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Are Credit Card Agreements "Adhesion Contracts"?

Woodland Hills, CA |

My trial was today and and when I stated in judges chambers prior to the trial that I believed credit card contracts are adhesion contracts the judge snapped at me that the judge had gone to law school and knows what adhesion contracts are and that credit cards are not adhesion contracts because I was free to go to any other credit card company. When I pointed out that all the credit card agreements are basically the same, the judge just scoffed.

Isn't this twilight zone territory? Is the judge right in believing that credit card agreements are not adhesion contracts?

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Attorney answers 4

Posted

Contracts of adhesion are basically take it or leave it agreements. Since your credit card is issued with an agreement to which you did absolutely no negotiation, then yes, technically, credit cards are adhesion contracts. I have heard the argument made just as your judge did, and I respectfully disagree. Just about every legal definition of adhesion contracts indicates that such a contract exists when terms are not negotiated and are provided "take it or leave it."

Advice on this forum is for informational purposes only and should never be mistaken as a substitute for legal advice. If you are in need of legal advice, you should consult local legal counsel.

Asker

Posted

I appreciate your response because it is exactly what my researched conclusion was as well. Can I challenge the judge's bias in this area? Do all judges think the same way regarding adhesion contracts and credit cards? Clearly this is why he just sort of was uninterested in ANYTHING I had to say, and I KNOW I came up with some excellent points in my defense, but they were based on the credit card being an adhesion contract. I was really surprised at how friendly the court personnel were with the credit card attorney, they treated this person with such familiarity and sweetness, like a good friend. The vibe in the courtroom was almost like, How dare I challenge the way the credit card companies do business is the exact vibe I got from the judge. I want to appeal. Can I bring up the issue of the judge having a pre-disposition to the credit card companies by viewing credit card contracts as not being adhesion contracts? Or do I have to try and prove that credit cards are adhesion contracts first?

Scott Richard Kaufman

Scott Richard Kaufman

Posted

I'd have to say it sounds like you've already gone to trial and lost. At this point, especially since you did not have counsel, your are in a very tough spot. The court is familiar with this attorney because they see him or her every day. These cases are clogging up the courts (not the allegedly frivolous ones where consumers properly seek compensation when large corporations or insurance companies hurt them) and if a consumer shows up with an attorney to fight the case, the credit card company usually folds their tent, as they have 35 other similar cases on the docket for that day. I fear you are searching for help a bit too late in the process, from my experience.

Eric Charles Lewis

Eric Charles Lewis

Posted

I agree with Attorney Kaufman and unfortunately, I don't know of a court anywhere that is going to side with you simply because it is an adhesion contract. Many judges will take the position that it is not because they do not want to be in the position of finding that there is no agreement because of a lack of meeting of the minds. Small claims courts in Marion County Indiana had the same problem of a comfort level between attorneys and judges so much so that a court commission was created to review the problem and suggest changes and they found that many defendants could not tell the difference between plaintiff attorneys and court personnel. It's an unfortunate byproduct of litigation today.

Asker

Posted

The reason credit card cases are clogging up the court is specifically because judges rationalize that credit card contracts are not adhesion contracts. This in turn protects all the wrong doing that credit card companies are engaged in and has created a judicial assembly line that is based on a flawed concept that credit cards are not adhesion contracts. I would suggest following closely the consumer financial protection bureau and all the fines they are now imposing, all for the same type of behavior among credit card companies. If all credit card companies follow similar contractual guidelines, and use the same basic tenets in their credit card dealings, then there is no choice for the consumer. The judge is rationalizing that since I have a choice between multiple credit card companies I can choose to avoid a potential adhesion contract situation. However, if all the credit card companies are virtual clones of each other, that's like saying because I can choose which lane of a highway I use to travel, I had a choice. The reality is, all the lanes are connected and are part of the same freeway. A distinction with no difference. If the adhesion contract issue were cleared up once and for all, attorneys would find a lot of work challenging several, and I mean several flaws in the credit card company agreements, and the unwinding of those flaws would have huge consequences for the entire United States, its economy, and the consumers as well..

Asker

Posted

By consequences I mean millions of consumers would need lawyers so they can get their faulty credit card breach of contracts unwound.

