The contracts toolkit
Why use a written contract
Apart from exceptions such as house purchase, assignment of copyright and credit agreements, a contract need not be in writing to be legally valid, provided it contains the four essential ingredients (an offer, acceptance, consideration and intention to enter into a legal relationship). A verbal agreement may be legally enforceable in theory but in practice cannot be relied on because of problems of evidence. The advantages of having a signed written contract usually outweigh the risks of not having one.
Written contracts avoid misunderstandings. If you do not write down what you have agreed, or think you have agreed, there is always the risk that the other person you are dealing with will later tell you s/he did not agree at all, or agreed to something quite different. So it is ALWAYS worth writing down what you have agreed, and getting it signed by both parties as a record.
A court may decide an important matter (for example, a reproduction fee) for you if it is clear that both parties intended to enter into a contract but failed to agree on an important term; here the court is 'implying' a term into your contract. This risk cannot arise if you write down all the principle terms.
Clarifying a relationship
Drafting a written contract creates an opportunity for both parties to concentrate on the nature of the transaction and their mutual obligations.
Once you have a signed contract, it becomes much easier to ensure that the other party to the contract keeps to it and to find lawyers who can help you if they do not.