Warren Buffett’s risk filter: Why he likes ‘to deal with people where 1-page contract will do the job’

Warren Buffet, The billionaire investor and Chairman of Berkshire Hathaway has been vocal about his business mantras and investing rules over the years. Especially when it comes to dealing with people, there is a quality that he is extremely confident about. Here’s how and why this requirement is met.

While sharing with an interviewer in 2014 the one-page agreement he used to purchase National Indemnity in Berkshire’s annual report, Buffett explained that although times have changed, he still prefers one-page agreements.

Warren Buffett prefers one-page contracts: Here’s why

“We’ve had one-page contracts for other companies (other than National Indemnity), but I can’t seem to get around to that anymore. So, I’m sending these one-pagers to our lawyers and saying, let’s get on with this, let’s get this done… but the world seems to have changed on that front,” the veteran investor explained.

And he adds: “I still prefer the one-page contract. I like to deal with people for whom I think a one-page contract will work. If I need 50 pages to protect me against the guy I’m dealing with, I always wonder if I need 51.”

It is noteworthy that the actor, now 95 years old, resigned as CEO of Berkshire Hathaway. The Oracle of Omaha has handed over the reins to his long-designated successor, Greg Abel, who took over as CEO on January 1.

Why does Warren Buffett say ‘You can’t make a good deal with a bad person’?

The logic was consistent with Buffett, who puts trust high on the list of requirements when making a business decision. In an interview in 2021 CNBC Buffett, along with his late business partner Charlie Munger, told the network that you can’t make a good deal with a bad person. The duo was on the channel to talk about their company and their sixty-year friendship.

“You can’t make a good deal with a bad person. Just forget about it. Now, if you think you can break a contract that works against a bad person, they’re going to win. First of all, they probably like to sue, but as a Berkshire Hathaway entity, or me personally, I think we don’t want to spend our lives doing that kind of thing. Plus, the bad guys win. They know more games. They might lose in the end, but there’s no way to waste your life.” life.”