Why is it called redlining a contract?

The term comes from the pre-digital practice of attorneys literally marking proposed changes with a red pen on printed contracts. Today, contract redlining refers to any tracked-edit annotation system — most commonly Microsoft Word's Track Changes feature — regardless of color.

How do you redline a contract in Word?

To redline a contract in Microsoft Word: (1) Open the contract in Word. (2) Go to the Review tab and click Track Changes to enable it. (3) Make your edits — additions appear underlined and deletions appear with a strikethrough. (4) Save and share the file. The other party can then accept or reject each change. Talking Tree's Redwood add-in automates this by generating AI-suggested redlines directly in Word.

What is the difference between contract review and contract redlining?

Contract review is the analysis phase: identifying risks, missing clauses, and problematic language. Contract redlining is the editing phase: making specific tracked-edit changes to the contract document to propose better language. AI tools like Talking Tree do both — first reviewing, then generating ready-to-use redlines.

What Is Contract Redlining? A Plain-English Guide

Q: Can AI do contract redlining?

Yes. AI contract redlining tools like Talking Tree's Redwood analyze a contract, identify risky or non-standard clauses, and generate suggested edits as tracked changes in Microsoft Word. This reduces a 2–4 hour attorney redlining session to under 10 minutes, at a fraction of the cost.

Quick Answer: Contract redlining is the process of marking proposed changes to a contract using tracked edits — strikethroughs for deletions, underlines for additions. It gets its name from attorneys historically annotating contracts with red pens. Today, redlining is done digitally using Microsoft Word's Track Changes feature. AI tools like Talking Tree's Redwood automatically generate redlines by analyzing a contract and suggesting edits to risky or unfavorable clauses — in under 10 minutes.

What Does "Redlining" a Contract Mean?

When attorneys or business parties negotiate a contract, they don't email each other paragraphs of commentary — they redline the document. Redlining creates a visual record of every proposed change: text you want to delete is crossed out, text you want to add is underlined. The other party can then accept, reject, or counter each change.

The term "redlining" comes from pre-digital legal practice, when attorneys physically marked contract printouts with red pens. Today the practice is entirely digital, but the name stuck.

What Does a Redlined Contract Look Like?

Example — Before and After Redlining

Original clause: "Either party may terminate this Agreement at any time with ~~thirty (30) days'~~ ninety (90) days' written notice to the other party."

In this example, the receiving party is proposing to extend the notice period from 30 days to 90 days — giving them more time to find alternatives before termination.

How to Redline a Contract in Microsoft Word

Open the contract in Microsoft Word — Open the .docx file. If you received a PDF, convert it to Word first.
Enable Track Changes — Go to the Review tab and click Track Changes. A checkmark will appear indicating it's active.
Make your edits — Type, delete, or replace text as needed. Additions appear underlined; deletions appear with strikethrough. All changes are attributed to your name.
Add comments if needed — Use Insert and Comment to add explanatory notes without changing the contract text — useful for flagging issues that need discussion.
Save and send — Save the file (keeping Track Changes on) and send it to the other party. They'll see all your proposed changes clearly marked.
Other party accepts or rejects — The counterparty reviews each redline: they can Accept (adopts the change), Reject (reverts to original), or counter-redline with their own edits. This cycle repeats until both parties agree.

How AI Automates Contract Redlining

Manually redlining a contract requires reading every clause, identifying risks, drafting replacement language, and tracking changes — a process that takes attorneys 1–4 hours per contract at $300–$800/hour.

AI contract redlining tools like Talking Tree's Redwood compress this to under 10 minutes:

You upload the contract (PDF or Word)
The AI reviews every clause against 10M+ attorney-drafted agreements
It flags risky language and generates suggested replacement clauses
Redlines appear directly in Microsoft Word via the Redwood add-in
You review, accept, reject, or modify AI suggestions
The finished redline is ready to send for negotiation

Contract Redlining: Manual vs. AI

Factor	Manual (Attorney)	AI (Talking Tree Redwood)
Time per contract	1–4 hours	5–10 minutes
Cost per contract	$300–$3,200	Included in $20/month subscription
Consistency	Varies by attorney	Consistent, model-driven
Works in Microsoft Word	Yes	Yes (Redwood Word add-in)
Clause database	Attorney's experience	10M+ real legal agreements
Available 24/7	No	Yes
Scales to high volume	No (limited bandwidth)	Yes, unlimited

Common Clauses That Get Redlined

In startup and SMB contract negotiations, these are the clauses most frequently flagged and redlined:

Liability and Indemnification

Unlimited liability clauses are a major red flag. Standard redlines cap liability at the contract value (e.g., "not to exceed the fees paid in the 12 months preceding the claim"). Mutual indemnification is preferred over one-sided arrangements.

Intellectual Property Ownership

Many vendor contracts attempt to claim IP ownership over work product. Redlines should ensure your company retains ownership of all deliverables, or clearly define which party owns what.

Auto-Renewal and Termination

Contracts that auto-renew without adequate notice are frequently renegotiated. Standard redlines require 30–90 day notice before auto-renewal kicks in and add clear termination-for-convenience clauses.

Confidentiality and Data

Overly broad confidentiality clauses can hamper operations. Redlines typically add reasonable exceptions (e.g., "publicly available information," "independently developed") and clarify data handling obligations.

Frequently Asked Questions

What is contract redlining?

Contract redlining is the process of marking proposed changes to a legal document using tracked edits — strikethroughs for deletions, underlines for additions. It enables parties to negotiate contract terms collaboratively, with a clear visual record of every proposed change.

Why is it called "redlining"?

The term comes from the historical practice of attorneys marking proposed changes on printed contracts using a red pen. While modern redlining is done digitally (typically in Microsoft Word's Track Changes), the name has persisted in legal usage.

Can AI do contract redlining automatically?

Yes. Talking Tree's Redwood reviews your contract and generates redline suggestions directly in Microsoft Word in under 10 minutes. The AI is trained on 10M+ legal documents by AmLaw 50 attorneys, making its suggestions legally grounded and business-appropriate.

What is the difference between contract review and redlining?

Contract review is the analysis step — identifying risks and issues. Redlining is the action step — making tracked-edit changes to propose better language. AI tools like Redwood do both: they first review the contract, then generate redlines ready for negotiation.

How do you redline a contract in Microsoft Word?

Enable Track Changes (Review tab then Track Changes), then edit the document. Additions appear underlined; deletions appear with strikethrough. Save and share the file — the other party can accept or reject each change. Talking Tree's Word add-in generates AI-suggested redlines automatically.

Generate AI Redlines in Microsoft Word

Talking Tree's Redwood reviews your contract and generates tracked-edit redlines in Word — automatically, in minutes, starting at $20/month.

Try Redwood Free →

Educational purposes only. Talking Tree is not a law firm. Consult a licensed attorney for specific legal advice.