I actually have two this season, both my animals have gone out.

A well written contract is a must - ESPECIALLY if it's a friend. The last thing that you want to happen is that a friendship ends of a mis-understanding. Make sure you're both on the same page about everything.

So far, mine are going well, the two people I have a contract with are great communicators, and they are both people that I know and trust - as Heather hit upon - there has to be trust.

You also have to be willing to outline the difficult stuff - what happens if the loaned animal dies? What are the conditions if that happens?

It's definitely not something to enter into casually.