It all depends on whether or not you trust him.

Me, I always get a contract except when dealing with immediate family. And that's only as long as the mediators (mom and dad) remain on this earth.

I recommend that you have a contract, and not the boilerplate AIA contract that's designed to protect the architect. It's really not a matter of trust. Many things can change during the course of even relatively straightforward projects, and it benefits everyone to have the terms in writing and agreed to in advance.

Sure it is. Trust him not to sue you if things go south, trust him not to get mad if you have to sue him, and trust that a 3rd party won't sue the both of you.

Based on your post on the appliance board, is this guy trained in commercial kitchens? Does he understand your new electrical requirements? How far along is he, given that you are still debating between the number of ovens?

We also used a friend for our architect. He is a professional architect who has done a number of excellent projects in our town. We trusted him completely. He said that it would be cheaper for us if we paid him by the hour rather than as a percentage of the project. The original set of measurements and drawing cost about 2,000 and the final construction/bid set about 3.000. So we spent 5,000 total. This ends up being considerably less than 10% of the final cost of the project; so I'm glad we went with that payment plan. To do it over again I would have wanted a contract that clearly stated what he would provide us and on what time table. We didn't ask for a contract because we felt awkward asking a friend for a contract: but it made me nervous throughout the process knowing that we didn't have a contract.

You have a budget of 40,000.00 and he wants 10%. That only leaves you 36,000 for the kitchen itself.

All areas are different but in my area a 36,000 dollar kitchen wouldn't require extensive input from an architect. It sounds like you may be using the architect as a kitchen designer? (On an aside, You'll read many, many posts here about how architects rarely make good kitchens).

I would take that 4,000 number and try to translate it into an hourly rate. At 100 bucks an hour that's only week of fulltime work. At 20 bucks an hour it would be 5 weeks of fulltime work. Which of these scenarios is closer to the truth? Then, let's assume you double your budget (not all that hard to do!) and upgrade your appliances and finishes. Even if your comfortable with paying 4,000 now will you be comfortable paying 8,000 then?

I'd get some kind of a contract for sure, but I'd also be looking to cap costs on some level if you stick with a percentage item.