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Construction contracts are agreements where two parties are exchanging something for something else, often money for services like building a house. Verbal agreements can be legally binding, but it can be challenging to prove in case of an incident. It's essential to get everything in writing to avoid costly mistakes. The speaker learned this lesson the hard way, losing around $3,000 due to not having a written contract early in their business. Stick to the rule of getting everything in writing, no matter what.