Bloomberg reported yesterday that Groupon has been accused in a lawsuit of altering emails containing agreements with merchants after both sides had accepted the terms.
The plaintiff has accused Groupon of intentionally altering contracts after the fact (“Unbeknownst to Plaintiff and the other Class members … Groupon accesses its merchant-clients’ emails containing the Merchant Agreements while those emails are in post-transmission electronic storage and alters the content of those emails.”). While that kind of alleged misbehavior isn’t a common problem (at least in my experience), ensuring that you’re agreeing to the right version of a contract is an important part of the contracting process.
Contract drafts are generally sent back and forth between the parties during negotiations, and it’s important to keep track of the changes along the way. If, for example, you request changes to a contract sent to you by a vendor, you should make sure the changes have actually been made when the vendor sends you a revised draft. It’s risky to assume the changes have been made without comparing the new draft to the original one.
The process of manually comparing drafts can be tedious, but there are great software products available to do the comparison electronically. Microsoft Word has a document comparison feature, and products such as Workshare are outstanding, convenient, and relatively inexpensive.
Seeing the Bloomberg article and thinking about comparing versions of contracts, a process known as “redlining” (or “blacklining” if you’re of the old school), reminded me of this post on the Adams Drafting blog about document comparison etiquette. The comments to Ken Adams’s post are entertaining and instructive.
Are you the trusting sort, or do you track the changes of contract drafts along the way?
I always track changes and I always compare the final with the my most recent version. I would say 25% of the time I find changes (when the other side has said there were none). When I then ask the other said about that changes that I’ve found, they say “they were not signficant” and I’d say that is true about 1% of the time!
Alisa: Whether the other side’s changes are significant is beside the point. If someone is proposing a revised deal, they should let you know. I subscribe to the iceberg theory…if I find minor issues, I look deeper under the surface. If they make minor changes without pointing them out, what else are they doing?
Do you track the changes using comparison software or by some other method?
Brian
Brian,
In order to make the contract drafting process easier , off course there are software tools available. For example , check CMx Software: https://www.contractexperience.com/contract-management-features-collaboration.html
But agreed that the biggest pain point is the fact that contracts are altered a lot during the negotiation process and it is hard to keep track of the changes without a proper tool in hand.