The Value of Contract Drafting and Redlining

Contract Drafting
Contract Drafting or Contract Authoring

Easy Contract Drafting and Redlining using Microsoft Word and Contract Management Software

Also known as a (“blackline”) a red line within a contract offers an easy and quick view of all the differences between previous contract drafts and the new ones. Redlining is done on documents such as contracts. It involves marking texts in documents to indicate that there have been some additions, changes, rejections, approvals and deletions. These markings are usually in the red color and that is where the term redlining. The easiest way of redlining a contract is by use of contract drafting and management software. Most of the software can allow you to use other colors for redlining if you are not comfortable with color red.

The software in this case works by underlining the added terms and striking through the deleted terms. Although it deletes the terms, they remain legible to anyone who reads them. It is important to do carry out the redlining process the correct way because if done otherwise, it could delay negotiations and make you sign terms that you did not want to sign in the first place. Redlining is not just about marking a text but it also involves processes, skills and techniques that apply to good redlining during the contract drafting process. You have to know much about these because if you do not have a firm grip on them you will lose control and will negatively impact on your business.

In the process of contract management, redlining comes up during the negotiations. A point to note is that apart from the main contracts, there are other documents that relate to the main agreement and they are written after the signing of the contract. Such documents include memos, reports, and e-mails. Each of these can change, add to as well as eliminate the commitments that people make in the main contract. Redlining is therefore, not something you do once but is a continuous contract drafting process that will require your attention during the lifecycle of the contract.

How to create Redline Successfully

1.Know Your Redlining Software

Some people will start working with software without knowing more about it and how it helps further their cause. Once you have identified the correct software to use for redlining purposes, you should try to be intimately familiar with its redlining feature. You can study and run test redlines as well.

2. Never Create a Redline over another Redline

To get the best results, you should use two-dimensional redlining when you have a contract with two versions. People who create three versions; the current one, the previous and the one before the last usually have a difficult time often create a document that is not easy to view. It is common for people to try simplifying a triple redline by using different colors to the versions but this never works out as expected because it does not create a legible comparison. Additionally, you will not get much when you compare three versions. When it comes to contract negotiations, the versions that matter are the current and the last one.

When you are drafting, do not use the “Track Changes” feature for adding your redlined changes on the redline of the other party, to create a comparison. You should instead work on another copy of the last version belonging to the other party. You could use the redline of the other party as well. If this is your chosen route, you should go through it and accept all the changes that you agree with and reject those that you do not want. Most documents will have the reject and accept buttons and you can use them for those purposes. Once you are complete with the revision which includes accepting and rejecting, you will have a clean document with proper language and with no bearings from the previous versions. You should then run a redline as you compare it to the clean copy of the last version belonging to the other party.

3. Avoid Reading Triple Redlines

Many people confuse themselves as they try to read a triple redline. You should avoid doing this and instead run another redline while comparing your last version and the revised version of the other party In instances where the other party does not send you clean copy, hit the “Accept all Changes” button or a similar button if you are not using A Microsoft Word document. This will help to make another version the page belonging to the other party. You should then run a redline that will compare to the last version you have. Some people circumvent this by sending their redline as PDF along a clean copy. That makes it difficult for the other party to edit the redline, create a triple red line meaning that they will have to work with the new copy.

4. If in Doubt over another Party’s Redline, Run Yours

Sometimes people will send the other parties a redline that does not match the clean copy of the recipient. An example is a clause gets deleted from the redline and the clean copy but the deletion does is not struck through at all. In such instances, the language could be missing, and this means that if you are just reviewing struck through deletions and underlined additions, you will not notice any changes. In most cases, the problem could arise from carelessness and not dirty tricks which will not help you when you sign the wrong terms. Running a red line from your end can help you when you encounter such issues. At this point, you should compare the last version you had with a clean copy belonging to another person.

5. Do not Rely on “Track Changes”

Microsoft Word Software has the track changes , and these can have redlines as well when one revises a particular document. Track changes is a feature that work for a few revisions drafted quickly this can be in a single sitting. However, this does not create a good , clean version and you can spoil the whole document if you are working on the same language money times. Instead of dwelling on track changes, you should create new, clean versions of your contract and go on to run your redline against the previous version.

