Redlining

What does redlining mean?

Redlining is the process of editing a contract where two or more parties are negotiating or collaborating. The goal is to produce a joint document that satisfies all parties.

The term redlining comes from the original, physical method of editing a contract, which involved printed paper and red pen. One party would take the document and cross out words and add changes in red ink. That document would then go to the next processor, who would do the same. The red ink made it easy for everyone to see the exact changes that were made. Eventually, everyone would agree on a version of the contract. A clean document was then created at the end to fix the final agreement.

Today, the process is much simpler. With a cloud-based contract management solution, you can “redline,” or collaborate on, contracts in real time. Your legal department doesn’t have to worry about sending physical copies back and forth to manage the different versions. This can help you speed up your contract negotiation process by days or even weeks.

How does “redlining” work specifically?

Redlining is more than just editing. It’s a collaborative process where all parties involved in the contract work together to create a document that satisfies everyone. In the past, this was done with paper documents and red pencils, but today it is mostly done via computer files.

Specifically, Party A submits a contract to Party B. Party B makes changes. This new version is passed to Party A, which makes its own changes and approves or rejects Party B’s changes before sending the file back. This continues until all parties are satisfied with the contract. To learn more, read our extensive guide on contract redlining.

When do you use redlining on a contract Redlining?

You must use redlining on a contract whenever more than one person needs to agree on the final version. It is most commonly used when multiple groups are negotiating the terms of a new contract, but that is not the only used case where it is used. You may also need to use redlining for contracts where you are creating a new contract template or revising old contracts.