Redlining a contract is the process of editing a draft. The draft might have been provided by opposing counsel, or it might be an old contract you are using as a template. Redlining requires that you go back and forth with the other side to hammer out the details of your agreement. Always think carefully before proposing edits. If you want to make substantial changes, consult a lawyer to protect yourself and other people involved in the contract.
Steps
Method 1
Method 1 of 3:
Making Edits
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Turn on track changes. If you are using Microsoft Word, then do your editing using track changes. Go to the Review tab and click on the Track Changes button. Your changes will show up in red, and the other side’s will show up in a different color. You can swap the document back and forth. [1] X Research source
- Microsoft Word also lets you add comments, which can be helpful if you need to explain your reasoning behind an addition or subtraction.
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Identify what you want changed. Some changes are a given. For example, if you’re working off a template, you’ll want to change business information, such as the name of the parties, pricing, dates, etc. [2] X Research source
- However, you should take a more careful approach when reviewing all other terms.
- Avoid changing entire sections of the contract. This could anger the other side, which is not what you want to do. Instead, you could simply highlight the section and share with the other side why you want to change it.
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Confirm that your changes are reasonable. You should have hammered out the key terms of your contract orally. However, you might realize you never reached agreement on some important terms, such as your right to a refund or right to cancel the contract. You can certainly add these terms in, but check what is common in industry contracts.
- At this point, you might want to consult with a contract attorney or lawyer familiar with your industry. Alternately, you can search online for sample contracts to see what is the industry standard. [3] X Research source
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Anticipate the other side’s reaction. A good redline will only change what is necessary. You don’t want to change too much and jeopardize the deal. For these reasons, take a moment to anticipate how the other side will respond to your changes.
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Put the contract aside for a day. Take your time redlining the document so that you don’t forget to include something. Once you send a redline to the other side, you shouldn’t follow up with additional changes until you receive their redline. Slow down and get your draft just right. [4] X Research sourceAdvertisement
Method 2
Method 2 of 3:
Going Back and Forth
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Send two copies to the other side. Send a clean copy and one copy with the track changes. [5] X Research source The clean copy will be easier for the other side to read, but you want them to see exactly what you changed and your comments why.
- In your email, tell the other side when you are available for discussing your proposed changes. [6] X Research source
- It might also be a good idea to explain why you made changes, if you didn’t include comments throughout the document.
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Review the other side’s edits. Don’t have a kneejerk reaction where you automatically reject any change proposed by the other side. Instead, take a moment to reflect. Then take another. Is the change completely unreasonable? Or is it something you can live with? [7] X Research source
- Avoid arguing about every little change. You can sink the deal at any point in the redlining process, so try to be flexible.
- However, you should certainly clarify anything that is unclear. You don’t want to agree to a contract you don’t understand.
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Handle serious disputes over the phone. Avoid going back and forth over small details. At some point, one of you needs to pick up the phone and discuss the issue. You’ll resolve your disagreements much faster by talking. Make sure all relevant parties are involved in the phone conversation.
- Phone calls are great for avoiding miscommunication and hurt feelings. [8] X Research source
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4Write down any major details discussed over the phone. If you have an important conversation or decide on big changes to the contract over the phone, make sure to get it down in writing. Take notes during the call or ask the other person to have any changes mapped out in writing and sent to you to get your official OK.
- You can use these notes for reference, and in case of any future disputes.
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Method 3
Method 3 of 3:
Using a Lawyer
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Find an experienced attorney. Make sure the lawyer is experienced in your field. For example, if you are drafting a manufacturing contract, hire a lawyer who has experience with those types of contracts.
- Begin by getting a referral from your nearest bar association. Call up the lawyer and ask about their experience. Don’t worry if they aren’t qualified to help you. You can ask them to refer you to an attorney with the necessary experience.
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Review legal terms. Every contract contains business terms and legal terms. Legal terms include things like warranties, liability if something goes wrong, and whether you can assign the contract to someone else. If you want to negotiate these legal terms, you’ll probably need a lawyer’s help. [9] X Research source
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Use your lawyer as a way to address issues with the contract. If you reach an impasse with the other side, you can always use your lawyer as an excuse. Call up the other side and say, “I think the contract generally looks good, but my lawyer is worried about the following.” This is a good way to maintain a positive relationship with the other side while still rejecting certain contract provisions. [10] X Research source
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Ask your lawyer if you should walk away. During the redlining process, you might discover that you can’t reach an agreement that is acceptable to all parties. If not, you might need to walk away from the deal. Talk with your lawyer about your options.
- Sometimes walking away—at least temporarily—is a good bargaining strategy. [11] X Research source The other side might realize it is afraid of losing your business and agree to your demands.
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References
- ↑ https://www.inc.com/guides/2010/09/how-to-red-line-a-contract.html
- ↑ https://lawyerist.com/draft-great-contract-redline-deadline/
- ↑ https://www.inc.com/guides/2010/09/how-to-red-line-a-contract.html
- ↑ https://lawyerist.com/draft-great-contract-redline-deadline/
- ↑ https://www.inc.com/guides/2010/09/how-to-red-line-a-contract.html
- ↑ http://www.workmadeforhire.net/good-advice/good-advice-7-the-art-of-editing-a-contract/
- ↑ https://lawyerist.com/draft-great-contract-redline-deadline/
- ↑ https://lawyerist.com/draft-great-contract-redline-deadline/
- ↑ https://www.inc.com/guides/2010/09/how-to-red-line-a-contract.html
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