As you get your business underway, it’s important to understand the differences between adhesion contracts and negotiable contracts. What do they entail? When are they commonly used? What do you need to look out for? Here are the basics you need to know:

Adhesion Contracts

Chances are you’re already familiar with adhesion contracts, whether or not you know them by that name. An adhesion contract is one in which one party entirely writes the agreement and the second party can either accept or decline; you can either take it or leave it. Common examples you’ve probably run across include insurance policies, leases and tickets (the fine print on the back is considered an adhesion contract).

Can you ever get out of an adhesion contract? Well, sometimes. A court can rule that a specific contract is unconscionable, “unjust or extremely one-sided in favor of the person who has the superior bargaining power.” This can be determined by language that is difficult to understand or extremely small and buried.

Even though it is possible to get out of adhesion contracts sometimes, there are many instances where you can’t. At Omni Law Group we always recommend you read and fully-understand any contract before signing it. If you aren’t sure what it means, contact us and we can review it and advise you.

Negotiable Contracts

A negotiable contract is one that has room for adjustment. This type of contract always needs to be in writing (although we recommend you always get any sort of business agreement in writing), so don’t depend on an oral agreement made with another party.

A common example of a negotiable contract you might have run across is a credit card agreement. You can always ask your creditor to lower the interest rate, raise the credit limit or make temporary changes to your account. Because the agreement is negotiable, there is some flexibility as your behavior and circumstances change.

Not sure which type of contract is best to use with another party? Give us a call; we’re happy to offer our advice!

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