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In this video tutorial on starting freelancing, the speaker discusses the key differences between contracts and proposals. They clarify that contracts are legal documents outlining the terms of the deal, responsibilities, and legal obligations. In contrast, proposals are sales documents aimed at persuading clients to agree to the deal. Proposals highlight the project details, costs, and payment terms, effectively serving as both a pitch and a preliminary agreement. While contracts focus on legal terms, proposals play a crucial role in the sales process, often overlapping in content. The speaker advises viewers to approach this advice as freelancers rather than legal experts.