South Dakota Crop Insurance Practice Exam

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Which type of contract is characterized by a lack of negotiation between parties?

Unilateral contract
Contract of adhesion
Conditional contract
Aleatory contract

The correct answer is: Contract of adhesion

A contract of adhesion is characterized by a situation where one party typically sets the terms of the agreement with little or no negotiation taking place. These contracts are often created on a "take it or leave it" basis, where the party with less power must either accept all terms as presented or refrain from entering into the agreement altogether. This type of contract is commonly found in consumer agreements, such as insurance policies and service contracts, where the provider drafts the terms and the consumer must accept them without alterations. The nature of a contract of adhesion means that the power dynamics heavily favor the drafting party, making negotiations impractical or impossible for the other party. This distinct feature is what defines this type of contract compared to others which may involve negotiation or mutual agreement on terms.