Contracts of adhesion: unconscionable or imperative?

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Ever wonder what you are really getting into when you sign up for a cell phone or credit card? Of course for most of us, these thoughts enter our head just about as quickly as they exit. Standard boilerplate language that everyone signs is just something we can put our name on and forget about, right? Well, not quite. These types of agreements, also called Contracts of Adhesion in the legal world, can present quite the conundrum for those that aren’t familiar with them. And for some, land them in legal trouble.

Let’s start with a fairly simple example: you purchase an airline ticket to travel to to Bali. Of course the airline you purchase the ticket from doesn’t have a representative sit down with you to negotiate the terms of the deal. You don’t get a say in the ticket price, maximum altitude, cabin pressure, etc. Either you purchase the ticket for the asking price and according to the airline’s terms, or you find another method of transportation to Bali.

Don’t let legal jargon bog you down

As a practical matter, businesses both large and small wouldn’t be able to operate if they had to sit down and negotiate with customers the terms of every contract. But with so much boilerplate and technical jargon that come with most of these contracts, is it practical to assume each party has actually read and understands each term of the contact?

Clarifying what’s conisdered consent

Generally, a contract is not unenforceable merely because it’s a Contract of Adhesion. In fact, some courts have permitted the enforcement of adhesion contracts where there is clear notification of the terms, and an understanding consent between the parties. However, there is an obvious grey area between what constitutes “clear notification” or “understanding consent”.

These grey areas allow an argument against enforceability of adhesion contracts: unconscionability.

Unconscionable contracts

Unconscionable contracts are typically viewed by courts as so unfair to the weaker party that they’re unwilling to enforce them. In these situations, courts find there is no meeting of the minds between the parties and the weaker party has not accepted the terms of the contract. Typically courts recognize 3 remedies where a contract is unconscionable:

  1. Refuse enforcement of the entire contract,
  2. Enforce the contract except for the offensive term, or
  3. Enforce the offensive term but limit its application to avoid an unconscionable result.

If you’re thinking that the entire idea of adhesion contracts and unconscionability is vague and leaves a lot of the decision power of enforceability up to courts, you’re correct. The main issue with consumers entering into contracts of adhesion is that, more often than not, these types of cases are out of your hands.

Contract review by attorney

So before you enter into what you believe is a Contract of Adhesion, it may be a good idea to have an attorney take a quick look and ensure you still get what you want out of an often one-sided contract. In this case, a smooth, carefree trip to Bali!