An agreement in which one party has a significant advantage over the other in determining the parameters of the contract is known as an adhesion contract.
A standard set of terms and conditions that are the same as those provided to other customers is required for the existence of a contract of adhesion.
Those terms and conditions are non-negotiable, so the contract’s weaker party must accept it as written rather than asking for clauses to be added, deleted, or amended. Boilerplate contracts and standard contracts are other names for adhesion agreements.
Adhesion contracts are frequently employed in insurance, leases, car purchases, mortgages, and other transactions involving a sizable number of clients who will all be subject to a common set of terms. In an insurance agreement, the firm and its agent have the authority to construct the document, and the prospective policyholder only has the right to decline; they are not permitted to counter an offer or to come up with a different agreement that the insurer can accept. An adhesion contract should be carefully studied because the other party has written all the details and guidelines.
A contract must be presented as a “take it or leave it” arrangement, denying one party the right to negotiate due to their uneven negotiating position, in order to be considered an adhesion contract. However, adhesion contracts are examined, and this examination typically takes one of two kinds.