If I'm writing a sentence such as:
"I was talking to Alison the other day she said 'I like your shirt!'" Lisa commented.
Here Lisa is quoting Alison, how should Alison's speech be punctuated? I've used a single quote - is this correct?
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As long as you use two different sets of quotation marks readers should easily be able to follow the conversation. However, I think it would be more correct and more readable if you added a comma before the inner quotation.
Of course, you could always avoid the dilemma by having Lisa describe Alison's words to her rather than recite them verbatim, "she told me" rather than "she said". This may also be more naturalistic, but that depends on Lisa's manner of speech.
If you're using American English, your sentence is like:
That means add single quotes inside the double quotes.
If you're using British English, your sentence is like:
That means add double quotes inside the single quotes.