All Cap Clauses in Commercial Contracts

Many contracts contain capitalized clauses, for example:

Does any law require a provision in commercial contracts to be in capital letters?

U.S. Law

Indeed, some statutes specify that certain statements must be in all capitals, for example, 2021 Arizona Revised Statutes § 12-1366(C). Others do so de facto by stating in all capitals text that one contract party must include in the contract, for example, 2021 Florida Statutes § 718.202(3) and 2021 Oregon Revised Statutes § 93.040.

Apart from these exceptions, Section 2-316(2) of the Uniform Commercial Code (U.C.C.) only states that a disclaimer of the implied warranty of merchantability must be conspicuous. In addition, Section 1-201(10) of the U.C.C. specifies that "language in the body of a form is 'conspicuous' if it is in larger or other contrasting type or color"; it doesn't say anything about all capitals.

American General Finance, Inc. v. Bassett (In re Bassett), 285 F.3d 882 (2002) debunked the notion that text needs to be in all caps to be conspicuous. The court stated:

German Law

It's hilarious to see all capital clauses in commercial contracts, even when U.S. Law is not applicable. Section 305c of the German Civil Code (BGB) provides that an unusual provision in standard business terms does not form part of the contract. According to the German courts, a provision is not unusual if the corresponding contract party emphasizes it in the contract. However, there are no specific requirements for highlighting such provisions.

Conclusion

As a result, unless a statute requires it, don't use all capitals to emphasize a provision.

Incidentally, conspicuousness and readability are not the same. For example, using all capitals makes it hard to read once readers focus their attention on it. Modern contract design is a better way to achieve both.

Reference: Poleacov, P. (2025). All Cap Clauses in Commercial Contracts. INN.LAW. https://inn.law/en/perspectives/allcaps/

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