Posted

No, generally speaking, credit card agreements as a whole are not adhesion contracts because there are numerous credit card companies that offer credit cards. If you do not agree to a particular credit card provider's terms, you do not have to agree.

Even assuming that the particular credit card agreement is determined by the court to be an adhesion contract, the determination that a contract is adhesive is merely the first step that courts take in deciding whether to enforce such contract.

Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.

Asker

Posted

You said exactly what the judge said. I then pointed out that all credit card companies basically offer the same agreement, and he just rolled his eyes.

Frank Wei-Hong Chen

Frank Wei-Hong Chen

Posted

There have been cases, such as a fairly recent CA Supreme Court ruling holding that arbitration clauses in credit card contracts are adhesive in the context of class actions. But not the entire credit card agreement.

Asker

Posted

This distinction without a difference is actually destroying the U.S. economy. Because the american consumer is basically not allowed to take a debt holiday, no matter what the reason, credit card companies are slowly eroding the wealth of the U.S. economy. There are several valid arguments for allowing a consumer to simply suspend their debt for a period of time. This would actually harm no one but help the consumer big time. Until credit cards are deemed adhesion contracts, the judges apparently just sit there bored with anyone has to say in regards to improper conduct by the credit card companies. The unregulated credit protection insurance product has been used by the credit card companies as a hedge in the courtroom to win their breach of contract suits against consumers. Without a fairly priced debt suspension product to protect consumers in times of a dire circumstance, the consumer is completely vulnerable to the terms of a contract that is entirely to the favor of the credit card company.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

I disagree.

Asker

Posted

What exactly do you disagree with? Go check the one billion dollars in consumer financial protection bureau judgements against the credit card companies and their credit protection programs. The reason those penalties are being handed out is because the credit protection program was such a rip off the credit card companies could not help themselves trying to attach as many customers to the unregulated, overpriced coverage. Or are you going to disagree with that as well?

Asker

Posted

However, the CPFB IS NOT helping consumers in recovery, that is where the lawyers could come in. If there is court precedent that credit cards have been adjudicated as not being adhesion contracts, I would appreciate being pointed towards that court case.

Posted

I do not think there is any question that a typical credit card contract is one of adhesion. Regardless, that is not likely to get you anywhere, especially with this judge. So, if you are representing yourself, it may be time to come up with a better argument in defense of your alleged obligation.

Asker

Posted

I would like to challenge this judge's view of credit cards as not being an adhesion contract. How do I do that? I have proof.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

If you have already had the trial, you're pretty much done.

Asker

Posted

I'd like to appeal. I'd like to challenge the judges view on adhesion contracts. The judge was pious in viewpoint that no opportunity was given to me persuade the judges existing position. Is there case law that backs up a judges right to say that credit cards are not adhesion contracts? If there is I would love to read it, If there is not, then the judge has no right to not listen to my arguments that could prove that credit cards are adhesion contracts.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

How large a debt are you talking about here?

Asker

Posted

In a way, it does not matter, because I don't have the resources to pay for an attorney. Although, I'm technically owed 22 months of back pay for in home support services care giving that I have provided. However, MediCal has created a diversionary tactic where they scare people into not signing lien waivers that the person does not have to sign! This unnecessary signature tactic is used to deny the caregiver (me) a monthly stipend, which is why I fell behind on my payments.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

Right, so, how much is the debt?

Asker

Posted

I should also add I had over 15 year perfect payment history prior to giving up my employment so I could Care Give for my folks.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

Right, so, how much is the debt?

Asker

Posted

When I spend months researching the entire credit card industry, and discover several winnable arguments that came from my own research, arguments that would enable me to not to get out of the debt necessarily, but to suspend the debt without any cause of action, and I walk into a courtroom and see the opposing attorney treated like a best friend, an attorney who by the way was dressed down to about as frumpy as one could imagine, and the judge has already pre-decided that there is nothing I can say that would ever change their mind about whether or not credit cards are adhesion contracts or not, I'm not going to just accept that level of judicial conduct as being acceptable.

