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In this video tutorial, the speaker discusses the key differences between contracts and proposals for freelancers. They emphasize that contracts are legal documents outlining the terms of the deal, indicating who owes what, and defining legal obligations. In contrast, proposals focus on selling the project, detailing what the deal includes and its costs, serving as a persuasive tool to secure the agreement. While proposals also include payment terms and other details, they are primarily aimed at winning the client's approval. The speaker notes that a proposal can serve as a contract in many cases, blurring the lines between the two.