There are many situations where you sign agreements at a vendor with no real say in the terms of the contract. Most of us are guilty for not reading the terms of which we sign! These contracts are called Adhesion Contracts.
What are Adhesion Contracts?
Adhesion contracts (aka Standard Form Contracts) are agreements prepared by a party with a stronger bargaining power to be signed by another party with weaker bargaining power. The inequality of bargaining power in negotiation on the terms of the agreement is what classifies an Adhesion Contract.
These type contract are used in a variety of businesses to standardize their agreements with other parties as all their agreements will be bound by the same conditions.
What is Bargaining Power?
Bargaining power is the ability of a party to influence another to get their own way. Parties with equal bargaining power are able to go into negotiations with each other, unlike parties with unequal bargaining power.
Examples of Adhesion Contracts:
- Supplier gives an agent a standard for of agreement without allowing for negotiation.
- The “tick box” terms and conditions and terms of use are non-negotiable.
- When you purchase a house or a car there are certain documents that you sign in order to proceed with the sale. These terms are non-negotiable.
- Signing documents and waivers at the hospital.
- Signing insurance documents.
- When applying for a mortgage at the bank, the mortgage documents are non-negotiable.
- When you sign up for the gym and you have to sign some documents before you are allowed in.
All contracts mentioned above are non-negotiable and classified as standard form, adhesion contracts. A “take it or leave it” situation.
Who uses adhesion contracts?
The use of adhesion contracts is common amongst many industries, these include: Banking, Insurance, Phone providers, Car purchases, car rentals etc. These are also common between business-to-business agreements where one party has a higher bargaining power than the other.
Are they valid?
Adhesion contracts are valid under Omani law in the same way that other contracts are valid. However, as per Omani law, the judge has the power to invalidate certain provisions in a contract that are not fair to the weak party where the party has no right to negotiate the terms of the agreement.
What does the law say?
The concept of adhesion contracts Codified in Oman Civil Transactions law promulgated by Royal Decree 29/2013 as follows:
Article 83 of Oman Civil Transactions Law No. 29/2013 (Oman Civil Code) reads:
“Acceptance in adhesion contract shall be inferred by the mere adherence to the standard conditions set by the obligor and may not be negotiated.”
Article 158 of the said law also reads:
“If the contract is made by way of adhesion, and where said contract includes abusive conditions, the court may modify said contract or exempt the compliant party from the same in the application of justice. Any agreement to the contrary shall be void”.
Here the complaint party is the party with the weaker bargaining power who is unable to negotiate the terms
Also, article 166 reads:
“1. A doubt shall be construed in favour of the debtor.
2. In contracts of adhesion, the doubt must be construed in favour of the compliant party.“
The article above clarifies that if there is any uncertainty as to the terms of the agreement, the court will address the weaker party’s position and will usually take their side as they were not able to negotiate the terms. This will be upto to the courts’ discretion.
Conclusion
In summary, you will come across adhesion contracts between businesses as well as within your personal life. Make sure to read the fine print and ask for clarifications if anything is not clear!
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Dalia Sharabati
I am a Legal Consultant at a local law firm in Oman. I completed my LLB in the UK and then completed my LLM in Commercial Legal Practice and Legal Practice Course at BPP London. I am a strong believer of easily accessible legal advice to all members of the community.
Also can we conclude that in event someone has entered in an adhesion contract and later may feel that he or she has been taken advantage off , there will be a reasonable chance by applying for omani courts to make things change if the terms are unfair . what do you think? are there any precedence in the courts in oman as an example?