Contracts draftingWhat is beyond our attention

Ҥ 2-316. Exclusion or Modification of Warranties.(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.

(2)Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that "There are no warranties which extend beyond the description on the face hereof."

Caps Lock

“Lawyers who think their caps lock keys are instant "make conspicuous" buttons are deluded. In determining whether a term is conspicuous, we look at more than formatting. A term that appears in capitals can still be inconspicuous if it is hidden on the back of a contract in small type. ... Terms that are in capitals but also appear in hard-to-read type may flunk the conspicuousness test. A sentence in capitals, buried deep within a long paragraph in capitals will probably not be deemed conspicuous. Formatting does matter, but conspicuousness ultimately turns on the likelihood that a reasonable person would actually see a term in an agreement. Thus, it is entirely possible for text to be conspicuous without being in capitals.” (bold emphasis added)

In the 2002 9th Circuit Court of Appeal (California and neighbouring states) decision of In re Bassett the court notes

at para 887:

Caps Lock

Stevenson v. TRW, Inc., 987 F.2d 288 (5th Cir. 1993) endorses use of bold or larger type rather than ALL CAPS;

and California courts have even held that ALL CAPS text in an inconspicuous location in the document may not be conspicuous even though it is in ALL CAPS. Broberg v. Guardian Life Ins. Co. of America, 171 Cal. App. 4th 912, 922 (2009).

Caps Lock

historically, the only easy way for lawyers to make text “conspicuous” on a typewriter was ALL CAPS

The Economist, 2015

“Business today is increasingly digital, services-based and driven by intangible assets, including rights to exploit intellectual property, from patents to logos.” In addition, businesses are shifting to more collaborative sourcing business models designed to create value – not simply exchange value.

IACCM: top negotiated terms

IACCM: top negotiated terms

Top Negotiated Contract Terms 2015 Top Suggested Collaborative Contracting Terms

Limitation of Liability Alignment on Scope/GoalsIndemnification Change ManagementPrice/Charge/Price Changes Communication/Reporting

Service Levels and Warranties Responsibilities of the Parties

Payment Service Levels/Warranties

Intellectual Property Price/Charge/Price Changes

Warranty Limitation of Liability

Performance/Guarantees/Undertakings Delivery/Acceptance

Termination Dispute ResolutionDelivery/Acceptance Indemnification

Forbes, 2015

“The laws and regulations relating to trade were mostly designed for the manufacturing age. Not only are they inappropriate, but they add to the complexity of dealing with a fast-changing environment.”

IACCM: top negotiated terms