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!). Some propose changes via email (eye roll) while others do it in the document itself (yes, please). When we have thousands of pages of redlines to review and only so many hours in a day, shouldn’t we all get on the same page when it comes to redlining etiquette?
This article will be the first in a series of articles on Contract Redlining Etiquette™ (“CRE“) that will set some ground rules on which fork we should use with the salad plate when it comes to redlining during contract negotiations.
Rule #1 – Always Accompany Redlines with Explanatory Comments
People are more likely to agree with you when they understand you. Your words in the comments form your persuasive argument, your client advocacy, your opportunity to convince the other side that your language is better. The trial attorney’s equivalent to the closing argument. So don’t just scribble a quick note that says “Rejected” or “We cannot agree.” Really think about what you are going to say, strategize it, edit it, and make as much use of that little comment box as you can.
Your comments should include any information that would assist the other side in understanding the “why” of your redlines. Explain why you made those changes or why you’re not willing (or unable) to accept their language as-is. Give examples and share references where helpful. Don’t be afraid to include both business and legal justifications to support your position.
Every rule has an exception, and this one is no different. Redlining is an art form, it should be customized to fit the particular contract negotiation. Here are a few exceptions to keep in mind when tailoring your strategy.
- Minor or formatting changes don’t necessarily need an explanation. If your change is merely stylistic, consider not even making it. Over redlining can cause distractions.
- Self-explanatory or obvious to the lay person. Key words, lay person.
- After one or two rounds of redlines, get on the phone with opposing counsel and negotiate the old-fashioned way. It is a good idea to have the latest draft of redlines out during the call as a reference, or even on a screen-share so both parties can see. (See CRE Rule #3 on Email Exchanges.)
- For complex redlines, also include a high-level summary of the changes in a corresponding email.
- There are times when being silent on a redline, such as not including a comment, can be a powerful statement in and of itself. But use this exception sparingly and purposefully because it can be taken the wrong way when used too often. One example of using silence correctly is when I have already explained my reasoning in previous drafts and they were ignored. In this instance, my silence communicates that I am not going to waste my time repeating myself and my position has not changed. (See CRE Rule #2 on Silent Redlines.)
The example below depicts the Purpose clause of a Non-Disclosure Agreement. As you can see, I included redlines to reflect my proposed language, and then a comment justifying my redlines. My reasoning appeals to both sides, which makes it even more likely that this change will be accepted. At the very end of the clause, I capitalized the “A” in “Agreement” to avoid confusion between this Agreement and other agreements. Since that change should be self-explanatory to the contract drafter, I did not accompany it with a comment.
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Author: Nada Alnajafi
If your SaaS system is going to be tested in a proof of concept (POC), be sure to put an agreement in place. The POC agreement would ideally restrict access to the SaaS in a test environment, disclaim any warranties and indemnities and require your customer to ensure that no confidential or personal data is processed while in the POC mode. To learn more and join in the discussion, check out my LinkedIn post.