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In this video, the speaker discusses the essential elements that should be included in a design contract, differentiating it from a proposal. Proposals detail 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 protective measures in case of disputes. The speaker emphasizes that the video does not offer legal advice and highlights key elements to consider when creating a design contract to ensure comprehensive coverage.