What Is the Problem with Adhesion Contracts?

Adhesion contracts are not inherently bad. They serve a vital function for the organizations that use them. In fact, Fair Forms approved contracts, both those used between us and our authorized members and those approved for use by them with consumers, are adhesion contracts. It would be too costly for a company to operate if every consumer had different contract terms.

The danger of adhesion contracts is that the bargaining power is profoundly unbalanced against the consumer. In an adhesion contract, the company creates the terms of the contract outside the presence of the consumer. The consumer rarely has a chance to review the terms of the contract in advance. In addition, the contracts are generally offered on a take-it-or-leave-it basis. The terms are typically non-negotiable and often the representative that works with the consumer is not authorized to adjust the terms.

This problem leads to hidden fees, overly complex contracts that consumers don’t understand and abusive terms that enable the company to avoid liability under the contract. For a description of some common abusive contract terms found in adhesion contracts with some real life examples, check out our Abusive Contract Terms page.