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QUESTION:

Are fine print contractual terms, located on the backside of pre-printed contract forms, enforceable or do they just represent an unenforceable scare tactic?

REPLY:

The expression “The devil is in the details” has application when dealing with the so-called fine print. Placing key contractual terms on the reverse side of your contracts or hidden in smaller typeface clauses can be wrought with risk, unless some basic common sense principles are observed.

The general test to be applied is whether the customer is adequately placed on notice of the existence of terms applicable to his or her situation. As made plain by the Uniform Commercial Code (applicable to the sale of goods, but also instructive in the case of contracts for the provision of services), the answer to this critical question is determined by an assessment as to whether the relevant contractual terms are conspicuous.

Courts around the country have recognized that conspicuousness is achieved where the terms in question are: preceded by a descriptive heading; the language of such terms are in a type size which is larger (all capitalized lettering); the terms are in contrasting color or face (bold typeface); and are described in plain and understandable language.

Applying these very principles, it is critical, in the first instance, that all such contracts contain, on the face of the contract itself, a clause in bold typeface and capitalized lettering providing that: “THIS CONTRACT IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED ON THE REVERSE SIDE.”

By including this simple clause on the face of the contract, the customer is undeniably placed on notice that there are relevant and applicable terms to be considered on the reverse side of the document.

Supporting this language with additional bold, all capitalized lettering and headings describing the relevant provisions on the reverse side is also therefore critical. You should ask yourself whether a reasonable customer would understand that the particular term in question is applicable to his or her circumstance. If this question were answered in the affirmative, any attempt on the part of a customer to avoid the binding impact of such reverse side clauses would be undermined. On the other hand, burying key terms and conditions in the text of a lengthy, reverse side paragraph, without providing for larger sized, bolded typeface, will surely present an obstacle to its enforcement.

As a consequence, it is critical that your form contracts be reviewed by an appropriate legal professional to ensure that the terms you believe to be critical, essential, and applicable to protecting your interests are fairly presented and articulated in the operative document.

In summary, only if the relevant terms are set forth in plain language, in an obvious form, serving to place the customer on notice of his rights or the limitations thereof, will courts be inclined to enforce such terms. Erring on the side of caution will therefore serve you best in this context.

Publication Date: 10/22/2007