I like the idea - you invest your time but aren't out any money, and have an opportunity to do something you love and make money doing it.
Do you know this person? Whether you do or don't, a business contract is essential. It should include things like, what types of products you plan to sell, how many units per month are you expected to provide, what quality of materials is he expected to purchase, what costs will be deducted from earnings before profits and payments are determined... You get the idea.
The concern would be if he doesn't think you're working fast enough; if he has invested in materials that are now in your possession he could exert a lot of pressure on you. Perhaps it would be better for him to commission quilts from you and then sell them on his own?
Just thinking out loud. It's an amazing opportunity, just be sure to protect yourself while grabbing it with both hands. :)