Which term describes an insurance contract that is drafted by one party and accepted by the other, with little to no negotiation?

Which term describes an insurance contract that is drafted by one party and accepted by the other, with little to no negotiation?

• A. Unilateral contract
• B. Bilateral contract
• C. Adhesion contract
• D. There is no offer and acceptance required.

Answer: (C)

Adhesion contracts describe agreements where one party drafts the terms and presents them to the other on a take-it-or-leave-it basis, with little room for negotiation. In insurance, the policy language and forms are typically created by the insurer and the insured accepts those standard terms as written, rather than negotiating each provision. This reflects the power imbalance in which the insurer sets the boilerplate and the insured must adhere to it. This differs from a unilateral contract, which hinges on a promise from only one party, or a bilateral contract, which involves mutual promises but not the standardized, non-negotiable nature of adhesion. Also, even though an offer and acceptance are required in contract formation, adhesion specifically captures the way the terms are created and presented rather than how many promises exist.

Adhesion contracts describe agreements where one party drafts the terms and presents them to the other on a take-it-or-leave-it basis, with little room for negotiation. In insurance, the policy language and forms are typically created by the insurer and the insured accepts those standard terms as written, rather than negotiating each provision. This reflects the power imbalance in which the insurer sets the boilerplate and the insured must adhere to it.

This differs from a unilateral contract, which hinges on a promise from only one party, or a bilateral contract, which involves mutual promises but not the standardized, non-negotiable nature of adhesion. Also, even though an offer and acceptance are required in contract formation, adhesion specifically captures the way the terms are created and presented rather than how many promises exist.