Wednesday, November 6, 2013

Proposing changes to contracts, if you are an individual or small business.

In arms' length transactions, red-lining is the process by which parties or their attorneys agree to a final contract. The first party sends a contract. The second party returns the contract with any proposed changes. The first party either accepts or rejects the changes, and the parties negotiate further modifications. It can take one exchange, or it can take a hundred before a final agreement is made.

If given a contract by a larger company, you can always propose changes to terms you do not like. The company is not obligated to accept those changes, but it might. Usually, the worst that can happen is that the proposed changes are rejected and you know you are dealing with an adhesion contract. If it is an adhesion contract, its enforceability is limited in court. It is unlikely that the company will rescind the contract simply because you proposed changes. If it does, you probably do not want to deal with that company anyway.

Just be aware that you can always propose changes to contracts that require your signature. You may or may not be successful.

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