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In this video tutorial on starting freelancing, the speaker discusses the differences between contracts and proposals. They clarify that contracts are legal documents that outline the terms of the agreement, detailing obligations and legal responsibilities. In contrast, proposals serve as sales documents aimed at persuading clients and outlining the project scope, costs, and payment terms. The speaker notes that proposals often include elements of both sales and legal terms, and frequently, a proposal can essentially act as a contract. They emphasize their advice is based on freelancing experience, not legal expertise.