Contract Of Adhesion
The definition of contract of adhesion or, as it is also known, an adhesion contract is explained as an agreement between two parties where one party has more power than the other when the terms of the contract are set. These kinds of contracts of adhesion are used when the party with more power gives its customers the same standard contract. The customer can not alter these contacts, the customer can not make amendments or addendums to the contract, they can either sign it or not. The terms and conditions specified in a contract of adhesion are not open for negotiation, and they are also known as standard contracts or boilerplate contracts.
What is a Contract of Adhesion, and Who uses it?
The term may seem intriguing, but the contract of adhesion is the most common type of contract that any individual may come across in their daily lives. They are used in insurance, vehicle purchases, leases, mortgages, telecommunication subscriptions, and other types of transactions where a company deals with large numbers of customers. Adhesion contracts are enforced in the US through the Uniform Commercial Code (UCC), and most states, with the exception of Louisiana, adhere to the set of rules and regulations.
When dealing with a mortgage, the customer must accept all the terms and conditions specified within the agreement signed. The customer can not write their own contract or come with a counteroffer that the financial institution could agree to. These adhesion contracts should demand the full attention of the customers as the terms and conditions are all written down by the other party.
How are Adhesion Contracts Enforced?
Contracts that are considered adhesion contracts have to be seen as a “take it or leave it” option for customers. Two forms of scrutiny are applied in court to verify if an adhesion contract is enforceable or considered null and void.
- Reasonable expectation
The terms and conditions specified in a contract of adhesion are expected to be within reason. If these terms and conditions go beyond what the customer reasonably expects from the contract, the contract is deemed unenforceable. The purpose of the terms, the prominence of the terms, and the way in which the contract was accepted are all taken into account to determine whether the contract is enforceable.
- Unconscionability
If the terms and conditions of a contract of adhesion include oppressive terms that, as the one-sided contract provisions block them, leave the customer unable to fight back, the contract is considered unenforceable. Simply put, if the contract had exceptionally unfair terms imposed on the customer and the customer can’t change or influence them due to the way the contract is written (by one party), the contract can be considered unenforceable.
Popular Insurance Terms
Variation of ordinary life insurance under which current mortality experience and investment earnings are credited to the insurance policy either through the cash value account and/or the ...
Endorsement to the special multiperil insurance (smp) policy that provides all risks damage coverage for personal property. There are special limitations on amounts of coverage for furs, ...
Additional Living Expense Insurance is a type of coverage present on several types of Homeowner’s Insurance that reimburses additional costs caused because of the insured’s ...
Method of transferring pure risks that is perhaps the seed of the modern day insurance policy. Ancient Greece held to the concept that a loan on a ship was canceled if the ship failed to ...
property insurer that distributes its products through a direct selling system. Traditionally, insurers often were known as direct writers if they used either a direct selling system or an ...
Same as term Funded Pension Plan: plan in which funds are currently allocated to purchase retirement benefits. An employee is thus assured of receiving retirement payments, even if the ...
Coverage for bodily injury, property damage or destruction, for which the insured garage and/or its representatives become legally liable resulting from the operation of the garage. For ...
Principle of equity in property, casualty, and health insurance. When two or more policies apply to the loss, each policy pays its part of the loss, unless its terms provide otherwise. For ...
Roof used in construction that is composed of fire resistive materials such as slate as approved by the underwriters laboratories inc. (ul). ...
Have a question or comment?
We're here to help.