Are Adhesion Contracts Enforceable?

Contract law is complicated, and is probably one of the areas of law least understood by attorneys and non-attorneys alike. One frequent misconception about contracts is that adhesion contracts are not enforceable.

I recently had a case where I was seeking to enforce the terms of a contract between my client and the opposing party. The contract stated that if the opposing party wanted to take my client’s deposition, she would pay my client “$300.00 per hour, including drive time.” The contract also provided that if my client retained an attorney for the deposition, the opposing party would pay the attorney’s fees associated with the deposition.

When the opposing party noticed my client’s deposition, I sent the opposing attorney a letter outlining our expectations, including payment for my and my client’s fees.

The opposing attorney refused, and I filed a motion for a protective order on behalf of my client, asking the court that the deposition of my client be conditioned upon payment of her and my fees.

The opposing attorney acknowledged the contract terms, but claimed that the contract was unenforceable. He argued, “this contract … is obviously a form … not tailored in any way …. Such a contract is an adhesion contract and is unenforceable.”

The problem with this argument, besides lacking any legal authority, is that it is wrong. It illustrates a common misconception about adhesion contracts.

Adhesion Contracts

An adhesion contract is a

a standardized contract form offered to consumers of goods and services essentially on a “take it or leave it” basis, without affording the consumer a realistic opportunity to bargain, and under such conditions that the consumer cannot obtain the desired product or service except by acquiescing to the form of the contract.

Obstetrics & Gynecologists William G. Wixted, M.D., Patrick M. Flanagan, M.D., William F. Robinson, M.D. Ltd. v. Pepper, 101 Nev. 105, 106, 693 P.2d 1259, 1260 (1985).

As a practical matter, most contracts consumers sign are adhesion contracts. Your contract with the cable company, the cell phone company, online vendors, airlines, hotels, etc., are all adhesion contracts. The airline you purchase a plane ticket from, for example, does not have a representative sit down with you to negotiate the terms of your agreement, like the ticket price, the airspeed of the plane, the departure time, maximum altitude, cabin temperature, etc. Large corporations and even small business would not be able to operate if they only way they could enforce contracts was to negotiate each one separately.

Instead, many businesses will prepare standard contracts that govern their relationship with their potential clients, and if the potential clients do not agree to one or more of the terms, they are welcome to do business elsewhere.

As a general rule, a contract is not unenforceable merely because it is an adhesion contract. In fact, Nevada courts “permit[] the enforcement of adhesion contracts where there is plain and clear notification of the terms and an understanding consent, and if it falls within the reasonable expectations of the weaker … party.” Burch v. Second Judicial Dist. Court of State ex rel. Cnty. of Washoe, 118 Nev. 438, 442, 49 P.3d 647, 649 (2002).

The Results of the Motion for a Protective Order

At the hearing on behalf of my client, the opposing attorney took the same position he took in the briefing—that adhesion contracts are unenforceable. I was able to quickly dispatch with that argument using citation to Nevada law (something he did not even try to do). The attorney then took the position that because his client did not actually read the agreement, she cannot be held to its terms. That he would resort to such an argument revealed the weakness of his position.

In the end, the judge ordered that both my client and me be paid our respective hourly rates for time spent at the deposition.

It was a hard lesson to learn for the opposing party, who also had to pay her attorney. You should always read contracts before you sign them. And if there are terms you do not agree to, try to negotiate the terms, particularly if you are dealing with a small business. Often they are willing to adjust their standardized contract if it means keeping your business. And always be wary of what you sign because regardless of whether you read it or understand it, chances are, you’ll be held to its terms, which means any deviation from the terms will likely constitute a breach of contract.

 

Zachariah B. Parry is an attorney and founding partner at the law firm Parry & Pfau and is an adjunct professor who teaches torts, contracts, and Nevada practice and procedure for UNLV’s paralegal program. He can be reached at 702-912-4451 or zach@p2lawyers.com.