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Strand v. U.S. Bank National Association ND3/31/2005
Dictionary 342 (8th ed. 2004), an "adhesion contract" is defined as:
A standard-form contract prepared by one party, to be signed by the party in a weaker position, usu. a consumer, who adheres to the contract with little choice about the terms.
[ ] The transaction at issue in this case carries the classic hallmarks of procedural unconscionability-inequality of bargaining power, oppression, surprise, lack of negotiation of terms, a preprinted standard form contract, and a "take it or leave it" transaction. There can be little argument that there is an enormous disparity in bargaining power between the Bank and Strand. The transaction produced a pure adhesion contract-the contract was drafted by the Bank, which had superior knowledge of and expertise in credit transactions; it was a preprinted standard form contract, with no possibility of negotiation of its terms; and it was offered to Strand on a "take it or leave it" basis. The contract with the amendments to the parties' credit card agreement, including the new arbitration provision, was sent to Strand as a "bill stuffer" with his monthly billing statement. The cardholder was required to notify the Bank in writing within 25 days if he did not accept the new provisions, and his account would then be closed. The arbitration clause at issue in this case was included on page fourteen of the sixteen page "bill stuffer" sent with Strand's monthly statement. In Construction Assocs., 446 N.W.2d at 242-43, we concluded that procedural unconscionability had been established, even in a commercial setting, where there was a substantial inequality of bargaining power, a preprinted form contract was used, there was no allowance for bargaining or negotiation of contract provisions, there were elements of unfair surprise, and there was an actual lack of negotiation of contract terms.
[ ] When one party is in such a superior bargaining position that it totally dictates all terms of the contract and the only option presented to the other party is to take it or leave it, some quantum of procedural unconscionability is established. The party who drafts such a contract of adhesion bears the responsibility of assuring that the provisions of the contract are not so one-sided as to be unconscionable. See Construction Assocs., 446 N.W.2d at 241.
[ ] The Bank argues there can be no procedural unconscionability in this case because the Bank complied with N.D.C.C. ยง 51-14-02 when it amended the credit card agreement. Section 51-14-02, N.D.C.C., creates certain requirements when a revolving charge agreement is amended:
Upon written notice, a seller may change the terms of any revolving charge agreement, including the credit service charge, if this right of amendment has been reserved. A change under this authority is effective as to existing balances, if within twenty-five days of the effective date of the change, the buyer does not furnish written notice to the seller that the buyer does not agree to abide by the changes. Upon receipt of this written notice by the seller, the buyer has the remainder of the time under the existing terms in which to pay all sums owed to the seller. Any request for additional credit under a revolving charge agreement, including use of a credit card issued under the agreement, after the effective date of the change of terms, including a change in the credit service charge, is deemed to be an acceptance of the new terms, even though the twenty-five days has not expired.
The statute does not specifically authorize wholesale amendment of a credit card agreement by a sixteen-page bill stuffer, nor does it say all amendments to agreements complying with the statutory procedure are necessarily
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