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Adhesion Contract

An adhesion contract is about a standardized contract form that provides goods and services to the consumers. This is a legal agreement between two parties to do a particular transaction in which on one side there is full bargaining power and used in writing the contract to the full advantage of a party to the contract.

It also means that either take it leave it which means that a consumer cannot negotiate about a product unless a contract agreement has been signed. For example, you have taken loan from a company and you are unable to pay loan installments and the penalties levied are printed in small size in adhesion contract. In such case,the court states that weaker party has not accepted the terms and therefore there is no meeting of minds.

Court does not enforce adhesion contracts which are unconscionable and always safeguard the weaker parties of the contract. Adhesion contract always favors one party and there is no power for bargaining. Another example if a landlord is have a poor tenant and all of the terms of lease are accepted by the tenant only due to the fact that the landlord is very rich and any disagreements would terminate the contract of lease and tenant has to vacate the premises. In such instance, adhesion contract can give a solution to the tenant to claim in court that the contract with rich landlord is not valid whereas the doctrine to this extent and effect has to be used in a safe manner and method.

In a way, adhesion contracts are beneficial to the clients with the fact that clients can claim in the court and can obtain relief through adhesion contracts. However all may not come under the purview of adhesion contracts and there are several measures that have to be worked out before entering into adhesion contract. Customers always prefer contracts that are in good faith and good legal language indicating clear expression of words and meaning. Because it is basically the words and language which communicate and provide good meaning to the contracts and in such instance, the adhesion contract would be giving a complete guidance and support to the customers.

More and more people would be willing to enter into an adhesion contract with the fact the risk in this contract is very low and customers are very safe from paying huge penalties as violation of contract. One more benefit is both the parties of the contract are not rich whereas if one is poor the other party to the contract is rich therefore, poor party is protected by the court from payment of huge penalty while the rights of property of rich client are protected by court. Therefore in this manner, adhesion contract work in favor of both the parties of the agreement.

This can be used for small business loans, tenant and lease agreements, land lease, commercial lease and for any other purpose with selling and buying proposal that benefits both the clients and customers.

Tags: Legal, loan, risk

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