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Hey Forest,
From my understanding this company is asking you for a "guest post".
This WON'T affect your SEO negatively.
However, you said that they are asking for you to link to your direct competitor? yeah thats a no go.
If your SEO is as good as you say - this Guest post will do them Good and take up some market space on the search queries that could've been yours.
Also, throughout my years of experience with guest posting I have never encountered a company that had asked for a contract agreement - so I wouldn't do this offer personally.
However, selling Blog Posts on your blog could actually be monetarily beneficial for you. You could probably make an extra 1-2k a month basically doing nothing.
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