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Understanding Contract Negotiation Through Redlining for Non-Lawyers

Posted by Amanda Butler Schley | Jan 13, 2025 | 0 Comments

Redlining is a collaborative process used to negotiate contracts by editing and marking up a draft to highlight changes, disagreements, or suggestions. Think of it as a "track changes" feature for contracts. Here's a simple breakdown of how redlining works and how you can approach it effectively:


Step 1: Review the Contract

Before making any changes, carefully read the contract to understand:

  • The overall structure.
  • Specific clauses or terms that might affect your business, like payment terms, liability, and intellectual property rights.
  • Problematic or unclear language.

Step 2: Make Changes (Redline the Contract)

Redlining involves marking up the document draft to reflect proposed changes. This is typically done in a Word document and not in a PDF document.  The process will involve your additions, deletions and comments or footnotes with clarifying questions or commentary to the proposed contract.  Once you have made the changes to the document - you will redline your version of the document (typically by saving it as a new document, i.e. BLG Comments to Commercial Lease) and then using the "Compare" feature in Word, you will compare the version sent by the other party to your new version.  This produces a new document showing the redline or the changes made from the initial contract/document.  Save this new document as "Redline [Date] [Document Name].

Focus on Key Terms

For non-lawyers, it's essential to pay attention to:

  1. Liability Clauses: Make sure you're not accepting unfair risks.
  2. Payment Terms: Ensure they are clear and aligned with your expectations.
  3. Indemnification Clauses: Verify that they protect you appropriately.
  4. Deadlines and Deliverables: Confirm these are realistic and well-defined.

Step 3: Share and Collaborate

After redlining, send the revised contract back to the other party for review. They will likely:

  • Accept some of your changes.
  • Reject others.
  • Propose their own edits.

This back-and-forth is normal and part of the negotiation process.


Step 4: Seek Mutual Agreement

The goal is to reach a fair compromise that satisfies both parties. Be willing to adjust, but don't shy away from insisting on clauses that are crucial for your protection.


Step 5: Finalize and Execute

Once all changes are agreed upon, the final contract is created, and both parties sign it.


Pro Tip for Non-Lawyers

Always seek professional legal advice if you're unsure about certain terms or clauses. While redlining is a collaborative process, it's also a critical moment to ensure you're not exposing yourself or your business to unnecessary risk.

About the Author

Amanda Butler Schley

Ranked as a Top Rated Business and Commercial Attorney, I have more than a decade of experience representing boutique hotels, family-owned businesses, privately owned restaurants, breweries, artists, executives and entrepreneurs.

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Business Law Group is a boutique business services law firm in New Orleans, Louisiana. Our focus is on understanding the legal pitfalls of your business and industry, as well as the secrets to maximizing your legal leverage at every opportunity and in every negotiation. We work selectively with clients that aren't ready for the overhead expense of an in-house general counsel, but understand the advantages of having a trusted legal advisor on their team. Amanda Butler has been ranked as a Louisiana SuperLawyer, New Orleans Top Lawyer, Best Lawyers, and in Leaders of Law.

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