1. What is a contract of adhesion?

Contract of Adhesion is a contract drafted by one party (usually a

business with stronger bargaining power) and signed by another party
(usually one with weaker bargaining power, usually a consumer in need of
goods or services). The second party typically does not have the power to
negotiate or modify the terms of the contract.

Since there is such disparity between the parties, the weaker party
usually adheres to the initial contract since it is unable to negotiate the original
terms of the deal. This is also sometimes referred to as a “take it or leave it”
situation.

While this type of contract would seem unfair or even unenforceable,

there is nothing wrong with entering into such an agreement. In fact, this type
of contract is more common than one would think. If businesses spent time
negotiating every single deal, they wouldn’t get any work done.

2. Why was the bill of lading issued by Maersk Line considered as a

contract of adhesion?

The bill of lading issued by Maersk Line is considered as adhesion

contract because said bill of lading contains stipulations, exceptions and
conditions that only Maersk Line drafted without the participation of the other
party. Efren Castillo’s participation was only to adhere to such stipulations,
exceptions and conditions stated in that bill of lading.

3. Is the contract of adhesion strictly prohibited?

A contract of adhesion is not strictly prohibited by law. A contract of

adhesion is as binding as ordinary contracts because the party who adheres
to the contract is free to reject it entirely. However, the law enumerates in
Article 1409 of the New Civil Code those contracts of adhesion that are
inexistent and void from the beginning. These are the following:
1. Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;
2. Those which are absolutely simulated or fictitious;
3. Those whose cause or object did not exist at the time of the transaction;
4. Those whose object is outside the commerce of men;
5. Those which contemplate an impossible service;
6. Those where the intention of the parties relative to the principal object of
the contract cannot be ascertained; and
7. Those expressly prohibited or declared void by law.
 4. What is the function of the bill of lading?

In Magellan case, a bill of lading operates both as a receipt and as

contract to transport and deliver the same therein stipulated.

As a contract, it names the parties, which includes the consignee, fixes the
route, destination, and freight rates or charges, and stipulates the rights and
obligations assumed by the parties. Being a contract, it is the law between the
parties who are bound by its terms and conditions provided that these are not
contrary to law, morals, good customs, public order and public policy.

A bill of lading usually becomes effective upon its delivery to and

acceptance by the shipper. It is presumed that the stipulations of the bill were, in the
absence of fraud, concealment or improper conduct, known to the shipper, and he is
generally bound by his acceptance whether he reads the bill or not.

A bill of lading as a receipt referred to as specific information to particular

cargoes is generally entered in numbered boxes. This information includes the
description and weight or volume of bulk cargoes or, in the case of containerised
cargoes, the dimensions, number and seal numbers of the containers.

A bill of lading as evidence of the contract of carriage serves as conclusive

evidence of the bill of lading terms of the contract of carriage between the carrier and
a bona fide endorsee.

A bill of lading as a document of title could be a constructive possession of

the goods and can be passed by endorsement and delivery of the bill of lading from
one person to another. The bill of lading thus represents the goods; it was described
as the “keys to the warehouse”.