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A standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is a contract between two parties that does not allow for negotiation, take it or leave It is often a contract that is entered into between unequal bargaining partners, such as when an individual is given a contract by the salesperson of a multinational The customer in no position to negotiate the standard terms of such contracts and the company's representative often does not have the autonomy to do While adhesion contracts, in and of themselves, are not illegal per se, there exists a very real possibility for There is some debate on a theoretical level whether, and to what extent, courts should enforce standard form On one hand, they undeniably fulfill an important efficiency role in Standard form contracting reduces transaction costs substantially by precluding the need for buyers and sellers of goods and services to negotiate the many details of a sale contract each time the product is On the other hand, there is the potential for inefficient, and even unjust, terms to be accepted by those signing these Such terms might be seen as unjust if they allow the seller to avoid all liability or unilaterally modify terms or terminate the These terms often come in the form of, but are not limited to, forum selection clauses and mandatory arbitration clauses, which can limit or foreclose a party's access to the courts; and also liquidated damages clauses, which set a limit to the amount that can be recovered or require a party to pay a specific They might be inefficient if they place the risk of a negative outcome, such as defective manufacturing, on the buyer who is not in the best position to take There are a number of reasons why such terms might be acceptedStandard form contracts are rarely readLengthy boilerplate terms are often in fine print and written in complicated legal language which often seems The prospect of a buyer finding any useful information from reading such terms is correspondingly Even if such information is discovered, the consumer is in no position to bargain as the contract is presented on a “take it or leave it” Coupled with the often large amount of time needed to read the terms, the expected payoff from reading the contract is low and few people would be expected to read Sometimes a standard form contract may literally be dispensed from a vending machine to drivers sitting in line to enter a parking garage, which means that stopping to read the contract risks provoking road Access to the full terms may be difficult or impossible before acceptanceOften the document being signed is not the full contract; the purchaser is told that the rest of the terms are in another This reduces the likelihood of the terms being read and in some situations, such as software license agreements, can only be read after they have been notionally accepted by purchasing the good and opening the These contracts are typically not enforced, since common law dictates that all terms of a contract must be disclosed before the contract is Boilerplate terms are not salientThe most important terms to purchasers of a good are generally the price and the quality, which are generally understood before the contract of adhesion is Terms relating to events which have very small probabilities of occurring or which refer to particular statutes or legal rules do not seem important to the This further lowers the chance of such terms being read and also means they are likely to be ignored even if they are There may be social pressure to signStandard form contracts are signed at a point when the main details of the transaction have either been negotiated or Social pressure to conclude the bargain at that point may come from a number of The salesperson may imply that the purchaser is being unreasonable if they read or question the terms, saying that they are "just something the lawyers want us to do" or that they are wasting their time reading If the purchaser is at the front of a queue (for example at an airport car rental desk) there is additional pressure to sign Finally, if there has been negotiation over price or particular details, then concessions given by the salesperson may be seen as a gift which socially obliges the purchaser to respond by being co-operative and concluding the Standard form contracts may exploit unequal power relationsIf the good which is being sold using a contract of adhesion is one which is essential or very important for the purchaser to buy (such as a rental property or a needed medical item) then the purchaser might feel they have no choice but to accept the This problem may be mitigated if there are many suppliers of the good who can potentially offer different terms (see below)Some contend that in a competitive market, consumers have the ability to shop around for the supplier who offers them the most favorable terms and are consequently able to avoid However, in the case of credit card contracts, for example, the consumer while having the ability to shop around may still have access to only form contracts with like terms and no opportunity for Also, as noted, many people do not read or understand the terms so there might be very little incentive for a firm to offer favorable conditions as they would gain only a small amount of business from doing Even if this is the case, it is argued by some that only a small percentage of buyers need to actively read standard form contracts for it to be worthwhile for firms to offer better terms if that group is able to influence a larger number of people by affecting the firm’s Another factor which might mitigate the effects of competition on the content of contracts of adhesion is that, in practice, standard form contracts are usually drafted by lawyers instructed to construct them so as to minimize the firm’s liability, not necessarily to implement managers' competitive Sometimes the contracts are written by an industry body and distributed to firms in that industry, increasing homogeneity of the contracts and reducing consumer's ability to shop Common law statusAs a general rule, the common law treats standard form contracts as any other Signature or some other objective manifestation of intent to be legally bound will bind the signor to the contract whether or not they read or understood the The reality of standard form contracting, however, means that many common law jurisdictions have developed special rules with respect to In general, courts will interpret standard form contracts contra proferentem (literally 'against the proffering person') but specific treatment varies between Contracts of adhesionContract of adhesion on timekeeping ticket dispensed by vending machine at parking lot entranceThe concept of the contract of adhesion originated in French civil law, but for example, it did not enter American jurisprudence until the Harvard Law Review published an influential article by Edwin W Patterson in It was subsequently adopted by the majority of American courts, especially after the Supreme Court of California endorsed adhesion analysis in For a contract to be treated as a contract of adhesion, it must be presented on a standard form on a ‘take it or leave it’ basis, and give one party no ability to negotiate because of their unequal bargaining The special scrutiny given to contracts of adhesion can be performed in a number of ways:If the term was outside of the reasonable expectations of the person who did not write the contract, and if the parties were contracting on an unequal basis, then it will not be The reasonable expectation is assessed objectively, looking at the prominence of the term, the purpose of the term and the circumstances surrounding acceptance of the Section 211 of the American Law Institute's Restatement (Second) of Contracts, which has persuasive though non-binding force in courts, provides:Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the This is a subjective test focusing on the mind of the seller and has been adopted by only a few state The doctrine of unconscionability is a fact-specific doctrine arising from equitable Unconscionability in standard form contracts usually arises where there is an "absence of meaningful choice on the part of one party due to one-sided contract provisions, together with terms which are so oppressive that no reasonable person would make them and no fair and honest person would accept "

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