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In this video tutorial on starting freelancing, the speaker discusses the differences between contracts and proposals. Contracts are legal documents that detail the terms of the deal, including obligations and legal conditions, while proposals are more sales-oriented documents that explain why a deal should be made, including details like costs and project scope. Proposals also often include payment terms and can resemble contracts; thus, they may serve dual purposes. The speaker emphasizes that the advice provided is from a freelancer's perspective rather than a legal viewpoint.