This Rule #7 of Contract Redlining Etiquette is about the act of tracking changes throughout the course of a contract negotiation. It applies universally to your professional obligation of transparency from initial drafts through the final version, and with any tool you decide to use (not just MS Word).
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Remember, you’re still drafting even while negotiating. The key to drafting a clear contract is to re-draft clearer contractual terms that correspond with your redlines and reflect the parties’ intent. The best way to accomplish this is for the party requesting a substantive change to propose the corresponding language. Here are some best practices to keep in mind for this simple yet often overlooked rule of thumb.
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When we think of the contract negotiation process, most of us think only of the external legal negotiation and often neglect the importance of the internal negotiation. The stronger the internal negotiation, the stronger the external negotiation. This Rule focuses on using internal redlines to get the most out of the internal negotiation phase.
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Now that you’ve exchanged redlines with your counterparty, it is time to switch to live negotiations via a phone call or virtual meeting. The goal of the contract negotiation call is to close out the remaining open items and move the contract forward towards a final agreement.
How can you run the call as efficiently as possible to achieve this goal? Follow Rule #4 on Running Calls.
Overall, we should strive to exchange redlines as few times as possible between contract initiation and contract execution. The redlining etiquette rule of thumb is to initiate contract negotiations via email, exchange redlines once, then switch to live negotiations to move negotiations forward.
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When it comes to redlining etiquette, Rule #1 is to accompany redlines with explanatory comments. An exception to that rule begets Rule #2 – silent redlines can be a powerful negotiation tool. There is an essential distinction between silence and silent redlines.
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The heart of all contract negotiations lies in between the redlines. In the comments, explanations and questions that accompany the redlines. But not all contract negotiators redline the same way. Some never leave comments with their redlines (rude!), others leave too many (annoying!).
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Redlines tell us something that the original words don’t. When we read between the redlines, they tell us what the other party is thinking, wanting, feeling, reconsidering, ready to reject, or willing to accept. Smart in-house counsel will accompany their substantive redlines with comments.
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