Adhesion Contract: What it Is and Benefits of Having One
Jump to Section
Adhesion contracts are the right solution when you need to protect your company at scale. They can save you time and money since they do not require you to negotiate the terms for each transaction. However, using an adhesion contract the wrong way can result in massive legal consequences.
This post helps you understand how adhesion contracts work, important considerations when using them, and application.
What is an Adhesion Contract?
An adhesion contract, also called a boilerplate contract and standard form contract, is an agreement drafted with non-negotiable terms and conditions, limited negotiation, or customization or certain terms in different situations. Parties with a significant amount of bargaining power offer them to others since they are often used in vehicle purchases, leases, mortgages, and consumer credit situations. However, they can also be used when both parties have equal or the same bargaining power.
The party with greater bargaining power negotiates the agreement, while the party with less bargaining power is generally in great need of specific goods and services. Generally, the latter cannot amend or negotiate the contract’s terms.
Businesses most commonly use adhesion contracts for the following situations:
- Situation 1. Leases
- Situation 2. Asset purchases
- Situation 3. Motor vehicle purchases
- Situation 4. Insurance policies
- Situation 5. Mortgages
- Situation 6. Medical care
- Situation 7. Airline tickets
Buyers have no room to negotiate terms, meaning that the party who drafts the contract has the legal upper hand during every transaction. Adhesion contracts are common in consumer transactions, but not all consumer contracts are adhesion contracts. Generally, large businesses use adhesion contracts because they are standardized and don’t have to be negotiated individually.
Many businesses create standard contracts for their prospective clients to sign. If consumers are dissatisfied with the terms of the agreement as written, they have the right to take their business elsewhere.
You can learn more about adhesion contracts by checking out this article.
What is ‘Contract of Adhesion’ in Law?
‘Contracts of adhesion’ in law is a concept that means the relationship must adhere to the original terms without renegotiation or amendment. While contracts of adhesion are critical in the business world, there is considerable debate over their fairness and carefully scrutinized by courts.
When determining the fairness of an adhesion contract, courts consider the following factors:
- Factor 1. Possibility of a surprise
- Factor 2. Inadequate notice requirements
- Factor 3. Significant inequity
- Factor 4. Leverage balance
- Factor 5. Other relevant factors
Fans of adhesion contracts say that they promote efficiency by saving parties time and money on negotiations. Without form contracts, the time required to negotiate and prepare a single contract for each transaction would significantly increase. As a result, prices would rise, possibly dramatically.
Additionally, there is whether adhesion contract offerors should be immune from liability for unfair agreements. Some contract clauses give rise to significant concern due to the disparity they could cause a more vulnerable party.
Clauses that may concern courts when ruling over adhesion contracts include:
- Concern 1. Choice of law clauses
- Concern 2. Arbitration clauses
- Concern 3. Liquidated damages
The most critical step you can take before signing an adhesion contract is to read it thoroughly. The business writes adhesion contracts for their benefit, which means you should consult a contracts lawyer with legal questions. This strategy helps you understand the terms and conditions before offering or signing.
73 projects on CC
CC verified
Examples of Adhesion Contracts
You may not realize it, but adhesion contracts are around us every day. If you use cell phone service, stay in hotels, go to college, attend a show, or fly on a plane, you have been a party to an adhesion contract. You also know how much they favor the entity offering them, which means it’s essential to understand how they work in the real world.
Here’s are three common, everyday examples of adhesion contracts:
Example 1. Internet Service Providers
Billions of people and companies worldwide need internet access. It’s unreasonable to expect internet service providers (ISPs) to negotiate contracts with each customer, and it would not be a profitable venture, nor would this system give rise to innovation.
Example 2. Cell Phone Service Providers
Cell phone service providers are in the same situation as ISPs. Mass demand ensures that there are adhesion contracts to reduce costs. However, they don’t use the same contract for every plan and may customize certain sections to create new adhesion contracts.
Example 3. Hotels & Motels
It makes sense that hotels and motels would use adhesion contracts. After all, they are mainly offering lodging at scale. Boilerplate language can also be included with a contract clause indicating when to address a broader customer base.
Image via Pexels by RODNAE
Benefits of Adhesion Contracts
Adhesion contracts are beneficial for service contracts, lease agreements, and insurance agreements. Although they hasten the purchasing process, their use is still debated. However, they are an excellent solution for the right company.
Three benefits of adhesion contracts include the following:
Benefit 1. Improved Performance
By establishing a standardized contract with non-negotiable terms, adhesion contracts eliminate the need for customized documents tailored to each consumer, increasing efficiency and saving time for buyers and sellers.
Benefit 2. Lower Costs
Transaction costs incurred are much lower with adhesion contracts. Many deals include negotiation, communication, and enforcement expenses, and adhesion contracts significantly reduce these costs by encapsulating all relevant information in a non-negotiable, legally enforceable contract.
