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In this tutorial on starting freelancing, the speaker discusses the distinctions between contracts and proposals. Contracts are described as legal documents that specify the terms of a deal, detailing obligations and legalities. In contrast, proposals serve a sales purpose, focusing on persuading clients about the value of the deal, including costs and project details. While proposals can outline terms similar to contracts, their primary function is to sell the service rather than enforce legal conditions. The speaker notes that they're not a lawyer, advising viewers to consider this information as freelance advice rather than legal counsel.