I personally almost always use PDF's and after about 30 clients, haven't had a problem.
I always draft a very professional-looking project "proposal" as well as a "contract." The proposal states everything that Julian's post pointed to:
http://www.talkfreelance.com/showth...45&page=1&pp=10
At the end of the proposal, I append a "contract" with the legalese (ownership, payment schedule, etc.). Then I e-mail the proposal AS WELL AS print a nice color version, put it into a presentation folder, and mail it Priority Mail (requiring a signature) to the client. This always adds an extra touch of professionalism.
Once they sign the proposal agreement and the contract, they can either fax, mail, or even hand it to me at the next client meeting.
Good luck!