Unilateral contract

Definition

A unilateral contract is a type of agreement where one party makes a promise in exchange for a specific action by another party. This means that only one side is obligated to fulfill their promise, while the other side only needs to perform the action requested to create a binding contract. This dynamic sets it apart from bilateral contracts, where both parties make promises. Understanding unilateral contracts is essential for grasping how agreements are formed, what terms are included, and how remedies are determined in cases of breach.

5 Must Know Facts For Your Next Test

1. In a unilateral contract, the offeror is the only one who makes a promise, while the offeree must perform the requested act to accept the contract.
2. Common examples of unilateral contracts include reward offers for lost items or contests where the winner receives a prize based on performance.
3. The acceptance of a unilateral contract happens when the offeree begins the requested performance, rather than through a verbal or written agreement.
4. Unilateral contracts can be enforced in court if the offeree has completed the act requested by the offeror.
5. If a unilateral contract is breached, remedies may include monetary damages or specific performance, depending on the circumstances.

Review Questions

• What are the key characteristics that differentiate unilateral contracts from bilateral contracts?
  • Unilateral contracts are characterized by one party making a promise in exchange for an action from another party, while bilateral contracts involve mutual promises from both parties. In unilateral contracts, only the offeror has an obligation until the offeree performs the action. This means that acceptance occurs through performance rather than an exchange of promises. Understanding these differences is crucial when assessing how obligations are created and enforced.
• How does the concept of offer and acceptance play a role in forming a unilateral contract?
  • In forming a unilateral contract, the offeror presents an offer that includes specific terms and conditions for acceptance through performance. The offeree's acceptance is not based on agreeing to terms verbally or in writing but rather by taking action that fulfills the offer's requirements. This means that until the offeree begins or completes the requested action, no contract exists, showcasing how offer and acceptance function uniquely in unilateral agreements compared to bilateral ones.
• Evaluate the implications of breach in a unilateral contract and discuss potential remedies available for the aggrieved party.
  • When there is a breach of a unilateral contract, it typically means that one party did not fulfill their promise after the other party completed the required action. The aggrieved party may seek remedies such as monetary damages for any losses incurred due to the breach. In some cases, courts may also order specific performance, requiring the breaching party to fulfill their promise as initially agreed. Evaluating these remedies shows how important it is for parties to understand their obligations within unilateral contracts.

Related terms

Bilateral Contract: A bilateral contract is an agreement where both parties exchange promises to perform certain actions, creating mutual obligations.

Offer and Acceptance: This refers to the fundamental components of a contract, where one party makes an offer and the other accepts it, leading to the formation of a legal agreement.

Breach of Contract: A breach of contract occurs when one party fails to fulfill their obligations under the terms of the agreement, which can lead to legal consequences.