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In this video tutorial on starting freelancing, the speaker explains the differences between contracts and proposals. Contracts are legal documents that outline the terms of the deal, detailing obligations and legal terms. In contrast, proposals are primarily sales documents focused on persuading the client to accept the deal, including the project scope and costs. While proposals can also contain terms similar to those in contracts, they serve primarily to sell the service. The speaker emphasizes that their advice is geared towards freelancers and should not be considered legal advice.