I recently received an email from someone who would like to use a stock illustration as a (non-exclusive) logo. Since an extended license on iStock doesn't allow for logo use, he'd like to pay me directly, and has asked me to name a price.

All very well, of course, but how do I officially grant him this license? Do I have to write a user agreement for this? Does it have to be a watertight contract, with legal terms and all? I'm not really sure how to write such a document. Should I even do this myself? How do you handle these kinds of requests?

Advice and/or examples are very welcome!   

A "logo" by definition, should be exclusive, since it should be trademarkable, and having it sold RF, that is not possible.

Yeah, my thoughts exactly. At first they wanted it exclusive, but since they couldn't afford the initial offer, they now asked for a non-exclusive logo. But it's not an actual business, more like a student organisation committee or something. So trademarking isn't what they're after.

Otherwise, just write up a document (put it on the cd, and print on it as well), with whatever terms you like.  "X grants Y a perpetutal, non-exclusive license to use enclosed content for promotional purposes.  It is not to be resold, redistributed..."  yada yada.

Okay, thanks. I thought it needed to follow some juridicial guidelines or rules, but I guess not then.

I don't like to cannibalize my collection, so my strategy is usually to offer to make them something exclusive. It can be similar, but has to be unique and different too.

In understand what you mean, but that's food for another topic. Besides, I can still sell that image, because they want non-exclusive rights.

However, I am willing to sell an image exclusively, for a price that's equal or bigger than what I expect to earn from it on stocksites.