Business Contracts/Agreements under Sole Proprietor

I was wondering if a sole proprietor business in Hawaii (web design and custom database programming) utilized contracts or agreements that a client would sign before a project be enough to protect the sole proprietor in the event of a lawsuit. I understand that a sole proprietor's personal and business assets are seen as one and therefore has the potential to cause bankruptcy in such an event. However, if the client were to agree to the terms stating that the designer would not be liable for items such as amount of business generated from the web site or custom database, possible damage to computers utilizing the applications, copyrighted or trademarked images provided to the designer by the client, etc. would that protect the business from lawsuits.

Basically, would the business need to become an LLC or INC if there is only one individual running the business. Would these contracts and agreements protect a sole proprietorship from legal issues?

It is much better and very easy to become an LLC or corp. But you can agree contractually that you are not liable as well--but it is hard sometimes to cover every issue or situation even when you think you have done so.