Useful Advice: What is a contract?
A contract does not have to be written down (although it does help prove what was agreed). A contract is an agreement in law between two or more parties to do or to not do something.
As a general rule it is not merely breaking the agreement which can lead to legal action. You will normally need to prove a loss. This loss may then be repayable by the person or organisation in breach of the contract. They are also likely to have to pay your costs (these can in many cases far exceed the actual loss involved).
As with many areas of business (and life in general) it is worth taking specialist advice when drawing up a contract.
Chose a reputable commercial solicitor and seek references when getting a contract drawn up.