What is an Adhesion Contract?

An adhesion contract is defined as a one-sided, "take-it-or-leave-it" contract drafted by one party and then signed by another. The party writing the contract usually has more bargaining power than the one signing. The signing party has only two options: accepting the contract or reject it - there is no room for negotiation of the terms. This contract is also known as a "boilerplate" contract or a "standard form" contract.

How Does an Adhesion Contract Work?

For an adhesion contract to be valid, it must meet the following requirements:

• The contract must include all the consumer's data and be signed by them.
• It should include the governing clauses within the document.
• It should exclude any clauses that could be deemed abusive under law or equity.

Example of Adhesion Contracts

Some famous examples include the contracts for the provision of public services like water and electricity. Banks and insurance companies also routinely employ these type of contracts, but sometimes it's possible that the contracts are entered into between individuals. What makes this contract a controversial one is one of the parties cannot negotiate the terms of the agreement. This leads to inequality between the parties, and this is the reason why sometimes there are abusive clauses in the contract.

Limitation of Adhesion Contract

Legal limitations: There are two of them. One is that the voluntary act cannot transgress the law and the other is that the contract cannot disregard the rights that are declared inalienable by the law. Protection of the legitimate rights of a third party: The legitimacy or illegitimacy of these rights depends on whether it is in good faith. This corresponds to whether the third party ignores or knows the unlawful situation that might occur against him. In this type of contract, an offer is made by one party, and it contains all the elements of the contract. Since this contract does not accept discussions, the other party either accepts or rejects the contract. However, adherence to a contract already entered by other parties should not be confused with accession contracts. Adhesion contracts possess protection measures on consumers. These type of contracts may also exist between companies. Since the consumer is the recipient of the service, the abusive clauses are defined by consumer law.

Related Topics

• Contract Law (Intro)

• What is a Contract?
• Contract Theory Definition
• Meeting of the Minds
• Doctrine of Utmost Good Faith 
• Aleatory Contract Definition
• What are the sources of contract law?
• Restatement of Contracts
• Uniform Commercial Code
• Convention on Contracts for the International Sale of Goods (CISG) 

• What is a Unilateral Contract vs a Bilateral Contract?
• What is an Express Contract vs an Implied Contract?
• What are the requirements to form a Contract (Offer, Acceptance, Consideration)?
• What is an Enforceable Contract vs. a Valid Contract?
• What is a Void Contract vs a Voidable Contract?
• Adhesion Contract 
• What is Mental Capacity to contract?
• What is the requirement of a Lawful Purpose?
• What are common types of Voidable Contract?

• What is an Offer?
• Sum Certain (Contracts) Definition

• When does an offer to contact terminate?
• Counterparty Definition
• Mirror Image Rule?
• Rule for Sale of Goods
• Silence is Not Acceptance?
• Mailbox Rule
• Shrink-wrap Agreement Definition
• Click-Wrap Agreement Definition
• What is Consideration?
• What is Promissory Estoppel?
• When is a contract required to be in writing Statute of Frauds?
• What type of writing satisfies the statute of frauds?
• Exceptions to the Statute of Fraud
• Documents Under Seal
• Who Can Sign Contracts on Behalf of a Company?
• E-Sign Act
• Privity of Contract
• Who are third-party beneficiaries to a contract?
• What is assignment and delegation of a contract?

• When is a party's Duty of performance?
• Aleatory Contract
• What is an Executed contract vs an Executory contract?
• Inchoate Definition
• Evergreen Contract

• What is Performance, Substantial Performance, and Breach of a contract?
• What is performance of a Divisible Contract?
• When is a party's duty of performance discharged?
• What are conditions to Contract (Precedent & Subsequent)?
• Abandonment Option (Contract) Definition
• Cooling Off Rule Definition
• What is tender performance of a contract?
• What are Impossibility and Impracticability
• What is a Frustration of Purpose?
• Waiver or Release from Contract
• Accord and Satisfaction
• Force Majeure Clause
• Novation
• What is a Breach of Contract?
• Repudiation (Contract) Definition
• Anticipatory Repudiation
• Acceleration Clause (Contracts) Definition
• What methods exist for resolving a breach?
• Assumpsit
• What remedies exist for a breach of contract?
• Rescission (Contract)
• Exculpatory Clause
• Hold Harmless Clause
• What is Efficient Breach?
• Organization of a Contract
• How to Read the Contract
• Boilerplate
• Contract Representations & Warranties
• Contract Covenants
• What rules does a court follow in interpreting a contract?
• Addendum 
• Allonge Definition
• What is the Parol Evidence Rule?
• What is a complete integration vs a partial integration?
• Exceptions to the Parol Evidence Rule
• Patent and Latent Ambiguity in a Contract
• Service Level Agreement Definition 
• Offtake Agreement