6. Very Few Changes

A red line draws the attention of the other party to the changes you are making. The fewer changes you make the less work the other party will do and the more reasonable you will seem. You should not make unnecessary changes if you want your negotiations to work as fast as possible. A grammatical error can change the meaning but there are some that do not have an impact. The same can be said about run-on sentences, passive language, poor construction and so on. You should not use them in your drafting and avoid making changes unless they change the meaning that negatively impacts on you. Light redlines often make people happy and happy people make good and flexible negotiators .

7. The right Software for Drafting and Redlining

A good contract drafting and redlining software has some basic features such as rejecting and accepting proposed changes, track changes, compare versions of documents and combine versions from multiple authors into new documents. Normally, it would take ages for a person to track all the changes in their documents manually and it can be quite cumbersome as well. Capturing the changes should be done in a way that will not impact on the computer of the user. You can set several rules that will help you capture the changes to your document as fast as they are made. You can use the rules at designated steps within the process of the contract.

You should also be able to compare and make changes on certain documents during their life-cycle. Some of the things to include at this point include content changes such as amendments, deletions and additions. There should also be header/footer changes. All the changes should be automatically highlighted when the next person looks at it after the external party sends it. The main reason for comparing documents automatically is to remove manual steps and offer a more shortened cycle for revision. As documents go through the review cycles, externally and internally, businesses analysts should identify the logical points within the contract drafting approval process and include events for document comparison. As your document follows the flow of the process, all the changes that have been made will be highlighted as soon as the next person starts working on the document.

Key Factors for a good redline

Always Make the Deal

When redlining a document, some people will forget that they are drafting a document to make money and sink the whole deal. This is especially when you fear risk or if it’s an attorney, they can be too tough. In case you blow up a deal you may end up losing your job. To avoid this, you may have to be careful and draft a document that will make money.

Redline only the Important Parts

Some people redline all the terms at first glance although not every term needs improvement. In most cases you will find poorly written contracts, however, you cannot use a redline to help in that. This is because it can slow the process. You should also not dwell on the edits of the other party if you have had a chance to look at them and they are not as important. Your focus should be on the flat-out unacceptable or unclear terms.

Communicate Generously and Be Considerate

When Drafting a Contract You should always have in mind the reaction that people will have when they see your redline. For instance, you might find yourself stepping on the other party’s toes if you delete large parts of the agreement without offering an explanation for your actions. Before you delete any part, you should call the other party and be sure to tell them the reason for your actions. Take another Look You should read the contract one more time as some details are just too important. It is therefore, your job to know which are the most important details and which ones are not.
Presenting a redlined document that does not have some important components may make you seem incompetent or snaky to the other party. Having another look at a later stage may offer you new and surprising insights It might also help if you can call in a colleague to have a look at the document. So as to have enough time to do all these, you should never let a redline remain in your in-box. As soon as it comes, ensure you have put it among the top priorities of the day.

Common Pitfalls for Contract Drafting and Redlining a Document

Despite their best intentions, sometimes people who are drafting documents often get them into trouble. Here are some of the practices you must avoid in order to remain compliant and steer clear from any problems.

1.Drafting a section or Clause from Scratch

It is advisable to not start contract drafting from scratch but there often arises a need for a custom language. Some people make up entire sections, clauses or pulling out unreliable forms from popular search engines that do not reflect current market standards or laws. Drafters should, however, look for the large archives with sample clauses and agreements available from the main legal research providers. From such resources, it becomes easy to get the language to use from the tested contracts that match your circumstances. Reliable language will offer the ideal chance of carrying out the interests of the party. Should the court resort to the common interpretations of art terms, consistent phrases and defined terms, your contract will not stand alone.

2.Inconsistently Defining Phrases and Terms

Sometimes Contracts can grow longer; thus, it becomes you can get the temptation to define some terms in a clause or section instead of in the upfront definitions part of the contract. This practice can lead to ambiguity when the terms appear in another part of the contract. This can happen as well when the terms are seen in the same part but without capitalization. Some people may use the drafting ambiguities to present a case saying that an exclusion is broader as compared to the intended. As a good businesses practice, it is always advisable to make sure that every defined term has been moved to the definitions part. It can be quite tedious reviewing every reference to the defined part and this is where good software comes in because it can help the user with this task as well. Some tools can find misplaced cross references and identify the undefined terms many times as well.

