In law of business, the Standard Form Contract is one of its main topics. A standard form contract is a contract between two parties that does not allow for negotiation, or more commonly defined as the “take it, or leave it”.
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 corporation.
As a general rule, the common law treats standard form contracts as any other contract. 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 terms. Visit the North Carolina business lawyer to learn more about this.
The reality of standard form contracting, however, means that many common law jurisdictions have developed special rules with respect to them. In general, courts will interpret standard form contracts contra proferentem but specific treatment varies between jurisdictions.
The Uniform Commercial Code which is followed in most American states has specific provisions relating to standard form contracts. Furthermore, standard form contracts will be subject to special scrutiny if they are found to be contracts of adhesion. One of these contracts is the Contracts of Adhesion. Learn more about business laws with the North Carolina business lawyer.
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 the purchaser no ability to negotiate because of their unequal bargaining position.
The special scrutiny given to contracts of adhesion can be performed in a number of ways. One is that 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 enforceable. 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 contract.
The doctrine of unconscionability which is a fact-specific doctrine arising from equitable principles. 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 them." For more information about business laws, then visit the North Carolina business lawyer for details.