0

Suppose two parties have a relationship that might be a contract under U.S. law. Suppose one party is an individual and the other is not, so that if it's a contract it would be a contract of adhesion, thus with any ambiguities to be interpreted in favor of the individual. Suppose in all respects the relationship is a contract except for one possible issue, which is that the party who is not an individual says it's not a contract.

Is it a contract?

(I ask because I increasingly see in advertising or promotion that a company says that you can have their service without a contract and I'm dubious.)

  • 1
  • Thanks; I didn't find that in a search. – Nick May 29 '18 at 22:16
  • "Suppose one party is an individual and the other is not, so that if it's a contract it would be a contract of adhesion, thus with any ambiguities to be interpreted in favor of the individual." This is not the definition of a contract of adhesion and the interpretation of ambiguities rule applies whenever a contract is drafted by the other party. – ohwilleke May 30 '18 at 20:40
  • Seems like the title of this question has been edited a few times. If the OP changes it back, I think we ought to respect that, even if it's not a well-formed question title law.meta.stackexchange.com/questions/703/… – jimsug Jun 1 '18 at 14:00
5

You can have agreements that are not contracts

As such, there are not legally enforceable as contracts but may be enforceable under non-contract law. Examples of such non-contractual agreements include social agreements, statutory duties, memorandums of understanding, agreements to distribute cocaine etc.

However, that’s not what you have here

“No contract” agreements for things like internet or phone services are contracts - the “no contract” terminology is advertising fluff to indicate that the contracts are one-off or short term and don’t lock the customer into a long-term contract.

The term “contract” is being used in a generally understood way as meaning a long-term binding commitment not in a strict legal way where virtually every commercial transaction is a contract

  • I think so, too, except for doubt about an agreement to distribute cocaine, if performing part of the terms would be unlawful, because then the agreement (at least if contract law applies) would be against public policy and thus unenforceable. – Nick May 29 '18 at 22:23
  • @Nick as I said - its an agreement, not a contract. – Dale M May 29 '18 at 23:09
  • If you meant that, you didn't write that. The "However" line means the next paragraph applies to the issue and, till I learn otherwise, agree that it's a contract that just isn't called one by one party. – Nick May 30 '18 at 17:36
  • @Nick: The answer seemed to me to be saying that agreements to distribute cocaine couldn't be contracts (whether or not anyone wanted to call them that), perhaps because they're agreements to perform illegal acts. "However" splits the answer into two parts with no overlap between them. – Nathan Tuggy May 30 '18 at 20:21
  • 1
    @Nick "judgement-proof" as in "has no assets" makes a contract practically unenforcable - it is still legally enforcable and such enforcement can trigger bankruptcy etc. Not being a contract makes it legally unenforcable. One of the things that make an agreement not a contract is illegality of objectes - distributing cocaine is illegal therefore any agreement to do so is a void contract (see law.stackexchange.com/questions/6263/…) – Dale M Jun 1 '18 at 1:03
1

Short Answer: No, it cannot disclaim a contract of adhesion.

Long Answer:

(I ask because I increasingly see in advertising or promotion that a company says that you can have their service without a contract and I'm dubious.)

Most legal words have more than one meaning depending upon the context. The term "contract" is no exception.

In this context, as used in an advertisement or promotion, what "service with a contract" means is service without an "executory contract" (which means a contract that hasn't yet been fully performed when agreed to), for a fixed term, while "service without a contract" means a contract that can be terminated at will or when the amount currently paid for the service is exhausted.

But, in the more general sense that the term contract is usually used in the law, you still have a contract, even though it can be terminated at any time, and either party could sue the other for a breach of contract in court (or in an arbitration forum if the agreement contains an arbitration clause as it often does).

Incidentally, a "contract of adhesion" is a take it or leave it contract, used in many individuals transactions, drafted by the party with more economic power that the party with less economic power must accept to get the service and cannot negotiate the terms of. Status as a contract of adhesion doesn't not dependent upon one's status as an entity or an individual. The contract you describe is almost surely a contract of adhesion, but not for the reasons that you provide.

An entity could be bound by a contract of adhesion and contracts of adhesion are usually enforceable if their terms of reasonably related to the subject matter. A contract of adhesion is not automatically invalid and cannot be disavowed unless it is "unconscionable" (i.e. absurdly unfair and exploitive) and even then such invalidity might be applied to a particular term of the contract of adhesion, rather than to the agreement as a whole.

All contracts drafted by the other party are construed against the drafter in cases of ambiguity. This is not limited to contracts of adhesion, although all contracts of adhesion, by definition, are subject to this rule.

This said, if it is a "no contract" agreement, the business could terminate the agreement either at any time, or when the money already paid is exhausted, which functionally isn't that different from disclaiming a contract. The difference would be that the contract terms that were in force while service was provided (e.g. a privacy policy or a waiver of liability) would continue to be binding on both parties with respect to the service that was provided.

  • The change in subject seems to confuse people. You answered a subject I did not supply for my opening post. I'm not a lawyer; my reading on adhesion is years ago and I don't have sources for the law; and my understanding of unconscionability is that it voids any contract, adhesion or no. – Nick Jun 1 '18 at 0:57
  • Bear in mind that the "unconscionable" standard has been lowered in many jurisdictions (Australia, UK etc.) to an "unfair" standard for "small" contracts (which can include contracts up to a quater of a million dollars and B2B contracts).. – Dale M Jun 1 '18 at 1:42
  • "my understanding of unconscionability is that it voids any contract" While voiding a contract is one remedy, reforming the contract or voiding the offending term is at least as common a remedy. – ohwilleke Jun 1 '18 at 16:22

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.