Unilateral Contract Example in Advertising Explained
Learn how advertisements & unilateral contracts differ, with real-world unilateral contract examples like reward offers, job bonuses & limited-time promotions. 6 min read updated on May 27, 2025
Key Takeaways
- A unilateral contract is a legally binding promise made by one party, enforceable only when the other party performs a specified act.
- Advertisements generally are not unilateral contracts unless they make a clear, definite promise to a defined group and specify performance.
- Examples of unilateral contracts include reward offers, employment bonuses based on performance, and contests.
- Businesses may inadvertently create unilateral contracts through promotional campaigns or limited-supply offers.
- A unilateral contract becomes enforceable once performance begins, and the offering party typically cannot revoke it after that point.
Advertisement unilateral contract refers to two aspects of running a business: advertisements and unilateral contracts. Both have an important effect on the business itself and its customer base.
Unilateral Contracts Versus Advertisements
Contracts and advertisements are integral pieces to running any type of business. These two aspects of a business are similar but have important differences. It's important to fully understand how advertisements and contracts can work in favor of your business when used wisely.
Unilateral contracts are like advertisements in that they don't put legal requirements on one of the two parties to perform or face liability. But there are some important differences. In unilateral contracts, two parties sign a legal agreement that states that one side of the contract will agree to perform or not perform a service if the other party agrees to pay a fee or perform a specific action. Basically, the actions of one party are dependent on the other.
For instance, if one party in a contract agrees to pay another $500 for taking their wedding photos, this is a unilateral contract. The $500 won't be paid unless the photos are taken.
An advertisement is different because it isn't a contract until an interested party responds to the advertisement and then pursues a contract. Advertisements are used to entice customers to make a purchase or an offer of purchase. If a pizza shop advertises $8 pizzas to potential customers, they aren't entering into a contract with anyone until a customer calls or comes by asking to make a purchase.
What Is a Unilateral Contract Example?
A unilateral contract example occurs when one party makes a promise that the other can accept only by completing a specific action. Here are some common examples:
- Lost Pet Reward: A poster offering $500 for the return of a lost dog creates a unilateral contract. The promise becomes binding when someone returns the dog.
- Sales Commission Incentive: A company may promise a bonus to independent contractors who meet a specific sales target. Only those who meet the condition earn the payment.
- Online Contests: Companies offering gift cards to users who complete surveys or refer a certain number of friends are creating enforceable offers once the task is completed.
- Employment Bonuses: Promising an end-of-year bonus if a contractor remains employed until a certain date also qualifies as a unilateral contract.
Each unilateral contract example involves a promise that becomes legally binding only after the other party performs the required act.
What Is the Difference Between an Advertisement and a Unilateral Contract?
The biggest difference between advertisements and unilateral contracts is the fact that the party making the advertisement can change or revoke their offer, but the party agreeing to pay for a product or service in a unilateral contract cannot change their offer without the potential for a breach of contract lawsuit.
On the other hand, when someone advertises a certain price for a service or product, they are not locked into that price when an interested customer comes by to make a purchase. In most cases, unless a contract with a specified price has been formed--either implied, verbal, or written--the selling party has the right to change the price or refuse the sale. For example, if the pizza shop that was advertising $8 pizzas runs out of pizzas before a customer has a chance to order, the pizza shop is not legally obligated to provide an $8 pizza.
Another difference between unilateral contracts and advertisements is specified parties. Both parties are clearly specified and involved in a unilateral contract. The contract must be agreed upon and signed by both sides if it's a written contract. The party receiving the service or product is clearly specified in a unilateral contract.
Advertisements are still looking for purchasing parties, so they are not yet specified. Target audiences may be specified for an advertisement, but no one in the audience is required to make a purchase. However, if the advertisement works well, it might lead to a unilateral contract once a customer decides to make a purchase.
Sometimes, companies will create unilateral contracts for themselves when they put out a specific type of advertisement. If, in the interest of getting potential customers to act quickly, a company advertises a certain number of products at a fixed price, they have then set themselves into a unilateral contract with their potential buyers. As long as the buyer asks to make a purchase while product is still available, the advertising company must honor their promise.
When an Advertisement Becomes a Unilateral Contract
While most advertisements are not contracts, there are circumstances where an ad transforms into a unilateral contract:
- Limited-Supply Offers: If a business advertises “first 50 customers get a free item,” this may constitute a unilateral contract. The promise is enforceable if the buyer meets the condition.
- Definite Terms and Conditions: An ad that clearly defines the reward, conditions, and how to claim it can become legally binding if someone fulfills the conditions.
- Legal Precedent – Lefkowitz v. Great Minneapolis Surplus Store: In this landmark case, the court ruled that an ad for a specific fur coat at a set price was an enforceable offer when the plaintiff arrived in time and met all terms.
These instances show how businesses may unintentionally form enforceable unilateral contracts through marketing efforts if their advertisements promise clear, specific performance rewards.
Advertisement Versus Offer?
A legitimate contract must include these basic elements:
- Offer - a party needs to offer a product or service for a price.
- Acceptance - the other party needs to accept the offer either in writing or verbally or by implication.
- Capacity - both parties need to have the mental capacity and ability to fully understand the agreement.
- Legality - whatever is being agreed to must be legal. Contracts for selling illegal drugs are not legally enforceable.
An advertisement isn't an offer, but it's an invitation for the potential customer to make an offer. Even if prices are included in the advertisement, the advertiser is not legally bound to sell at those prices.
Key Elements of a Valid Unilateral Contract
For a unilateral contract to be enforceable, several elements must be present:
- Clear Offer: One party must make an explicit, definite promise.
- Performance-Based Acceptance: The offer can only be accepted through the other party’s performance—not by a promise.
- Intent to Be Bound: The offering party must intend to be legally bound if the condition is fulfilled.
- Consideration: The act performed in response to the promise provides the necessary consideration.
- Communication: The terms of the offer must be communicated effectively to the public or targeted group.
Courts typically enforce unilateral contracts when these criteria are met, especially when the promise leads someone to act in reliance on it.
Frequently Asked Questions
-
What is a unilateral contract example in business?
A business promising a sales bonus to employees if they hit a quota is a common unilateral contract example—payment is made only after performance. -
Can an advertisement be considered a contract?
Generally, no. But if the ad contains clear, definite terms and is directed at a specific group, it can form a unilateral contract once the terms are fulfilled. -
Is a reward offer a unilateral contract?
Yes. Offering money for returning a lost item is a classic unilateral contract—acceptance occurs through action, not agreement. -
Can a unilateral contract be revoked?
It can usually be revoked before performance begins. But once performance has started, many jurisdictions prevent revocation until the act is complete. -
What makes a unilateral contract enforceable?
Clarity of the offer, the intent to be bound, communicated terms, and performance by the offeree are key to enforceability.
If you need help with an advertisement or unilateral contract, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies such as Google, Menlo Ventures, and Airbnb.