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In this tutorial, the speaker explains the difference between an invoice and a legal contract for contractors in California. Many contractors mistakenly believe that an invoice serves as a contract, but it is merely a receipt that documents payment. An invoice includes the contractor's and client's information and details about the work performed. In contrast, a legal contract, specifically a home improvement contract, is necessary for work done on existing residential properties. This type of contract is applicable to various trades, including landscaping, electrical work, plumbing, and roofing, and provides protection and legal clarity for both parties involved in the transaction.