What are Adhesion Contracts?

In running a business, it is likely that you will encounter a large number and wide variety of contract types. You are also likely to use a number of different contracts in running your business. Sometimes, there will be recurring contracts that need to be signed by clients, customers, and other business stakeholders. Oftentimes, it is in the best interest of streamlining things, and, in doing so, conserving business resources like time and money, by having boilerplate contracts or standard form contracts to use for certain repetitive business needs. This is where adhesion contracts come in.

What are Adhesion Contracts?

An adhesion contract is drafted by one party and signed by another. It is not developed through negotiation nor is it subject to negotiation. It is a standard contract or boilerplate contract language that sets forth terms and conditions that are non-negotiable. While your first reaction may be confusion at when non-negotiable contracts are used, adhesion contracts are quite common. Many may first think that all contracts are subject to negotiation, but think more on the number of adhesion contracts you may have agreed to without giving it a second thought.

Have you accepted the user terms and conditions on a software update for your phone? Have you downloaded something from a website and said you agreed to the terms of use or signed a rental agreement? These are all adhesion contracts. The standardized forms and the non-negotiability features of an adhesion contract can make them almost essential to use when trying to provide goods and services on a broader business scale. The broad applicability of the adhesion contract language means that it can be used for a large number of people as opposed to only being applicable to a single person.

You can, of course, see why adhesion contracts can play such a vital role in the successful and smooth operation of a business. Can you imagine a rental car company that had to go through negotiations on every rental agreement? It would not be a sustainable business model. Using an adhesion contract saves companies and users alike a significant amount of time, money, and overall hassle. While there is the drawback that comes with the lack of bargaining between the two parties, you can see that there are many benefits that both sides to an agreement can appreciate in using an adhesion contract.

Despite the fact that adhesion contracts are drafted by one party and not subject to negotiation, they are enforceable so long as the terms are not unconscionable to the party signing the contract drafted by the other party. Unconscionability will be determined by considering a number of factors such as the relative bargaining power between the two parties to the contract. Complex or difficult to understand wording in the contract may also make it unconscionable as would a significant imbalance in the contractual obligations imposed by the agreement.

Pittsburgh Business Law Attorneys

Could your business benefit from the development of an adhesion contract or multiple adhesion contracts? Talk to the team at Jones, Gregg, Creehan & Gerace about what we can accomplish for you and what we can help you accomplish.  Contact us today.