What is Contract Redlining?

Over the years, the process of drafting contracts has evolved with technology. Despite the availability of new streamlined platforms, organizations are only catching up to the new paperless era, where many new methods have evolved or emerged due to more streamlined practices. However, “redlining” remains a fundamental part of the process. 

Back in its original form, and for a long time since, redlining referred to marking up a paper contract with a red pen to highlight changes or revisions. Nowadays, it means proposing, reviewing, and incorporating changes into a digital document through a collaborative process. This step is essential to ensure clarity, agreement, and, ultimately, a contract that benefits all parties involved.

However, redlining is only a part of the review process focused on marking proposed changes, while contract review is the overall evaluation of the contract’s content and implications.

What are the benefits of contract redlining? 

The complexity of contracts and their legal ramifications can lead to many interpretations and discrepancies between parties. Misunderstanding not only comes from interpretation but also from language. Transparency is one of the most critical aspects of drafting a contract, so both parties must understand what is being agreed upon. Redlining offers additional benefits beyond this, including:

Improved Clarity:At its core, redlining is a process of understanding each other and highlighting mismatched expectations. It ensures all parties understand the contract’s terms, reducing the risk of disputes.

Better Accuracy: Even synonyms and similar words can have different implications as they’re outlined in clauses and agreements. Being accurate while drafting a contract is crucial as it helps detect errors and omissions before finalizing the document. This process also accounts for human errors that may occur while drafting clauses.

Streamlines negotiation: Redlining is an organized framework for contract drafting revisions and a structured approach that accelerates the whole contracting process until an agreement is reached and both parties are satisfied with the final draft.

Can you use CLM for contract redlining?

In the modern contract world, parties can conduct the redlining process, from creation to reaching an agreed draft, with CLM tools. The effectiveness of contract management platforms surpasses basic word processing software and email exchanges in virtually every way.

Modern contract management platforms maintain detailed records of every edit, ensuring that information is conveyed accurately, despite minor changes. In traditional manual processes, when a change is marked in red and approved, the documents are sent to the next person in the approval chain, which can create a bureaucratic delay. 

However, with modern Contract Lifecycle Management (CLM) systems, this process is entirely automated, resulting in faster approval times and significantly reduced backlog. CLM Platforms allow for quick and easy resolution of disagreements.

Although organizations benefit greatly from using new tools, adoption rates for CLM are low due in part to an “if it’s not broken, don’t fix it” approach. Is your company still stuck in the paper era? Let us show you how Zeal can help you make the jump and start saving not only time but ultimately increasing your revenue.

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