You are absolutely right 'bout the necessity of a contract before taking up a job.
Many a times, clients give me a weird look when I ask them for an advance deposit and sign a work order before I actually get started. Dunno why people expect a designer to first prove herself by doin' their job on speculation before they finally agree to bind themselves by a signed contract.
And I hv come across a lot of clients who do not agree to pay the advance amt. Instead stress on the completion of a job and only after being "fully" satisfied, will make the lumpsum payment. Dunno how to tackle this scenario