What Is a Take It or Leave It Contract?
A take it or leave it contract is also called a contract of adhesion, and it means that the agreement cannot be negotiated.3 min read
2. What Is an Adhesion Contract?
3. Are Adhesion Contracts Fair?
A take it or leave it contract is also called a contract of adhesion, and it means that the agreement cannot be negotiated. The party being offered the agreement either accepts or denies the agreement, but they cannot make a counteroffer.
Ways to Approach a Take It or Leave It Contract
When you come across a take it or leave it type of contract, there are a few ways to handle it in order to still get what you want without negotiating, including:
- A bid with exception
- Providing a suggestion for alternative contract language
- Fairness appeal
- Risk control appeal
- Incorporation of a proposal
In the case of bidding on an offer, if you have already made your company attractive as a contractor to the offering party, you can hope that adding a few exceptions to your bid won't hurt your chances. These are also called conditional bids. This basically means that you accept the adhesion contract without negotiating, but if they accept your bid, they automatically agree to your conditions.
When signing a contract, you can offer a suggestion for better wording in a particular part of the agreement. This is a way to possibly fix a term or condition that was giving you pause without technically negotiating.
A fairness appeal is a discussion between the two parties in a contract over a specific clause in the agreement that caused one of the parties to question whether the agreement is fair.
Any time a contract is formed between to parties, risks are allocated to certain sides. If such risks are allocated inappropriately, this can be appealed and changed.
For instance, in a building contract, the risks of certain damages should be allocated to whichever party has the best ability to handle such an issue well. The risk of damage to the current property while building an addition onto a house shouldn't be allocated to the homeowners but to the contractors.
If you can have your proposal included as part of the official contract, you'll have your terms incorporated into the agreement without having to negotiate them.
What Is an Adhesion Contract?
When a stronger party offers a contract to a weaker party in terms of legal or financial power, they have the opportunity to offer it on a take it or leave it basis. This is called an adhesion contract. Usually, adhesion contracts are offered by businesses to their customers when providing a service or product for a fixed price. The customer can either accept what is offered at the price that is set or shop around elsewhere.
Adhesion contracts are also called standardized contracts because they are offered to consumers as a standard agreement. Each consumer faces the same offer with the same terms. These types of contracts are ideal for certain businesses because offering potential customers or clients the chance to negotiate can be very time-consuming and end up hurting the company's profits.
The following types of contracts are usually in a take it or leave it form:
- Car purchasing and leasing
- Property leasing
- Mortgage lending
- Insurance coverage
- Home repairs or improvement services
- Auto repairing
- Medical, dental, and veterinary services
If a company is in good shape with a solid client base or steady business, they probably have the option to use adhesion contracts. Offering a little room for negotiation to consumers is a good idea in some instances, however.
Are Adhesion Contracts Fair?
Even though many of the contracts that are formed throughout the world of business are, in fact, adhesion contracts, there is still a big debate about whether they are fair.
There are a few aspects of contract agreements to consider. If, in the spirit of fairness, every business afforded their customers the opportunity to negotiate their contracts for services or sales of products, then the amount of time it took to make a purchase or hire a service provider would be extended and therefore businesses would need to charge more to protect their profits.
However, adhesion contracts are often viewed as a way for sellers to sneak in unfair or unkind terms and conditions when offering a product or service to customers, especially if they have a sort of monopoly over a specific good.
Some believe that any unfair clauses in take it or leave it contracts shouldn't be enforced by the court. Creators of adhesion contracts can sometimes avoid any liability for unfair clauses because of the nature of the contract.
If you need help with a take it or leave it contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.