My lawyer once pointed out to me that "contracts are only as good as the people who signed them" and what I've learned over the years is to go out of my way to avoid doing business with anyone who seems to be a flake. Granted that things can go south, but this strategy works well. And I say this as someone who went to court once and still couldn't collect.
That's a variation on my own (painfully acquired) General Operating Principle about what really matters: It's not what's on the table - it's what's in the chairs.
This is especially true when it comes to small contracts (below $25K)... in many cases, the overhead of those situations makes actually going to court onerous, even if you win. You want to either get paid up front, or ramp up your relationship with someone to minimize the risk if they decide to just not pay you.
That's like "pulling out" instead of using real contraception. It's usually effective, but when it fails, it can be disastrous. That's why you should always have a good contract, just in case.
