What term describes a contract in which one party must either accept the agreement as written by the other party or reject it?

What term describes a contract in which one party must either accept the agreement as written by the other party or reject it?

• A. Contract of adhesion
• B. Contract of indemnity
• C. Valued policy
• D. Binder

Answer: (A)

A contract of adhesion is one where the terms are drafted by one party and the other must either accept the agreement as written or reject it, with little or no opportunity to negotiate. This reflects an imbalance in bargaining power, common in many standard insurance forms. The insured typically cannot modify the language and must “adhere” to the terms as they stand. If there’s ambiguity, courts often apply contra proferentem, interpreting uncertain provisions in favor of the insured because the drafter is the insurer. The other options don’t describe this setup: a contract of indemnity centers on compensation for losses, a valued policy fixes the insured value in advance, and a binder is a temporary agreement providing coverage until a policy is issued.

A contract of adhesion is one where the terms are drafted by one party and the other must either accept the agreement as written or reject it, with little or no opportunity to negotiate. This reflects an imbalance in bargaining power, common in many standard insurance forms. The insured typically cannot modify the language and must “adhere” to the terms as they stand. If there’s ambiguity, courts often apply contra proferentem, interpreting uncertain provisions in favor of the insured because the drafter is the insurer. The other options don’t describe this setup: a contract of indemnity centers on compensation for losses, a valued policy fixes the insured value in advance, and a binder is a temporary agreement providing coverage until a policy is issued.