Define: Contract Of Adhesion

A contract of adhesion is a legally binding agreement where one party has significantly more bargaining power than the other, resulting in a situation where the terms and conditions are presented on a “take it or leave it” basis. The party with less bargaining power typically has little to no opportunity to negotiate or modify the terms of the contract. These contracts are often presented in standardized forms, such as insurance policies, rental agreements, or software licences. Courts may scrutinise contracts of adhesion to ensure that they are not unconscionable or unfairly disadvantageous to the party with less power. However, if the terms are clear and not against public policy, courts will generally enforce them as written.

A contract that cannot be bargained over. Insurance contracts are considered contracts of adhesion because the insured cannot negotiate the terms.

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This glossary post was last updated: 29th March 2024.