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The tutorial explains the difference between an invoice and a legal contract for contractors in California. It emphasizes that many contractors misunderstand these two documents. An invoice, which includes contractor and client information along with work descriptions and payment details, serves merely as proof of payment and does not provide legal protection. In contrast, a home improvement contract is essential for residential projects and offers legal protection. This type of contract is applicable for various trades, including landscaping, electrical work, plumbing, and roofing, when performing work on existing residential properties.