Legal Definitions - contract of adhesion

A contract of adhesion is a standardized agreement presented by one party to another on a "take-it-or-leave-it" basis. In such a contract, the party presenting the agreement holds significantly more bargaining power and drafts all the terms, while the other party has little to no ability to negotiate or modify those terms. The weaker party must either accept the contract as written or forgo the product, service, or opportunity.

• Example 1: Mobile Phone Service Agreement

  Imagine a customer wants to sign up for a new mobile phone plan with a major telecommunications provider. The provider presents a standard service agreement outlining monthly fees, data limits, early termination penalties, and arbitration clauses. The customer reviews the document but cannot negotiate individual clauses, such as a lower early termination fee or a different data allowance.

  This exemplifies a contract of adhesion because the telecommunications company, having significant market power, dictates the terms of service. The customer cannot negotiate individual clauses; their only choice is to either agree to the provider's standard terms to get the service or seek another provider, who likely offers similar non-negotiable agreements.

• Example 2: Software End-User License Agreement (EULA)

  When you download and install new software on your computer, a window often pops up displaying the End-User License Agreement (EULA). This document details the terms of use, limitations of liability, and privacy policies. You are typically presented with an "Accept" or "Decline" button, and you must click "Accept" to proceed with the installation.

  This is a contract of adhesion because the software company drafted all the terms and presented them as a non-negotiable package. The user has no opportunity to change any clause within the EULA; their only choice is to accept the entire agreement to use the software or decline and forgo its use.

• Example 3: Standard Rental Car Agreement

  When renting a car for a vacation, a customer is typically presented with a multi-page rental agreement at the counter. This agreement includes standard clauses regarding insurance coverage, fuel policies, damage liability, and late return fees. The customer is expected to sign the pre-printed form without negotiating specific terms like the deductible amount for damage or the daily rate for additional drivers.

  This situation illustrates a contract of adhesion because the rental car company, as the stronger party, provides a standardized contract with terms it has unilaterally set. The customer, needing the car, has little to no ability to alter these terms and must accept them as presented to rent the vehicle.