Legal Definitions - adhesion contract

An adhesion contract is a standardized agreement presented by one party with significantly more bargaining power to another party with less power, on a "take-it-or-leave-it" basis. The weaker party typically has no opportunity to negotiate or modify the terms and must accept the contract as written to obtain the desired product or service. These contracts are common in many consumer transactions because they allow businesses to efficiently conduct a high volume of similar transactions.

While adhesion contracts are widespread, courts recognize the potential for unfairness due to the inherent power imbalance. Therefore, they often scrutinize these contracts more closely than freely negotiated agreements. Courts may refuse to enforce terms that are overly harsh, unexpected, or unclear, especially if a reasonable person would not have anticipated them. If a term is ambiguous, courts generally interpret it in favor of the party who did not draft the contract. In extreme cases, if the contract or its terms are found to be fundamentally unfair or oppressive (a concept known as unconscionability), a court might strike down specific provisions or even the entire contract.

Here are some examples of adhesion contracts:

• Software End-User License Agreement (EULA)

  Scenario: A person downloads and installs new photo editing software. Before the installation can proceed, a pop-up window appears with a lengthy End-User License Agreement (EULA) and an "I Agree" button.

  Explanation: The software company (the party with superior bargaining power) drafted the EULA, which includes terms about usage rights, limitations of liability, and data collection. The user (the party with inferior bargaining power) cannot negotiate these terms; they must click "I Agree" to use the software or decline and not use it. This illustrates the "take-it-or-leave-it" nature and the standardized form of an adhesion contract.

• Gym Membership Agreement

  Scenario: Someone wants to join a local fitness center. They are presented with a multi-page membership agreement that outlines monthly fees, cancellation policies, liability waivers for injuries, and rules for using equipment.

  Explanation: The gym (the stronger party) provides a standard contract to all prospective members. The individual (the weaker party) cannot negotiate changes to the cancellation fees, the liability waiver, or the automatic renewal clauses. To gain access to the gym's facilities, they must sign the contract as presented, making it an adhesion contract.

• Online Streaming Service Terms of Service

  Scenario: A user signs up for a new video streaming service. During the registration process, they are required to check a box indicating they agree to the "Terms of Service" and "Privacy Policy," which are accessible via hyperlinks.

  Explanation: The streaming service provider (the stronger party) has drafted comprehensive terms covering content usage, subscription billing, data privacy, and dispute resolution. The user (the weaker party) has no ability to negotiate these terms. To access the streaming content, they must accept the terms as written, demonstrating the non-negotiable, standardized nature of an adhesion contract in a digital context.