Adhesion Contract

Adhesion Contract A type of contract, a legally binding agreement between two parties to do a certain thin g, in which one side has all the bargaining power anduses it to write the contract prima rily to his or her advantage. An example of an adhesion contract is a standardized contract for m that offers goods or services to consumers on essentially a "ta ke it orleave it" basis without giving consumers realistic opport unities to negotiate terms that would benefit their interests. Wh en this occurs, theconsumer cannot obtain the desired product or service unless he or she acquiesces to the form contract. There is nothing unenforceable or even wrong about adhesion contr acts. In fact, most businesses would never conclude their volume oftransactions if it were necessary to negotiate all the terms of every Consumer Credit contract. Insurance contracts and residential leasesare ot her kinds of adhesion contracts. This does not mean, however, tha t all adhesion contracts are valid. Many adhesion contracts areUn conscionable ; they are so unfair to the weaker party that a court will refuse to enforce them. An example would be severe penaltypr ovisions for failure to pay loan installments promptly that are p hysically hidden by small print located in the middle of an obscu re paragraphof a lengthy loan agreement. In such a case a court c an find that there is no meeting of the minds of the parties to t he contract and that theweaker party has not accepted the terms o f the contract. West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved. adhesion contract (contract of adhesion) n. a contract (often a signed form) so imbalanced in favor of one party over the other that there is a strong implication it was no t freelybargained. Example: a rich landlord dealing with a poor t enant who has no choice and must accept all terms of a lease, no matter howrestrictive or burdensome, since the tenant cannot affo rd to move. An adhesion contract can give the little guy the oppo rtunity to claim incourt that the contract with the big shot is i

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Transcript of Adhesion Contract

Adhesion Contract

Atypeofcontract,alegallybindingagreementbetweentwopartiestodoacertainthing,inwhichonesidehasallthebargainingpowerandusesittowritethecontractprimarilytohisorheradvantage.Anexampleofanadhesioncontractisastandardizedcontractformthatoffersgoodsorservicestoconsumersonessentiallya"takeitorleaveit"basiswithoutgivingconsumersrealisticopportunitiestonegotiatetermsthatwouldbenefittheirinterests.Whenthisoccurs,theconsumercannotobtainthedesiredproductorserviceunlessheorsheacquiescestotheformcontract.

Thereisnothingunenforceableorevenwrongaboutadhesioncontracts.Infact,mostbusinesseswouldneverconcludetheirvolumeoftransactionsifitwerenecessarytonegotiateallthetermsofeveryConsumer Creditcontract.Insurancecontractsandresidentialleasesareotherkindsofadhesioncontracts.Thisdoesnotmean,however,thatalladhesioncontractsarevalid.ManyadhesioncontractsareUnconscionable;theyaresounfairtotheweakerpartythatacourtwillrefusetoenforcethem.Anexamplewouldbeseverepenaltyprovisionsforfailuretopayloaninstallmentspromptlythatarephysicallyhiddenbysmallprintlocatedinthemiddleofanobscureparagraphofalengthyloanagreement.Insuchacaseacourtcanfindthatthereisnomeetingofthemindsofthepartiestothecontractandthattheweakerpartyhasnotacceptedthetermsofthecontract.

adhesion contract (contract of adhesion)

n.acontract(oftenasignedform)soimbalancedinfavorofonepartyovertheotherthatthereisastrongimplicationitwasnotfreelybargained.Example:arichlandlorddealingwithapoortenantwhohasnochoiceandmustacceptalltermsofalease,nomatterhowrestrictiveorburdensome,sincethetenantcannotaffordtomove.Anadhesioncontractcangivethelittleguytheopportunitytoclaimincourtthatthecontractwiththebigshotisinvalid.Thisdoctrineshouldbeusedandappliedmoreoften,butthesamebigguy-littleguyinequitymayapplyintheabilitytoaffordatrialorfindandpayaresourcefullawyer

contract of adhesion

A contract offered intact to one party by another under circumstances requiring the second party to accept or reject the contract in total without having the opportunity to bargain over the wording. Insurance policies are contracts of adhesion and, as such, are construed strictly against the party writing them (i.e., the insurer).