[Por_sha911]

1) Take the money and cash the check at his bank immediately.
2) Send him a bill for the remaining balance. If they don't pay, its a write-off tax wise.
3) If you don't want to go to small claims court, wait for the first callback to service it and tell them no problem, I'll be there if you hand me a check for the balance when I walk in plus have advanced payment on future work. Then show up with a contract for future work.
-Don't undo what you've done. "You can't out-stink a skunk"

Oh, and as far as integrity is concerned, the days of a handshake contract are gone! Sad to say that its no longer about what is fair, its about what they can get away with. Before anyone gets too high and mighty (myself included), how many people cheat on their taxes? How many pay sales tax on things bought online and shipped from out of state? "For whoever keeps the whole law and yet stumbles at just one point is guilty of breaking all of it."
Unfortunately, people want to pick and choose which laws or moral codes they want to obey or violate. This is a product of situational ethics. There is no moral standard of right and wrong...