Benefit 3. Perfect for Certain Transactions
Regular adhesion contract users believe that these types of contracts are simplified, offer consistency, and remove the need to engage in lengthy contract negotiations. When your business needs to scale, an adhesion contract may work well for you.
Critics argue that these contracts have been pushed so beyond the definition of a two-way agreement, making them unreasonable in some cases. Ensure that you speak with a legal professional about contract laws in your state to ensure that it is the best document for you.
Are Adhesion Contracts Enforceable?
Yes, adhesion contracts offer enforceability depending on your jurisdiction. The Uniform Commercial Code (UCC) covers contracts for the sale of goods. Therefore, if your adhesion contract covers the sale of goods, it may be covered under the UCC. However, a few states, districts, and jurisdictions do not recognize the UCC. Generally, adhesion contracts are determined by contracts of principle law. Consult with a lawyer for your particular situation to find out how your adhesion contract can be enforced.
The general heuristic is that an adhesion contract is legal unless the signer finds it unreasonable. Business owners and signing parties should discuss the legality in contracts with business lawyers before entering into an executed agreement that is non-negotiable or amendable.
Here are six signs that an adhesion contract may be unenforceable – although the court looks at these on a case-by-case basis, so every situation is different:
- Sign 1. Severe disparity in leverage between contract parties
- Sign 2. Use of non-sensical language or terms
- Sign 3. Exploitation of vulnerable people
- Sign 4. Overly burdensome terms and conditions
- Sign 5. Doesn’t meet the signers reasonable expectations
- Sign 6. Serves as a violation of public policy
The UCC has guidelines that govern adhesion contracts for selling goods and services. On the other hand, adhesion contract clauses are examined more closely under state laws, and interpretation is subject to the rules there. The probability of a favorable outcome during a dispute largely rests on the facts and circumstances of the situation.
Where to Get Help with Adhesion Contracts
Adhesion contracts can be powerful but risky agreements, and their enforceability is contingent upon the proportionality and reasonableness of the contracting parties’ obligations. The circumstances surrounding the contract’s execution and all other pertinent circumstantial elements are critical considerations. Business lawyers in your state can protect your legal rights and help you navigate the complexities surrounding adhesion contracts.
Post a project in ContractsCounsel’s marketplace to get flat fee bids from lawyers to review for your project. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our Adhesion Contract Lawyers
John M.
John Mercer is a distinguished corporate counsel who is well-known for turning legal challenges into strategic assets. He possesses a deep understanding and expertise in intellectual property (IP), compliance, and corporate law, particularly in the pharmaceutical and biotechnology sectors. His proficiency lies in transforming legal complexities into strategic advantages, ensuring operational excellence, and driving innovation forward. John excels at safeguarding an organization's legal interests and integrity, ensuring operations adhere to the law. As a strategic leader, John excels at safeguarding an organization’s legal interests and integrity, ensuring operations adhere to the law. He also brings immense value to his profession through his skills in drafting, negotiating, and managing significant agreements that secure organizational interests with widespread industry impact. His unparalleled expertise in legal advisories significantly enhances compliance and develops risk management frameworks that protect and advance company ambitions. Moreover, John's command over patent and trademark portfolios, alongside his ability to drive innovation initiatives and design incentive schemes, substantially bolsters intellectual property prowess. John's areas of expertise are extensive, covering skills vital to corporate law, legal contract negotiations, material transfer agreements, and more. He is particularly adept in regulatory compliance, legal consulting, clinical trials, biotechnology, patents, and patent portfolio analysis, to name a few. His leadership is complemented by active listening, analytical thinking, problem-solving abilities, and other soft skills that make him a leader and visionary.
"Thank you John, I appreciate your very personal effort with quality and practicality in mind."
Jorge R.
**Bio:** My name is Jorge Ramos, and I am an experienced family law attorney practicing since 2011. Over the years, I have honed my skills and knowledge in family law, having worked with prestigious law firms before establishing my own solo practice. My expertise spans a wide range of family law matters, including divorce, child custody, spousal support, and property division. I am dedicated to providing personalized and compassionate legal representation, ensuring that my clients receive the support and guidance they need during challenging times. My commitment to excellence and client-focused approach have earned me a reputation as a trusted advocate in the field of family law.
"I had a fantastic experience working with Jorge. He was incredibly responsive and maintained a high level of detail throughout the entire process. Jorge was able to push things along efficiently and completed everything I asked for much faster than expected. If you need someone who is thorough, quick, and reliable, I highly recommend him!"
Jim Z.
I graduated honors from the University of Iowa, University of Chicago and Brooklyn Law School. I’m an innovative corporate M&A attorney with 7 years of experience and a software developer experienced in front end development. A highly experienced and entrepreneurial lawyer, I work primarily with business owners and founders in connection with mergers and acquisitions, securities law and software contracts.
Beth M.
