Contracts of Adhesion

Presentation by The Office of the Community Lawyer

What is a Contract of Adhesion?

An imbalanced contract where one party has all the power.

Common Uses

Contracts of Adhesion are typically used in matters involving:

insurance,

leases,

deeds,

mortgages

automobile purchases

home contractor or repair services,

auto repair services,

services for medical or dental care,

and veterinary care.

Questionable Provisions

Mandatory Arbitration

Any issues with contract must be

settled outside of court.

Acceleration Clause

Allows party to demand full amount

due in the event the other party

fails to live up to terms

Unilateral Modification

Binds signor to current contract as

well as any future changes to contract

Dangers of Contracts of Adhesion

Significant provisions like Mandatory arbitration can be hidden in fine print and complex legal language

Full contract may not be presented. Text may reference terms found in another location.

Consumers feel pressured to sign without asking questions

“Shrink wrap” contracts- typically used in software contracts- bind party to terms even if contract cannot be seen before product is bought/opened

“Click wrap” contracts- when signor is bound by clicking “I Agree” online. Terms can be dense text in hyperlink, even on a different site

US Law and Contracts of Adhesion

US Law treats a Contract of Adhesion like any other contract

A signature legally binds the parties

to the contract, whether or not consumer

has read the provisions.

What You Should Do

Collective action is needed!

According to faircontracts.org, you should:

  • Contact your state attorney general's office— ask them to require that all businesses using standard form contracts make those contracts publicly available before requiring the consumer to engage in the transaction;
  • Contact your members of Congress and ask them to replace fine print with language everyone can easily read and understand;
  • Contact the Federal Trade Commission in Washington DC and ask them to act to get rid of unfair and deceptive fine print in standard form contracts;

Send contracts you believe to be unfair or incomprehensible, minus personal information to mycontract@faircontracts.org

In the meantime, a healthy dose of awareness about contracts of adhesion will help you make smart consumer decisions. Avoid products and services with incomprehensible terms and be wary of agreeing to invisible terms online.

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