Don't sign a contract. If they need a contract, they're worried about losing you. My first Aikido school went to contracts after I was already a brown belt, so I signed (not feeling I really had a choice) and within a few years, some stuff changed that made it so that I no longer felt safe training there. A bunch of us all left and they sent us to collections and small claims court. You don't need that crap clouding your training.
That said, my current dojo does *offer* auto payment through an ACH program and I love it. Keeps people paying on time (many folks just forget the check) and students can cancel or postpone their payments at any time.
Contracts are for Gyms and Oom Yung Doe franchises.
The larger issue at hand is what dojo has the better instruction. The dialogue regarding issues related to a contract should be secondary to the level of instruction.
I understand your emotional opinion regarding what happened to you and as a generalization, I would agree with your opinion. However, given the choices that this person has, I would opt for the better instruction.