Adhesion Contract – Definition

Cite this article as:"Adhesion Contract – Definition," in The Business Professor, updated February 15, 2019, last accessed June 4, 2020, https://thebusinessprofessor.com/lesson/adhesion-contract-definition/.

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Adhesion Contract Definition

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.

A Little More on What is an Adhesion Contract

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.

References for Adhesion Contract

Academic Research for Adhesion Contract

 

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