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Construction contracts are agreements between two parties, typically involving an exchange of money for services, such as building a house. The simplest contract can be a verbal agreement, which is legally binding but challenging to prove in disputes. Therefore, it’s essential to get everything in writing to avoid potential issues. The speaker shares a personal experience where failing to have a contract cost them about $3,000 within their first six months of business, highlighting the importance of written agreements to prevent financial losses. Overall, the key takeaway is to always document agreements in writing to protect oneself in the construction industry.