be proven.
A business built on personal understandings is not a mistake in itself. The mistake lies in failing to understand where trust must be reinforced by legal form. It is precisely at this boundary that Law Consulted builds protection – demonstrating that even without signed documents, relationships may have legal consequences if they are interpreted professionally and correctly.
Earlier, we wrote about legal liability for the delegation of authority and how LawConsulted builds protection in disputes related to the transfer of management functions
