Why are Warranty Disclaimers in ALL CAPS?

Posted 19 February 2009

This is a trivia item for those with some curiosity about common legal agreements.

Why is it nearly universal in legal agreements that there’s a couple paragraphs in ALL CAPS that state that the product or service is offered “as is,” that the provider makes no representation that it is good for anything or will work as advertised, and that they are not liable if it causes you to lose your business, your spouse, or your right arm?

I can understand what drives the disclaimers in general, but I was curious about the specific language that is always used, and especially about the bizarre use of ALL CAPS. Is that supposed to make it somehow more forceful?

The Uniform Commercial Code

As it turns out, this all has its origin in something called the Uniform Commercial Code. Among other things, it states that:

“Unless excluded or modified, a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.”

And:

“Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.”

So that’s the reason for these paragraphs. Unless you explicitly disclaim it, your act of selling someone something can be taken as an implication that the thing you’re selling will actually meet the user’s needs. Heaven forbid!

SO WHY ALL CAPS?

OK, so now we understand what drives the disclaimer language, but what about the typography?

It turns out that comes from the U.C.C. as well. It specifies that any disclaimers must be “conspicuous,” and the code includes a formal definition of conspicuous:

“A term of clause is conspicuous when it is so written that a reasonable person against whom it is to operate ought to have noticed it. A printed heading in capitals (as: Non-Negotiable Bill of Lading) is conspicuous. Language in the body of a form is “conspicuous” if it is in larger or other contrasting type or color. But in a telegram any stated term is “conspicuous”. Whether a term or clause is “conspicuous” or not is for decision by the court.”

So to avoid the risk that a court might rule that a notice was not conspicuous, lawyers fall back on the unambiguous statement that “A printed heading in capitals is conspicuous” and just toss all the text into caps (since larger type or a contrasting color is typically not available in a contractual document).

So here we have it: a terrible typographic decision enshrined in the conventional wisdom of legal documents because it fits within the safe harbor defined by a widely used statute.

I’m going to take a radical chance and use bold for the disclaimers in our Webvanta terms of use.