1. Unilateral Contracts Versus Advertisements
2. What Is the Difference Between an Advertisement and a Unilateral Contract?
3. Advertisement Versus Offer?

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 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.

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.

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