Unilateral contract

Definition

A unilateral contract is a type of agreement where one party makes a promise in exchange for an act by another party. This means that only one side is legally bound to fulfill the terms of the contract once the other party performs their part, typically an action or task. Unilateral contracts often arise in situations like rewards or contests, where the offeror promises something upon completion of a specific task.

5 Must Know Facts For Your Next Test

1. In a unilateral contract, the offeror is bound to fulfill their promise once the offeree completes the required action.
2. Common examples include reward contracts, such as offering money for finding a lost pet or completing a specific task.
3. The offeree does not need to communicate acceptance; performing the act itself constitutes acceptance of the offer.
4. Unilateral contracts are enforceable as long as they meet legal requirements, such as having clear terms and consideration.
5. If the act specified in the unilateral contract is not performed, the offeror has no obligation to provide the promised benefit.

Review Questions

• What distinguishes unilateral contracts from bilateral contracts, and how does this impact the obligations of each party?
  • The main distinction between unilateral and bilateral contracts lies in how obligations are assigned. In a unilateral contract, only one party—the offeror—is bound to perform once the other party completes a specified act. In contrast, bilateral contracts involve mutual promises, where both parties are obligated to fulfill their respective promises. This difference means that in unilateral agreements, acceptance occurs through performance rather than explicit agreement.
• How does consideration function within unilateral contracts, and why is it important for their enforceability?
  • Consideration in unilateral contracts represents the value exchanged for the promise made by the offeror. It is crucial because it legitimizes the agreement; without consideration, a unilateral contract would typically be unenforceable. The promise of a reward for completing an action serves as consideration since it incentivizes the offeree to perform the act. Thus, consideration not only validates the contract but also ensures that both parties have something at stake.
• Evaluate the legal implications of failing to perform under a unilateral contract and how it affects both parties involved.
  • Failing to perform under a unilateral contract has significant legal implications primarily for the offeree. If the offeree does not complete the specified action, they are not entitled to any benefit promised by the offeror, who is not legally obligated to provide anything if there’s no performance. However, if performance occurs but is not satisfactory or meets conditions laid out in the offer, it can lead to disputes. The offeror may still face issues if their promise was vague or unclear, which could potentially result in claims related to misrepresentation or breach of contract depending on jurisdiction.

Related terms

bilateral contract: A bilateral contract is a mutual agreement where both parties make promises to each other, meaning both sides are obligated to perform their respective duties.

consideration: Consideration refers to something of value that is exchanged between parties in a contract, which is essential for the agreement to be legally enforceable.

offer and acceptance: Offer and acceptance are foundational elements of contract law where one party proposes terms (the offer) and the other party agrees to those terms (the acceptance).