3.Misuse of Conjunctions and Plural Nouns

Some people do not use plural nouns and conjunctions the right way. Such words include and, every, or, any and each. Using these words will cause confusion as one will wonder is the contract for one member of a group or a whole group. Ambiguities are often gateways to legal challenges.

4.Leaving Out the Key Details

The best Contract drafting practice should purposefully accomplish the goals of the parties while at the same time protecting the interests of the clients. Sometimes a client will want to leave out material information from a contract and then rely on some vague descriptions that will be determined at a later stage An example is “consulting services” which do not explain the type and nature of services. Such kinds of contracts often leave an open door way to disputes. For a complete and precise contract you should have a sit down with your client to flesh out all the materials terms. Clients really appreciate the clarity that comes from this process and the contract will reflect the bargain of the parties.

5.Not Dwelling on Legal Aspects

Sometimes people fail to scrutinize choice forum, law as well as other aspects to look for potential benefit from a contract dispute. You should always spend time to create a standard form that covers these provisions. It is imperative that you stick to them as much as possible. The provisions will give your client much leverage and are definitely worth the extra care and time.

6.Relying on the Track Changes Feature

The Track changes feature is not the best tool to use when negotiating your legal documents with the opposing counsel. After going back and forth for several rounds it might be difficult reading the contract and ensuring that you have captured the intended meaning. You should instead draft the document afresh and use your redlining software all the way. After you have completed the document, you should redline the final version against original to conform the understanding of the parties. It will also serve as a good safety net before any of the parties can sign.

7.Not having Much time for a Review

Not having enough time for review can lead to many mistakes at the drafting stage. Although it can be much work, a review will involve keeping track of defined terms as well as references to other parts, documents and exhibits, changes from the standard times and formulas. You can enlist software to help you with this in case your trusted associates are too busy to do it for you. You should always make unfinished contracts as your drafts until the day you can sign.

8.Assuming that Contracted Drafters Did a Perfect Job

Some companies hire outside counseled to draft their contracts for them. Once the drafts are done, they assume that the contracted legal counsel did a perfect job. However, contracted drafters, just like an in-house drafter can forget to make an update to a cross –reference or they could fail to do many other things while contract drafting. You should review their work using a draft and redlining software to ensure that it is ready for distribution to opposing counsel and parties.

9.Failing to Crate Systems for Keeping Standard Forms

Whenever a standard form changed severally, it is always not easy following up on the modifications on each signed contract. This problem presents two other issues that you will have to confront; it presents an administration challenge and inexperienced drafters may fail to realise the reasons for the disparities in standard terms. On the other hand, most experienced drafters will come up with cover sheets to outline the negotiable terms and then go on to record the variations for all contracts that they draft. After some time, the cover sheets turn into valuable material for reference when drafting new contracts. They can also be used for determining what is standard and what is not. Contract management software can help in this regard as well. This is especially for the large companies.

10.Forgetting the Sent Version and Its Recipient and Saving Versions on time

It is advisable to save frequent versions and be always be in control of all the signed copies that you have been producing. You should produce attached exhibits as well.

CMx Contract Management Experience - Contract Drafting and Redlining

The contract creation process is not such an easy process and there is always a need for back and forth. All these is in an effort to ensure that the final product is well done and one time to aid in faster businesses negotiations. The CMx contract management experience contract drafting feature works very efficiently to simplify communication internally and externally making for a smooth process. You are also assured of faster response, something that your requestors and contract drafting team will really appreciate. You will also have an audit trail for contract monitoring as well as audit logs for reference later during negotiations.

Most businesses people are usually concerned about security when conducting any kind of business online or when using a particular platform. Quite a number of people will make a decision on whether or not to use particular software based on its security features. The CMx will give you such an experience as well. Importing both paper-based and electronic contracts and agreements that have been generated by other entities will also enable external and third party negotiation as well as collaboration. This means that the negotiation part of the contract management process will take a shorter time and this will make both parties happier. You will also greatly benefit from emails and 'My tasks’ alert that helps the contract management team to be efficient.

Contract drafting and retrieving of the legal documents using Microsoft Word is possible with the central versioned enterprise contract management software repository. Draft contracts easily and with the best language will help you save time and make your work understandable to anyone comes across it.