Call Our Office Today
(305) 431 5678

An Overview of Adhesion Contracts or Clauses

Although you probably did not know it at the time, chances are you have signed at least one adhesion contract in your life. Think back to the end-user licensing agreements you have to click on each time you want to download software. Or, in some cases, your mortgage loan documents, car loan documents, or insurance contracts—these are all adhesion contracts or at least contain adhesion clauses.

What is an adhesion contract?

It is simply a contract that is drafted by one party that is usually holding the greater bargaining power (such as a bank who is loaning money) over the other party with weaker bargaining power, such as the person who is seeking to borrow the money. Because of the disparity in the bargaining positions of the two parties and the fact that one has something that the other wants and could not otherwise get it easily, the weaker party must “adhere” to the contract and its provisions without opportunity to negotiate or change the terms of the deal.

Obviously, adhesion clauses are good business for the creator of the contract since with their bargaining power, they can get away with a lot without negotiating on items that the other party would probably balk at and walk away from. They are not as beneficial to the weaker party because they must essentially take the deal or leave it, without any negotiation of the terms or exclusion of the more disadvantageous provisions, such as requiring arbitration.

Are they illegal?

While adhesion contracts are not illegal per se—see their proliferation even today as evidence of this—courts are still examining these contracts very carefully to ensure that the party with the better bargaining power does not use that power to bind the other party into unfair, unenforceable, or unconscionable agreements. Courts may strike or otherwise excise adhesion clauses that have this result and in some cases, will scrap the entire contract all together.

What are some advantages to adhesion contracts?

Proponents of adhesion contracts (also known as standard form contracts or boilerplate contracts) argue that these types of contracts are good as they are streamlined, provide uniformity, and cut down on negotiations that otherwise draw out deals and increase costs. Critics argue that these contracts in some cases have been taken so far out of the realm of being close to a two-sided agreement, that the entire contract itself is unreasonable.

What do adhesion contracts or clauses look like?

Not all adhesion contracts/clauses look alike. More recent examples are terms and conditions of use of digital platforms such as Twitter or Instagram. If you want to play, you have to agree to their terms and conditions which act essentially like a contract between you and the provider.

One spectacular example of adhesion clauses are non-disparagement clauses in agreements with consumers. Consider Yelp, where anyone can write anything about a business. Consider further a dentist who was maligned on Yelp and then proceeded to sue the individual who left the disparaging comments citing a non-disparagement clause in the contract of service with the dentist. Yes, this really happened. Fortunately, non-disparagement clauses are now prohibited in contracts with consumers under federal law, but you get the picture.

Not all adhesion contracts or clauses are as blatant or defeatable as these are, but it is still worth educating yourself about them so that if you do find a particularly egregious example, you know exactly what it is and what to do. And, if you find such an example or just need advice on  your own contracts, your first call should be to Trembly Law whose attorneys are well-versed in contract law.