An adhesion contract is a standardized agreement. Adhesion contracts are on a "take it or leave it" basis. If you don’t agree to the terms of the contract, you cannot acquire the products or services. There is no opportunity for negotiation regarding any terms in the contract.
Adhesion contracts are used in a wide variety of different commercial settings because of their efficiency (since adhesion contracts are standardized forms). Common types of adhesion contracts include:
- Insurance policies: Almost all insurance policies are adhesion contracts. As the insured, you have no power to bargain and you either take the insurance policy or you don’t.
- Housing: If you attempt to rent an apartment or a house, you will have to sign a lease. The lease is an adhesion contract because the terms are non-negotiable.The same thing goes for many other goods and services, such as buying a car or ordering a computer.
- Tickets: If you go to a baseball game, a cruise, or valet park, most likely there will be small print on the back of the tickets. This is considered an adhesion contract; once you purchase the ticket, you are bound by the terms of the small print contract even if you were unaware it was there.
Yes, parties have a duty to read the contracts they are given. However, the party which wrote the contract has the duty to call attention to the printed terms. This means that the author of the contract has to make the terms noticeable, especially if a clause or provision is not something which typically appears in contracts of the same type.
For example, an airline ticket will not usually require the ticket holder to pay a fee if they fail to show up for the flight (most airlines overbook a flight with the expectation that some people will not show up for their flight). If the airline does expect such a fee, they must make the fee reasonably clear to customers.
Although modifying an adhesion contract is theoretically possible, there are a number of problems. First, an electronic adhesion contract is very difficult to change since that would involve overriding the “read-only” function of the documents. Second, lower level employees, like clerks, secretaries and salespersons, typically do not have the authority to accept a deal without authorization from a manager. Third, it is not uncommon for adhesion contracts to contain a term which would prevent any handwritten modifications.
Finally, in order to have a contract, there must be a “meeting of the minds.” In other words, both parties must agree to the terms of the contract in order for the contract to be legally enforceable. If the company which made the adhesion contract believes that it is the same contract that you handed back, when in fact it made been modified, the contract is no longer valid. However, if you call attention to any modifications, the company will probably not want to accept the new deal.
In order to modify an adhesion contract, the company must know and consent to the modifications, but that consent will be difficult to get since negotiating an adhesion contract defeats the purpose of standardizing a contract.
Not always. Adhesion contracts are almost always created by the stronger of the two bargaining parties. The stronger party will often manipulate the terms to take full advantage of the situation. As a result, many adhesion contracts can be unfair or unjust. Besides, the language is often difficult to understand. If an adhesion contract is at issue in court, the judge will hold an adhesion contract unenforceable if it is considered unfair or unjust.
Although adhesion contracts are usually enforceable, adhesion contracts are judged by all the surrounding circumstances. In other words, one of these factors by themselves might not invalidate an adhesion contract, but if taken together, these factors might cast the contract in a bad light. Factors a judge might consider before enforcing an adhesion contract include, but are not limited to:
- Meeting of the minds – whether the customer knew or could have known about the contract’s terms
- Language – whether the contract was understandable or deceitful. A contract which portrays itself as an authorization form should not be talking about release of liability unless it clearly labels that section.
- Presentation – whether the contract was in an obvious location or hidden from the other party. A small contract on the back of a ticket is normal. A contract buried in the middle of a brochure is suspicious.
- Location – whether the contract was agreed to in a location which gave little time for the customer to read or consider the contract. Signing a contract from the comfort of the home will be very different from signing a contract while a line of people are waiting for you to finish.
As stated above, adhesion contracts will not be enforceable if they are considered unfair or unjust. An experienced contract attorney will be able to guide you through the difficult language of an adhesion contract and inform you of your obligations.