As consumers, we sign adhesion contracts on a regular basis, but what exactly is an adhesion contract? An adhesion contract is a contract written by one party in that party’s favor that it uses for all of its transactions with customers.
Among the agreements that are adhesion contracts are credit agreements, insurance policies, or software license agreements.
Typically, they are entirely in the company’s favor. However, this doesn’t make them unenforceable. Rather, courts and legislatures understand that adhesion contracts are usually required to allow companies to sell goods and services with an understanding in advance what their liability will be for providing that good or service.
This is not to mean that all adhesion contracts are enforceable. There are limited instances where adhesion contracts have been found to be unconscionable. The term “unconscionable” in the legal context usually means a contract is so burdensome on the weaker party that it shocks the conscience.
It is rare for a court to determine an agreement is unconscionable as unconscionability is a high legal standard to prove. In most cases, consumers are warned that to read the terms of everything they sign. However, in this day and time that can be a difficult standard to follow. Further, most reputable companies attempt to draft contracts that are not unduly burdensome.
While this is not always the case, a company rarely makes money fighting over the terms of a contract in court. Therefore, over the years, most companies have drafted their agreements to be one-sided, but not to the extent it would “shock the conscience”.
If we wish to keep the price of goods and services down to a reasonable level, we also usually accept a small amount of risk that something will go wrong and we might not be able to recover for all of the damages we would normally be owed due to the presence of adhesion contracts we had to sign to purchase those goods or services.
However, if after reading an agreement you feel a contract is entirely out of line with what a reasonable person would be expected to sign, speak to the attorney of your choice to discuss this.