Whenever there is a contract dealing, it need to be enter into a legal contract based on the court of law by writing the terms and conditions legally and clearly as per the law. Further the terms & conditions and obligations and liabilities are need to be clearly understood by both the parties before the sign or form the contract legally. If you both the party want to get protect from each other with help of the law then this would be the right approach. This is the ideal way to collect the lien when the other part goes as default. If contact is not formed, then this will be tidy job to collect the balance amount for which a complaint has to be filed legally by accusing the other party for not making the payment and this need to be proved by the facts and evidences. Then only this can be filed as case under court law and based on the investigation the verdict will be given , This will not suit for any kind of business. So its better to enter into a contract to ensure the safety of both the party and both the sides.