In the legal world, defined terms in contracts can be a source of confusion and frustration for both attorneys and laypeople. One area that often causes confusion is the capitalization of defined terms.

When drafting a contract, it is important to establish a consistent system for capitalizing defined terms. In general, defined terms should be capitalized to distinguish them from common nouns and verbs. However, there are exceptions to this rule, and it can be difficult to navigate the nuances of capitalization in legal documents.

Here are some guidelines to follow when capitalizing defined terms in contracts:

1. Use initial capital letters for defined terms.

Defined terms should always be capitalized, regardless of their position in a sentence. This helps to distinguish them from other words and makes them easier to identify when scanning a contract.

2. Capitalize the first letter of each word in multi-word terms.

If a defined term consists of two or more words, capitalize the first letter of each word. For example, “Confidential Information” should be capitalized as such, while “confidential information” would not be capitalized.

3. Exceptions to the capitalization rule.

There are some terms that are not capitalized even though they are defined in the contract. For example, articles (a, an, the), conjunctions (and, or, but), and prepositions (of, to, in) are generally not capitalized, even when they are part of a defined term.

4. Be consistent.

Consistency is key when it comes to capitalizing defined terms. Make sure that all defined terms are capitalized in the same way throughout the contract. Additionally, make sure that terms that are not defined are not mistakenly capitalized.

5. Consult a style guide.

If you are unsure about how to capitalize a particular term, consult a style guide such as The Chicago Manual of Style or The Bluebook. These resources provide guidance on capitalization and other style issues that arise in legal writing.

In conclusion, capitalization of defined terms in contracts can be a tricky area to navigate. However, by following these guidelines and ensuring consistency throughout the document, you can help prevent confusion and ensure that the contract is clear and enforceable.