Question

Under a contract of adhesion, what is true?

1) There is the potential for an unequal exchange of value
2) The insurer's obligations are dependent upon certain acts of the insured individual
3) The terms must be accepted or rejected in full
4) Only one party makes any kind of enforceable promise

Answer 1

A contract of adhesion requires consumers to accept its terms in full, which often results in an unequal exchange of value and places obligations on the insured to fulfill specific acts. They are frequent in the insurance industry, where the insurer sets the terms unilaterally.

Step-by-step explanation:

A contract of adhesion refers to a standardized contract form offered to consumers of goods and services on essentially a "take it or leave it" basis without affording the consumer a realistic opportunity to bargain and under such conditions that the consumer cannot obtain the desired product or services except by acquiescing in the form contract. Such contracts are common in the insurance industry.

Addressing the student's question specifically:

1. There is potential for an unequal exchange of value, as the insurer sets the terms unilaterally which might not equally benefit both parties.
2. The insurer's obligations are indeed dependent upon certain acts of the insured individual, such as timely payment of premiums and fulfillment of the terms of the policy.
3. The terms must be accepted or rejected in full - either the consumer accepts all the terms of the contract or cannot enter into the contract.
4. Typically, only one party (the drafter, often the insurer) makes any kind of enforceable promise which is stipulated in the terms and conditions of the contract.