As a freelance writer, I’m a firm believer of getting everything in writing. Maybe it’s partially because my career background is as a paralegal, but I think it’s also just good common sense. A freelance writing career is difficult enough without dealing with non-paying clients and clients who change their minds. Of course, there will always be clients who try to get out of paying, or who try go get away with changing their terms after a freelance writer has already done the work, but using a contract or letter of agreement can help cut down on those types of clients.
If you need a good template for developing your own letter of agreement, I like this one from the EFA (Editorial Freelancers Association): http://www.the-efa.org/res/sample_agreement.html
If you want a solid freelance writing contract that you can be sure is legal in your jurisdiction, consider joining a Writers Union (like the NWU - http://www.nwu.org/nwu) which offer such services to their members.
If you don’t use a formal freelance writer contract or letter of agreement, here are a few tips from my own experience (note: this isn’t legal advice):
1. Don’t make deals over the phone, or if you do, follow up with an email summarizing what was discussed and asking for a reply stating the terms you’ve stated in the email are correct.
2. Store such emails in a special folder or print them out. Don’t delete them, at least not until after your paycheck is cleared.
3. Always agree on terms (pay rate, method of payment, when you’ll be paid, as well as the client’s expectations and when you’ll deliver) BEFORE you begin an assignment.

