Adhesion contract

Adhesion contract,

Definition of Adhesion contract:

  1. Boilerplate contract, prepared entirely by the party with preponderant bargaining power, and offered to the weaker party on (in effect) a take it or leave it basis. Most insurance policies and small business loans, and some contracts of employment (although legal), are contracts of adhesion because they provide little or no opportunity to negotiate the terms. If the disadvantaged party finds some provisions unacceptable, it cannot suggest changes and must do without the loan or service. In case of a dispute, courts scrutinize such contracts to ensure their terms are not oppressive or unconscionable, and frequently refuse to enforce the contract. The name comes from the reality that the stronger party draws up the contract and the weaker party simply adheres to the terms. Also called contract of adhesion.

  2. An example of an adhesion contract is an insurance contract. In an insurance contract, the company and its agent has the power to draft the contract, while the potential policyholder only has the right of refusal; they cannot counter the offer or create a new contract to which the insurer can agree. Before signing an adhesion contract, it is imperative to read it over carefully, as all the information and rules have been written by the other party.

  3. In an adhesion contract, one party has substantially more power than the other in creating the contract. For a contract of adhesion to exist, the offeror must supply a customer with standard terms and conditions that are identical to those offered to other customers. Those terms and conditions are not negotiable.

  4. = contract of adhesion .

Meaning of Adhesion contract & Adhesion contract Definition