Using track changes for agreements is a useful way of negotiating changes to agreements electronically. However, there are some critical points to keep in mind when using this tool. The golden rule is that you must ensure the other party to the negotiations is aware of the changes you have made. If you fail to do this, the negotiation can breakdown because the impression may be that you are trying to sneak in terms without the other party’s knowledge.

So, at all times there needs to be a clear trail to follow through the negotiation process. This can be achieved in two ways:

Track all Changes in one Document

  • Party A sends a contract they have drafted to Party B.
  • Party B uses track changes to alter parts of the contract that they are not happy with.
  • The contract is then returned to Party A, who does not use the ‘accept all’ function but instead continues using track changes to highlight their areas of continued disagreement. Party A does not reject Party B’s changes where they disagree with Party B,
  • Party A must delete Party B’s change and add it in again. This is important because otherwise Party B cannot see that Party A rejected one of their requested changes.
  • Party A leaves in the changes added by Party B where they agree with those changes.
  • If there is a direct disagreement with a term the parties discuss the options, negotiate a middle ground and come to an agreement.
  • Eventually, once the parties have reached an agreement on all the terms they can ‘accept all’ and the final document is a fully negotiated contract ready to sign, or

Accept Previous Changes and Track New

  • Party A sends a contract they have drafted to Party B.
  • Party B then uses track changes to alter parts of the contract that they are not happy with.
  • The contract is then returned to Party A, who does ‘accept all’ the changes.
  • Party A then uses the track changes function to highlight areas that remain problematic even after accepting the initial changes that have been made by Party B.

We prefer Option 1 because it allows both parties to follow the changes to the document in one document. It prevents a situation where a party feels that terms are being included or changed without their knowledge. Option 2 can be useful when the document starts looking a bit like a Christmas tree covered in decorations and the reader cannot differentiate between the various authors. Using track changes correctly leads to clear contracts that avoid disputes and that have been fairly negotiated between both parties.