What is a Unilateral Contract?
A unilateral contract is a contract in which only one party or individual, or single group promises or agrees with things or actions. It is a single or one-sided contract. In this type of contract, an offer is made to a single person or group. It may be accepted or not.
In it, only a one-party performs an agreement while another party has already completed his part before it comes into action or begins. In this agreement, the promisor commits to the person who accepts the deal or carries out the particular activity.
Therefore, the two parties do not have a bilateral return agreement. In a unilateral agreement, it must be emphasized the duration of the contract must be specified. An example of a unilateral contract is the insurance policy which is partially unilateral.
An offeror’s responsibility is settled and specified in unilateral contracts. Unilateral agreements can include open or random requests and optional requests for other parties. According to contract law, unilateral agreements are enforceable.
Most legal issues only arise once the offeree claims to be entitled to remuneration. According to contract law, unilateral agreements are enforceable. Most legal problems only occur once the offeree claims to be allowed compensation.
What is a Bilateral Contract?
Bilateral contracts are when two parties, two people, or a group promise to do something with mutual understanding. In this contract, the responsibilities are on both sides for any consequences occurring in case of performance or nonperformance.
In most businesses, the sales contracts are bilateral. For example, the selling contract of a house is bilateral. When someone sells the house, they promise each other and hand over the title of the property to the other party after completing mutually decided payment for that house.
This means both parties are on a single page and mutually decide the consequences to meet the needs of each other. Bilateral agreements are complex for multinational trade negotiations. It is also called the side deal for multinational trades.
Both parties are involved in the general talks, but they can also look for a separate contract considering their relevant needs only to their shared interest. These are the most common binding agreements in which both parties are involved in concessions and responsibilities owed by both parties.
Difference Between Unilateral and Bilateral Contracts
Both unilateral and bilateral contracts are different forms of agreements that are done to develop business relationships and define—the legal implications and obligation to deliver them properly.
There are critical differences between unilateral and bilateral contracts.
- Unilateral contracts involve only one party to create a promise for a specified or a general group of people. In contrast, bilateral contracts involve two parties, and they decide and promise some agreement with their mutual understanding.
- Simply unilateral agreement is accepted after completed actions, whereas both parties receive and sign a mutual agreement in a bilateral contract.
Comparison Between Unilateral and Bilateral Contracts
| Parameter | Unilateral Contract | Bilateral Contract |
| Definition | A unilateral contract is a contract in which only one party or individual, or a single group promises or agrees with things or actions. | Bilateral contracts are when two parties, two people, or a group promise to do something with mutual understanding. |
| Parties Involved | Only one person or a single party is involved in the unilateral contract. | Two persons or two parties are involved in the bilateral contracts. |
| Offer Rewards | Only the promiser can make and effect a reward offered in the unilateral contract. | For rewards and offers to apply, both parties must make promises. |
| Time Frame | The duration of a unilateral contract is decided by the promisor. | In bilateral contracts, both parties must agree on a time frame after mutual understanding. |
References
- Wormser, I.M., 1916. True Conception of Unilateral Contracts. Yale LJ, 26, p.136.
- Williston, S., 1913. Consideration in Bilateral Contracts. Harv. L. Rev., 27, p.503.