Redline Contracting Definition

In business, a redline contract is an agreement in which one or more terms are highlighted in red for the purpose of indicating that the term is to be changed, negotiated, or removed from the contract entirely. The term ‘redline’ can also refer to the process of making these changes.

In many cases, a redline contract will be used when two parties are negotiating the terms of an agreement for the first time. One party will present the other with a contract that includes their desired terms, and the other party will then ‘redline’ the parts they disagree with. This can be an effective way to negotiate, as it allows each side to see exactly what the other is proposing.

Once the negotiating is finished and both sides have agreed on all the terms, the contract can then be signed and executed. It’s important to note that even though a contract may have been ‘redlined,’ this doesn’t mean that it’s invalid or unenforceable. Redlining simply indicates that there were some changes made to the original agreement during negotiation.