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Mitchell Losey discusses the importance of contracts when starting a photography or video business. He emphasizes the need to clearly define the terms of the agreement with clients to avoid awkward situations where payment and project details are ambiguous. It is crucial to address payment expectations and project specifications upfront to ensure a smooth working relationship. Failure to discuss these details in advance can result in uncertainty and discomfort when it comes time to invoice the client. Mitchell highlights the significance of open communication and setting clear expectations to establish a professional relationship with clients.