What characterizes a contract of adhesion?

A contract of adhesion is characterized by the situation where one party, usually the insurer, drafts the contract and the other party, the insured, does not have the ability to negotiate its terms. Therefore, the insured is expected to accept the entire contract as presented, including all terms and conditions, without the possibility of modifying them. This creates an imbalance in negotiating power, with the insurer holding all the strength while the insured must agree to the terms as they are laid out.

In this context, the nature of contracts of adhesion is significant as they often lead to the necessity for courts to closely scrutinize such contracts. Courts may be more inclined to interpret ambiguities in favor of the insured when disputes arise, reflecting the unequal bargaining power inherent in these contracts.

The other points do not accurately capture the essence of a contract of adhesion. While it is true that negotiation is not a key feature of this type of contract — which rules out options that imply negotiation — the requirement for mutual agreement suggests both parties have an equal level of influence over the contract's terms, which is contrary to the fundamental nature of contracts of adhesion. Thus, the defining characteristic lies in the insured's acceptance of the contract in its entirety without alterations or negotiation.