In adhesion contracts, one party drafts a contract while the other party is expected to sign the contract. The adhesion contract works in a way that is similar to insurance contracts. In an insurance contract, the company and the insurance agent will draft an agreement to be issued to the insured, who has the right to accept or reject the terms and conditions of the agreement before paying for the insurance policy. The insurer does not have the capacity to alter the contract terms to suit the desires of the policyholder.
Brief History of Adhesion Contracts
Adhesion contract has its origin rooted in the French civil law. Following the publishing of the article 'Harvard Law Review' by Edwin W. Patterson in 1919, adhesion contract became an adopted term in the United States courts, and a 1962 Supreme Court of California case subsequently endorsed the adhesion analysis.
How an adhesion contract can be Enforced
The major characteristics of an adhesion contract is that it cannot be negotiated and alterations cannot be made to the terms and conditions in the contract. There are several arguments that adhesion contracts effectively save time and resources, thus helping companies that ordinarily would be overwhelmed with the task of individually negotiating contracts. The adhesion contract can be advantageous because it displays some form of consistency and uniformity.
For equality and fairness to exist in the terms and conditions contained in an adhesion contract, the courts have the right to scrutinize the contracts. In order for an adhesion contract not be considered as invalid, several strategies are employed by the courts to carryout fairness and validity checks.
1. If the terms of the contract are not reasonable for the receiver (that is the individual not writing, but signing the contract) and the contracting parties do not lay on a level ground, then that adhesion contract cannot be validated and would not be signed.
2. In a case where the contract drafter knows that the party whose assent is needed would not give consent if he/she knows the implication of a particular term contained in the contract (which ordinarily should not be there), such adhesion contract cannot be enforced by the court.
3. An adhesion contract will be scrutinized and rendered invalid if the contract contains bias terms and conditions that seem oppressive and would not be acceptable under normal circumstances.