Adhesion Contract Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Adhesion Contract, written in plain English, along with examples of how it is used.
What is Adhesion Contract?
n. a term used in contract law adhesion contract is a contract between two unequal bargaining partners and does not allow for negotiation. It can be thought of as take it or leave it kind of contract where one party is tied down to accept whatever terms of conditions are put forth by the other powerful party. For example, suppose an individual has a contract thrust into his/her hands by the salesperson of a MNC. Now the consumer is in no position to negotiate the standard terms of such contracts and the company’s representative often does not have the authority to do so. It is also called standard form contract or boilerplate contract.
History and Meaning of Adhesion Contract
Adhesion contracts are often used in the world of law to describe contracts that are offered on a take it or leave it basis with no room for discussion. Such a document is provided by the stronger party to the weaker party, who does not have any bargaining power in the situation. While the powerful party has many more resources to draw upon to ensure favorable terms, the other party simply has to accept and sign.
In case of court battles, such a document is often scrutinized to see if any unconscionable elements exist, and if so, how this might affect the final verdict. Often, these are contracts of adhesion, meaning they do not operate on even standing for the parties involved. As such, they may be legally unfair, and not binding.
Examples of Adhesion Contract
- A rental agreement given out on a standard form by a landlord, where the tenant is not permitted to negotiate any of the terms.
- A cell phone contract offered by a major carrier that cannot be altered or negotiated by the user.
- A software license agreement displayed during installation that requires the user to click on “I Agree” regardless of whether they have had a chance to read the terms or not.
- A life insurance policy that is offered without an opportunity for the policyholder to negotiate premiums.
Legal Terms Similar to Adhesion Contract
- Unconscionability - A legal principle that refers to contracts that are fundamentally one-sided and unfair.
- Standard form contract - A contract that is made using standardized language and terms that are usually created in advance by one party.
- Boilerplate contract - Another term for standard-form contracts where information is replicated between different agreements for multiple customers.