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In this tutorial video by Edgar from TaxDome, viewers learn how to create contract templates. To start, navigate to the settings page, then to the templates tab, and select the contracts sub-tab. Users can create a new contract template or copy existing ones from the template library, and existing templates can be edited by clicking on their names. To create from scratch, click the "create template" button. The first field is for naming the template. Users can choose between two formatting options: "what you see is what you get" (WYSIWYG) for simple text formatting or HTML mode for advanced formatting with HTML code.