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In this video, the speaker discusses essential elements that should be included in a design contract, differentiating it from a proposal. Proposals outline project objectives, scope of work, phases, activities, timeline, and pricing. In contrast, contracts are legal documents that define the terms and conditions of the project, serving as a protective measure in case of disputes. The speaker emphasizes that contracts are critical for legal coverage when issues arise. They also caution that they are not a lawyer and do not provide legal advice but share important elements to consider when drafting a design contract.