- We all know that modern companies love fees, and there are so many different Late fees, cancellation fees, rebooking fees, overage fees, restocking fees, overdraft fees, early termination fees, missed appointment fees.

Some rental agencies will even charge you a fee for returning the car early.

Yeah, you heard that right.

- But what's really frustrating when the company screws up, there are no repercussions at al If Amazon delivers your package you can't hit them with a late f If you take a sick day to wait for the cable guy and he never shows up, or if you spend all afternoon on over a billing mistake, or if you have to drive all the to the store to return a carton of rotten fruit, no one's going to compensate you for your wasted time.

- And we've all just kind of acc that that's the way it is.

Consumers have to toe the line while companies can overcharge, miss deadlines, cancel orders, and generally inconvenience you in ways that cost real time and money without so much as a, "Whoops, our bad."

- But there is a very specific legal reason why the playing field is tilted And if some businesses ge their way, it could get worse.

(lively music) - You may not have heard of contracts of adhesion before, but you've likely agreed to dozens in your lifetime, if not hundreds.

Every mortgage, car loan, or credit card requires one.

So do most jobs, from part-time burger flipper to salaried employee, as well as subscriptions and software from Netflix to For Even everyday purchases like pow and mattresses can involv some kind of adhesion contract.

- The most famous example is probably the terms and conditions you're supposed t Yeah, right.

And agree to before using a new app or update.

But they can also be formal printed contracts you have to sign on paper, like the kind you'd get from a bank or a landlord.

Some are even just fine print at the bottom of a webpage or instruction booklet that says something like, "By using this product, you agree to yada, yada, yada."

But though they may come in several different flavors, they all share one big thing in - [Julia] Contracts of adhesion are legal agreements in which one side has all the negotiating power, and the other side has to take it or leave it.

You can't haggle with Netflix over their prices or insert your own clauses into a credit card agreement.

If you want to use a service or or live in an apartment or even just play a video game, you have to accept whateve terms are put in front of you.

- Contracts of adhesion have bee around since at least the early 20th century, when the Industrial Revolution made it common for businesses to hire large numbers of people in identical roles and sell identical items to large numbers of customers.

It would've been impossible to w and negotiate a bespoke contract for each one of these relationsh So in the name of economic effic contracts of adhesion, also known as standard form cont became a commonplace and forcible way for companies to set expectations between parties on a mass scale.

- It's arguable that modern life wouldn't be possible without the However, whenever one side gets to make all the rules, there will be some rules that are a little one-sided.

If you've ever created an Amazon you've agreed to not blame them if, say, their software gives yo that erases all your data, and accepted that they can cancel your orders, delete your purchases, or terminate your accoun forever at their own discretion.

- If you have a mobile phone plan, you probably agree that your carrier can change their prices at will or alter your phone's dat remotely without notification.

And if their services fail, the absolute most you'r entitled to is a prorated credit to your account, even if you lose work as a result or can't dial 911 in an emergenc - I guess we have no one to blame but ourselves.

The reason companies can hit us but not vice versa, is because we've agreed to it.

It's not like anyone forced us to click accept.

- Maybe not, but in practice, contracts of adhesion aren't so simple as take it or l - For one thing, very fe people actually read the terms before accepting.

And studies show that even if th most adults can't fully understand the legalese they're often written in.

That creates a lot of opportunit for companies to sneak in terms that people would otherwise find objectionable.

- And for a lot of consumers, walking away just isn't an optio In a perfectly competitive marke some businesses might offer fairer terms than others, but in reality, contracts of adh tend to be pretty uniform across industries.

If you want a car or a phone or a mortgage, no matter who you go to, you'll probably be agreeing to the same basic terms.

- And finally, there's a lot of social pressure to sign on the dotted line.

Yeah, you don't have t subscribe to Netflix or Spotify.

You don't have to be on Instagram or TikTok.

You don't have to go t sports games or rock concerts, but the loss of social participa is too great a cost for most of There was a time you could watch television and listen to the radio without signing a one-sided cont but today it's become the mandat for access to popular culture.

- And this can have some pretty wild consequences.

In 2023, a woman died of anaphylactic shock after eating at a restaurant in a Disney resort, even though she was assured by t that her food contained no dairy When her husband sued, he was in by the company's lawyers that when he signed up for a free trial of Disney Plus several years before, he had agreed to give up his right to bring them to court for any reason forever.

- This is one of the most popula and controversial elements of adhesion contracts, forced arbitration.

In order to do business with the many companies require you to waive your right to a jury trial or be part of a class action lawsuit.

Instead, you must take your disp to a private third party, often paid by the company who renders a final verdict, which cannot be appealed.

- Forced or mandatory arbitratio was conceived as a way to save time and money when two of more or less equal standing e into a business relationship.

But over the last hundred years, companies realized they could foist it upon employees and customers alike, and today it's an almost ubiquitous element of contracts of adhesion.

It's estimated that over half of all non-union workers in the US have given up their constitutional right to sue their employer.

It's no mystery why companies prefer arbitration.

Studies show that plaintiff are far less likely to prevail with an arbiter than with a jury And when they do, settlements are typically much smaller.

- Without access to the courts, there's really only one other way to protect consumers and employees from lopsided cont Legislation.

Congress has passed severa laws that curtail exploitative or unfair provisions like shifting responsibility for credit fraud onto cardholder or prohibiting customers from posting negative reviews.

- A more recent provision that has garnered controversy is the non-compete clause.

A non-compete clause stipulates that if a worker leaves their job, they cannot work- - No way.

- for similar businesses for a certain amount of time, usually one to two years.

In the past, they only applied to high level employees to prevent them from sharing tra or customer lists with competito But companies have increasingly required low or entry level employees to agre - In a famous example, the sandwich chain Jimmy John's required all employees to sign a non-compete agreement that prevented them from working at any other business in the area that made more than of its revenue from sandwiches, which would virtually include every restaurant for two years.

Since the idea of a minimu wage kid sharing trade secrets with Applebee's is outright ridi the only purpose of the clause seemed to be to keep workers dependent on their current emplo and thus more tolerant of shoddy treatment.

- Studies show that non-compete agreements depress wages, limit worker mobility, an make markets less competitive, which is why the Federa Trade Commission passed a rule banning them in 2024.

Though the ban was overturned by the courts, a number of states have passed their own laws to curtail this widespread and often exploitative practice.

- This is a rare example of a controversial agreement getting national scrutiny, but the real power of contracts of adhesion is how routine they are.

We tend to think of them as necessary at best, annoying at worst, if we think about them at all.

- But that invisibility cloaks a growing effort to induce consumers and employee to give up certain rights.

The right to a jury trial, the right to privacy, the right to look for a new job.

- It may be impossible to avoid contracts of adhesion, but we should at least know what we're agreeing to.

- [Both Together] And that's our "Two Cents."