Highly skilled attorney with more than 12 years of experience in delivering ongoing support to an international organization, government organizations, law firms, and long-term healthcare facilities. Eager to leverage experience in negotiations, contracts, and strategic planning into a corporate attorney role with room for growth in the organization.
June 3, 2024
Colin M.
Experienced attorney with a substantial history of crafting, evaluating, and bargaining multimillion-dollar commercial and government contracts across diverse sectors, encompassing the US Army, DoD contractors, employee benefits, NASDAQ, Pharmaceuticals, and Finance.
Mark L.
I worked in the Intellectual Property Group at Fidelity Investments for almost 25 years, including managing the group from 2017-2021. I managed and developed the same high-performing group of three legal professionals from 2007-2021. Early in my career at Fidelity, I focused primarily on trademark matters, including trademark searching and clearance, as well as enforcement of trademark rights. In fact, I created Fidelity's trademark and brand protection programs and advanced them over more than two decades, eventually bringing the domestic trademark portfolio in-house and realizing savings of well over $2 million in outside counsel expenses for searching, prosecution and maintenance of US registrations from 2008-2021. Fidelity put me through law school, and I continued working full time while attending law school at night over four years. Upon graduation and passing the bar in 2006, I was promoted to an attorney position effective 1/1/2007. My practice broadened, and I began working on more transactional matters. I became a key transactional attorney for major technology groups and businesses within Fidelity, and negotiated numerous mission critical tech deals, transforming Fidelity's business. I provided transactional and IP support for Fidelity's software development and services affiliate in Ireland, and worked extensively with many of Fidelity's other foreign affiliates. Fidelity's General Counsel handpicked me to provide transactional and IP support to a new business initiative in 2017. That initiative became fintech startup Akoya, LLC, a paradigm-shifting business that enables secure, customer-controlled sharing of personal financial information between financial institutions and service providers. I developed template agreements between Akoya and data providers (financial institutions) and also between Akoya and data recipients (e.g. tax preparation services and financial advisors). Akoya had matured enough to be spun out by Fidelity in early 2020 to a consortium of financial services companies. In 2021, Fidelity offered a voluntary buyout to long-tenured associates, and following the pandemic, coupled with the financial and health benefits included in the package, it was an offer I could not refuse. Days later, my elderly father-in-law broke his hip, and my wife and I became his primary caregivers. It's been a blessing that I was able to contribute to his care and alleviate some of the burden on my wife. He is now in a long-term care facility, and I am eager to return to work as in-house counsel, whether on a contract basis, part time or full time. I did work briefly as a sole practitioner in 2021 and 2022, primarily helping friends, family and pro bono clients with NDAs, business formation issues, consulting agreements and license agreements. From August 2022 - July 2023, I was on the staff of Flex by Fenwick, an in-house counsel on demand business that is a subsidiary of the IP firm Fenwick & West, but did not get any engagements. My wife and I have volunteered for over a year with a dog rescue, Last Hope K9 Rescue, and have fostered several dogs, and adopted two of them!
June 5, 2024
Robert C.
A highly motivated, dedicated attorney (and military veteran) with proven experience in executive corporate leadership, legal risk mitigation, litigation, and legal department management. Skilled in collaborating with all members of the organization to achieve business and financial objectives with high-profile corporations. Instrumental in streamlining and improving processes, enhancing productivity, and implementing sound legal and business solutions.
Find the best lawyer for your project
Browse Lawyers NowContracts
Adhesion Contract
Minnesota
Can I got a nonrefundable deposited back if no contract was signed?
I scheduled a free photography session with this girl. She said she needed $200 in advance that will go towards a package I'll buy when the photos are done. I decided the next day after looking how expensive her packages are that I couldn't afford it. I never signed the contract she sent me but she will not give me the $200 back. Can I get this money back? Am I in the wrong or is she?
Domonick G.
No
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
View Trustpilot ReviewHow It Works
Business lawyers by top cities
- Austin Business Lawyers
- Boston Business Lawyers
- Chicago Business Lawyers
- Dallas Business Lawyers
- Denver Business Lawyers
- Houston Business Lawyers
- Los Angeles Business Lawyers
- New York Business Lawyers
- Phoenix Business Lawyers
- San Diego Business Lawyers
- Tampa Business Lawyers
Adhesion Contract lawyers by city
- Austin Adhesion Contract Lawyers
- Boston Adhesion Contract Lawyers
- Chicago Adhesion Contract Lawyers
- Dallas Adhesion Contract Lawyers
- Denver Adhesion Contract Lawyers
- Houston Adhesion Contract Lawyers
- Los Angeles Adhesion Contract Lawyers
- New York Adhesion Contract Lawyers
- Phoenix Adhesion Contract Lawyers
- San Diego Adhesion Contract Lawyers
- Tampa Adhesion Contract Lawyers
Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.
View Trustpilot Review
I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.
View Trustpilot Review
I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.
View Trustpilot Review