Red Line Contract Definition

In a red line contract, also known as a mark-up contract, the seller outlines all the costs associated with providing the goods or services in question. The buyer then has the opportunity to review the contract and make changes, additions, or deletions to the original proposed terms. Once both parties are satisfied with the final agreement, they sign the contract and move forward with the transaction.

Red line contracts are common in construction and real estate deals, but can be used in any type of negotiation where both parties want to have a clear understanding of all costs before moving forward. This type of contract can help prevent misunderstandings and disputes down the road.