Asker

Posted

Can you explain why the amount matters? I don't see the benefit in my divulging such information on the internet, especially if at some point leave a link to some of my research.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

Because it does. All facts matter, some more than others. The amount owed and whether it is owed at all plays a big role in whether it is worth spending time on this. Regardless of your excellent research that has convinced you that what happened yesterday is wrong, it happened. So, now, the issue is what to do? Without knowing the amount of debt or whether it is actually owed or whether the folks who sued you actually have a right to payment, that answer cannot be properly considered.

Asker

Posted

The company is Crapital One. I've had an account with them since the early 90's. the amount is over a 1,000 dollars but less than 10,000 dollars. It's possible I was actually with SigNet who was then bought out by Capital One. In regards to my case, I did not get to present my arguments to a judge with an open mind, that is my first and foremost complaint. In my opinion, the judge was pre-disposed to having an already formulated opinion that is based on a flawed core belief regarding credit cards not being an adhesion contract. It seems to me that lawyers get trapped by the system into accepting what judges believe, even if a judge believes wrongly. As an outsider, I am saying no, that is unacceptable. I'm not going to accept a disinterested judge who is disinterested because they adopted a belief system that is antiquated, and on that grounds, I would like to challenge the judge's core belief system regarding adhesion contracts by appealing. Clearly the judge can NEVER change their mind because to do so would mean that every case they have ever seen up until then might need to be rewound. But that's not my problem. My problem is a judge with a faulty mindset regarding credit cards not being adhesion contracts.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

Your problem is what's next? The answer = to be decided. Good luck with the fight.

Asker

Posted

I would like to appeal the "decision". What precedent is there for the judge to decide that credit cards are not adhesion contracts?

Scott Richard Kaufman

Scott Richard Kaufman

Posted

You cannot afford to appeal the decision. They would have "settled" for less than it will cost you to appeal.

Asker

Posted

What precedent is the judge using to determine that credit cards are not adhesion contracts?

Posted

It is a binding contract. The terms are similar because the credit card companies want all of their cards to be governed by the same contract. Also, many of the provisions are required by law.

The contract is not unenforceable as an adhesion contract. However, if any of the terms are ambiguous, or contrary to law, you can argue the validity of such terms.

You argument with the judge is just a waste of time for both of you. If you have a better defense, argue your best defense. You would be better off getting an attorney to represent you in court.

Asker

Posted

I meant the terms are similar between different credit card companies. I also have no problem with an adhesion contract, I have problems with what has been LEFT OUT of the adhesion contract, not what has been put in. Plus, the credit protection programs were unregulated programs that prevented consumers from buying legitimate debt suspension insurance.

Asker

Posted

let me rephrase the last sentence. The Credit Protection programs were OVERPRICED, obscenely overpriced unregulated insurance products that gave the credit card companies the ability to say in court that the defendant did not purchase credit protection and was therefore negligent. Reasonably priced debt suspension insurance could have been offered for literally 5 cents on the dollar for what the credit protection insurance costs. The credit protection insurance was a hedge product that prevented consumers from actually protecting themselves in times of Dire Circumstances.

Scott Richard Kaufman

Scott Richard Kaufman

Posted

I completely agree with Mr. Lysle.

Asker

Posted

Yes, I agree with what Mr. Lysle is stating as well, however, it doesn't exactly apply to my situation. I understand that adhesion contracts can be and are legal., and I also agree that a credit card company can have a standardized contract that is the same for all of their contracts. However, it becomes somewhat moot for a judge to say, "multiple credit card companies exist, therefore you had a choice", when all the cards offer the same programs, such as credit protection, the same 2% monthly minimum payment, and the same basic agreements. And to imply they do it because they must follow regulations becomes arguable as well because their credit protection programs are unregulated. However, once a credit card contract is interpreted as an adhesion contract, then it opens the opportunity to explore if it is a fair and reasonable contract to the consumer. If the contract has obvious ambiguities or simply lacks certain disclosures, Contra proferentem can be applied. Lets just get down to the truth here. Before the internet arrived, state regulators were probably paid off to allow credit protector insurance to overcharge by remaining non-regulated. This in turn denied customers the right to insure themselves with an affordable product, therefore, their defaults should be unwound. Judges have too much skin in the game over the past decade to now realize that credit cards ARE adhesion contracts and HAVE flaws in them that need to be exposed. I want to expose those flaws so that credit card companies can be fairer with their customers.