Legal Definitions - standardized contract

A standardized contract, also frequently referred to as a standard-form contract or an adhesion contract, is a type of agreement where the terms and conditions are largely pre-written by one party and presented to the other party on a "take-it-or-leave-it" basis. The party presenting the contract, typically one with significantly greater bargaining power, usually does not allow for negotiation of the core terms. The other party, often a consumer or a smaller business, must either accept the contract as written or decline the transaction entirely. This structure is commonly used to streamline transactions, ensure consistency across many agreements, and reduce administrative costs, but it can also limit the ability of the weaker party to influence the terms of the agreement.

• Example 1: Software End-User License Agreement (EULA)

  When you install new software on your computer or smartphone, you are almost always prompted to agree to an End-User License Agreement (EULA). This document contains extensive pre-written terms regarding how you can use the software, limitations on liability, warranty disclaimers, and privacy policies. You cannot negotiate individual clauses; your only options are to click "I Agree" and proceed with the installation, or decline and be unable to use the software.

  This illustrates a standardized contract because the software company has drafted all the terms in advance, and the user has no opportunity to modify them. The user must accept the entire set of pre-determined terms to gain access to the software.

• Example 2: Car Rental Agreement

  When renting a car for a trip, the rental agency provides a contract that outlines the terms of the rental. This agreement typically includes pre-set clauses regarding daily rates, fuel policies, insurance options, liability for damages, and conditions for returning the vehicle. While you might choose specific add-ons like GPS or additional insurance, the fundamental terms and conditions of the rental agreement itself are fixed by the rental company.

  This is a standardized contract because the car rental company has prepared all the essential terms in advance, and customers generally accept these pre-written terms without negotiation in order to rent the vehicle.

• Example 3: Online Streaming Service Terms of Service

  Before you can subscribe to and use an online streaming service (like for movies, music, or TV shows), you are required to agree to its "Terms of Service" or "Terms and Conditions." These documents cover aspects such as subscription fees, content usage rules, privacy policies, dispute resolution mechanisms, and cancellation procedures. You must accept these terms in their entirety to create an account and access the service.

  This exemplifies a standardized contract because the streaming service provider dictates all the rules and conditions for its service, and subscribers must accept these pre-determined terms without any chance to negotiate them if they wish to use the platform.