What do you need to know about an adhesion contract?
Adhesion Contract (Contract of Adhesion) Overview. An adhesion contract (also called a “standard form contract” or a “boilerplate contract”) is a contract drafted by one party (usually a business with stronger bargaining power) and signed by another party (usually one with weaker bargaining power, usually a consumer in need of goods or services).
Can a court refuse to enforce an adhesion contract?
In the legal context, an “adhesive contract” means that a weaker party is stuck with an unfair contract. In some cases, a court can refuse to enforce a contract of adhesion. “Unconscionable” means excessive, unreasonable, unfair, and shocking.
Can a second party modify the terms of an adhesion contract?
The second party typically does not have the power to negotiate or modify the terms of the contract. Adhesion contracts are commonly used for matters involving insurance, leases, deeds, mortgages, automobile purchases, and other forms of consumer credit.
Is the adhesion contract legal in most countries?
Although adhesion contracts are legal in most countries, they are often scrutinized thoroughly by courts before legal enforcement, especially due to the potential for unreasonably one-sided terms that are in favor of the draftsman. The courts aim to ensure that the bargaining party does not become subject to unconscionable or unfair terms.
Can a buried clause in an adhesion contract be enforced?
Buried clauses, or inconspicuous clauses, will likely not be enforced. In Fairfield Leasing Corporation v. Techni-Graphics, Inc. , the Superior Court of New Jersey invalidated an adhesion contract because its waiver clause was single-spaced and had a small typefont; as such, the court deemed the clause to be too inconspicuous.