How to redline a contract

Redlining a contract means two related things: marking up someone's draft with the changes you want, and producing the document that shows what changed. Most of the difficulty is in neither — it is in knowing which two versions you are comparing and what to send back.

Which two versions

Before anything else, settle what the comparison is against. When a draft comes back from the other side, the useful comparison is almost always the version you sent against the version they returned. Not the first draft, not your internal working copy, and not whatever was most recently saved in the folder.

This sounds obvious and is the single most common source of a confusing redline. Files accumulate: an internal draft that never went out, a version where somebody fixed the schedule, a copy saved after a call. Comparing against the wrong one produces a document full of changes the other side never made, and the time it takes to work out why is time you do not have at 9pm.

Name the files so this is not a matter of memory. Something like Agreement — 2026-03-14 — sent to Counterparty is worth more than any naming convention involving version numbers, because it records both when and to whom.

Marking it up

Marking up is drafting, and the mechanics matter less than being explicit. Two habits make a redline easier for the person receiving it:

• Make the change, do not describe it. A comment saying "this should be mutual" costs the other side a drafting step and invites them to draft it their way. Write the words you want.
• Separate the substance from the tidying. If you have fixed forty cross-references and changed one liability cap, say so in the covering note. Otherwise the cap is one change among forty-one and may be read as housekeeping.

Where you are working in Word, that means turning on tracked changes before you start rather than after. Where you are working in an email — because the other side sent a clause rather than a document — it means keeping the original text somewhere you can still see it, which is exactly the situation this tool was built for.

Producing the comparison

For a whole document, generate the comparison rather than relying on the tracked changes you made. A generated comparison catches everything, including the edit somebody made with tracking off and the paragraph that moved when a page break was deleted.

Word does this well: see how to compare two Word documents. Dedicated products do it better on long or heavily formatted agreements. If you do not have Word, there are alternatives, with real limits worth knowing before you rely on them.

For a clause or two — the case where you are checking what someone changed in a paragraph they pasted into an email — a full document comparison is more work than the question deserves. Compare the text directly.

Reading the redline

Read it twice, for different things.

First for substance: what did they change, and does it matter? This is the reading everyone does. Second for consequence, which is the one that catches problems: does a change here break something elsewhere? A defined term that was narrowed, a clause that was deleted and is still cross-referenced, a limitation that now sits in a clause the indemnity does not pick up.

What to send back

Convention in most transactional practice is to send both a clean copy and a redline against the version you received, with a short note listing the substantive points.

Say what the redline is against — "marked against your draft of 14 March" — in the email itself. It takes four words and removes the most likely misunderstanding of the entire exchange.

Which tool for which job

The honest division, which has nothing to do with which product is better:

• A whole agreement, or anything where formatting and numbering matter.Word's Compare, or a dedicated comparison product such as Litera or Draftable. They handle file formats, styles, numbering and tables, produce a document you can hand over, and are supported. Nothing browser-based replaces that.
• A clause, a paragraph, a definition — pasted from an email. Comparing the text directly is faster and involves no files at all. That is what Redline Pad is for, and it is deliberately not more than that.