What characterizes a contract of adhesion?

A contract of adhesion is characterized by an unequal balance of power, where one party has significantly more power than the other in drafting the terms of the agreement. This often occurs in situations where the stronger party, typically a business or insurance company, presents a standard form contract to the weaker party, such as a consumer, who has little to no ability to negotiate any of the terms.

This situation leads to a disparity where the weaker party must either accept the contract as it is written or risk not having access to the product or service being offered. Because the terms are set unilaterally by one party, this type of contract is often seen as one-sided and may raise issues surrounding fairness or equity.

In contrast, the other options do not accurately depict a contract of adhesion. Equal bargaining power implies that both parties have the ability to negotiate terms, which is not the case in these contracts. Negotiated terms suggest a mutual agreement reached through discussion, which also doesn't apply here since the weaker party is generally not involved in the negotiation. Lastly, mutual agreement on all clauses indicates that both parties have contributed to setting the terms, a process that contradicts the essence of a contract of adhesion where one party dictates the terms without significant input from the other.