I do vacation rentals all the time and always do a contract.

One thing I add to the standard stuff is I am not responsible for any damage due to acts of God / nature and then list them out specifically...hail, flood, tornado, etc. And also put in the contract that the owner has liability insurance that covers short term tenants on the property.

Not sure what you get with paypal. I pay with a credit card and then I know I have protection from the card if it's a case of fraud. Luckily it has never been an issue.