An adhesion contract, also known as a “standard form contract” or a “take-it-or-leave-it contract,” is a legally binding agreement between two parties where one party has significantly more bargaining power than the other. In such contracts, the terms and conditions are typically drafted by the party with greater bargaining power, and the other party has little or no ability to negotiate or modify the terms.

Key characteristics of adhesion contracts include:

1. **Standardized Terms:**
– Adhesion contracts are characterized by standardized, one-size-fits-all terms. The party with more bargaining power, often a business or a larger entity, drafts the contract terms and presents them to the other party on a take-it-or-leave-it basis.

2. **Inequality of Bargaining Power:**
– There is a significant imbalance in bargaining power between the parties. One party, typically the party offering the contract, has superior bargaining strength, while the other party, often a consumer or a smaller business, has limited or no ability to negotiate the terms.

3. **Limited or No Negotiation:**
– The party with less bargaining power generally has limited or no opportunity to negotiate the terms of the contract. The terms are presented on a “take it or leave it” basis, leaving the adhering party with little choice but to accept the terms if they want to engage in the transaction.

4. **Pre-Printed Forms:**
– Adhesion contracts are often presented on pre-printed forms with standard terms and conditions. These forms are used for various transactions and are not tailored to the specific circumstances or preferences of the adhering party.

5. **Common Examples:**
– Adhesion contracts are commonly found in various consumer transactions, such as insurance policies, software licenses, rental agreements, and other standard agreements used in everyday commerce.

6. **Enforceability:**
– Adhesion contracts are generally enforceable in court, as they meet the basic requirements of a valid contract (offer, acceptance, consideration, legality, capacity). However, courts may scrutinize certain terms for unconscionability, unfairness, or violation of public policy.

7. **Standardized Arbitration Clauses:**
– Many adhesion contracts include standardized arbitration clauses, requiring disputes to be resolved through arbitration rather than in court. While arbitration can offer a more efficient and cost-effective resolution, it may also limit the legal rights of the adhering party.

8. **Consumer Protection Laws:**
– Some jurisdictions have consumer protection laws that impose limits on the enforceability of certain terms in adhesion contracts. These laws may prohibit unfair or deceptive practices and provide remedies for consumers.

While adhesion contracts are common in commercial transactions, the law recognizes the potential for abuse of unequal bargaining power. In some cases, courts may refuse to enforce certain terms or may interpret them against the drafter of the contract if they find the terms to be unconscionable or against public policy. It’s essential for individuals entering into such contracts to be aware of their rights and, if possible, seek legal advice.