Many a time, select paragraphs constructed in uppercase letters stand out in contracts, serving as a prominent reminder to the contracting parties of their inescapable commitment.
‘All-caps’ are typically used in commercial contracts in the ‘Warranty Disclaimer’ and ‘Limitation of Liability’ sections. In the 21st century as we wake up to and shed antiquated practices, this continued usage of the archaic ‘all-caps’ construct begs the question – is it at all relevant?
‘Majuscule’, in other words, writing in uppercase, was the predominant style of script in ancient Greece and Rome. Its earliest known use can be traced back to the Roman Square Capital used for monument inscriptions. Another well-known writing style in uppercase was the Uncial script widely endorsed between the 4th to the 8th century. The use of these scripts continued until it declined with the rise of Carolingian Minuscule, a script which introduced a combination of uppercase and lowercase letters as a precursor to the present style of writing in the modern era.
While the uppercase script lost its significance as the standard form of writing, it nevertheless gained traction within the realm of law. Notably, the origins of its usage within the legal context can be traced to the principles contained in the model laws of the United States of America, the ‘Uniform Commercial Code’ introduced to harmonise commercial transactions across states and territories. With increasing mercantile disputes over time, the courts' interpretation of the term ‘conspicuous’, a principal element contained in the model laws, gained much significance. The UCC 1-201(b)(10) and UCC 2-103(1)(b)(i) defines the term ‘conspicuous’ as follows:
“(A) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
(B) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.”
The limited features and formatting options of typewriters (like an inability to underline) also appears to have contributed to the heavy use of the easier all-caps way of paragraph formatting.
In present day, laws mandating the use of all caps are prevalent in contracts dealing with property. Florida Statutes § 718.202(3) mandates that a clear statement in bold, uppercase letters be included in the contract for permitting a developer to withdraw funds over 10% of the purchase price from the escrow account. Similarly, the 2021 Arizona Revised Statutes § 12-1366(C) requires the use of capital letters in a contract for the sale of a dwelling to specify the procedures pertaining to alternate dispute resolution. The Oregon Revised Statutes § 93.040 further specifies the use of certain mandatory statements to be included in upper case for sale agreements.
Judicial precedents from the last two decades have discussed the relevance of ‘all caps’. In American General Finance, Inc. v. Bassett, the US Court of Appeals, 9th Circuit remarked that “lawyers who think their caps lock keys are instant “make conspicuous” buttons are deluded,” creating a fallacy that text that are not in capitals are not conspicuous. In Broberg v. Guardian Life Ins. Co. of America, the courts in California ruled that the use of all-caps in a less noticeable section of the document will not automatically turn them ‘conspicuous’ by mere virtue of its use. Well-regarded authors renowned for their contributions to contract drafting, Ken Adams and Matthew Butterick, also advocate for limited use of all-caps.
In a paper titled Hiding in Plain Sight: “Conspicuous Type” Standards in Mandated Communication Statutes, Prof Mary Beth Beazley, a college law professor, notes an interesting reason behind its continued use. She attributes the regular use by sellers in contracts with disclaimers to often discourage buyers from reading them closely. She asserts in her paper:
“They are trying to increase profit and limit potential liability in every way they can. Sellers do not write disclaimers because they want buyers to know things. They write them so they can say to the buyer, 'I told you so'.”
Prof. Beazley’s statements are indeed thought-provoking. Ask yourself, how many times have you paused or strained to read text written in ALL CAPS. Since almost Middle Ages, humans are observably accustomed to reading text written in lower case, more legible compared to large chunks of paragraphs in upper case which can slow down reading speed while being a mental toll.
Why do lawyers then insist on its continued use? It is possible that the lawyers are as a fraternity, risk averse. The club naturally is drawn to fool-proof, tried and tested methods that require no second-guessing and deviation from established norms. However, its usage in today’s world needs to be debated more. Its long-standing practice may be backed by a mine of precedents, but its non-use may garner more support. Ultimately, when interpreting any contract, courts primarily dive into the intention of parties.
Rose Joby is an Associate and Harini Subramani is the Founder of HS Law & Associates.