I don't split profits 50/50 ever. Half payment upfront or after initial artwork is created is the safest bet so at least you are some what covered. The problem with contacts is they are nearly impossible to enforce and over see what is indeed owed to you. If you get stiffed/ripped off, more then likely, the amount of money it would take to peruse the other party would out weigh the total that is owed.
My suggestion is if this project is something you WANT to pursue simply for the experience or just because it would be fun, go for it and do your best to create a solid contact, like *Omega-WereWolf suggested but don't be completely shocked if the contact is not upheld and beware even if you are in the right you may not have any reasonable recourse.
I don't know anything about making contracts, but I will advise you to have proof of the agreement in more than just a digital contract. Be sure to save all emails/notes/any other way you've had communication with this person, so if something does go wrong, you have multiple pieces of evidence to the deal.
Wow! I wouldn't know what to tell you. I've seen first hand what the bad side of that stuff is. I managed a hobby shop many years ago and we did a lot to support independent artists and comic creators. The horror stories.
I'm not sure how digital contracts work. Is it like a notarized document? Is there any legal binding?
I wouldn't even know where to go to check and see if your State would recognize the contract in a court dispute. I guess call your Congress representatives.
Well, one thing you need is transparency. So if the product does sell and turns a profit the books are open so you can see what's going on.
You might need a payment plan too. Because if you're marketing this item and it sells the company might not get paid until after the product is shipped to retailers. So you have to consider language that stipulates payment occurs within a certain time period after money comes in.
Also, who owns the art? Can the company use the art for other purposes? Etc...
I heard a lot of horrible things back in the day with comic artists and writers just getting ripped off so bad it was sad. It goes all the way to the top too with some of Marvel's old school original artists fighting for royalties etc...
It's just an ugly place on the business side of comics.