Business Lawyers Understand Unilateral Contracts
Unilateral Contract: A Legally Binding Agreement2 min read
A unilateral contract is a legally binding agreement between two parties, one of which is offering the terms, while the other is obligated to take, with no reciprocity. The party who offers the contract does not incur any obligations until the other party accepts the legal agreement, resulting in mutual recognition by both parties. This type of contract can take many forms, from general agreements on data security between companies and their clients, to accepting someone’s offer at a certain rate of payment. Understanding the key considerations and nuances of a unilateral contract is critical for business lawyers who offer counsel to corporate clients in the United States.
The essential components of a unilateral contract derived from the common-law requirement include an offer or promise, acceptance of the offer, and exchange of something of value known as consideration, which is most commonly money. The offeree in a unilateral contract does not need to fulfill any obligations until they accept the offer, while the offeror is obligated to fulfill their obligations as soon as the other party accepts and agrees to follow through with the legal agreement, known as performance.
In terms of contracts of adhesion, or when an agreement is seen as one-sided or non-negotiable, courts may choose to procure certain protections for the offeree in the form of implied terms or implied warranties given the unequal leverage of the offeror. While states have granted some leeway, adhesion contracts are still subject to statutes of frauds.
It is also important to note that for a unilateral contract to be abiding, the offeror must not be in violation of the Statute of Frauds, which means if the contract is not in writing and signed by both parties, or if it includes non-disclosure agreement (NDA), then it is technically not valid in a court of law. For contracts that involve real property or real estate, such as leases and mortgages, include an implied term of X years, the Statute of Frauds applies, which means the agreement should include a written contract outlining the contract terms.
Nuances of unilateral contracts should be taken into consideration when providing counsel to clients, as the slightest misstep could create ambiguity that could then be heavily contested in court. Businesses should ensure that their unilateral contracts are very clear and precise, and if there is any doubt as to validity, they should seek the services of a business lawyer to avoid potential litigation.
On the whole, unilateral contracts are designed to ensure one-way reciprocity, and should always be handled with the utmost care. If the offeror and the other party cannot agree on some aspect of the contract, they should seek mutual counseling or legal advice to ensure that the contract is both sound and reflective of the wishes of each party.
UpCounsel’s network of experienced business lawyers are well versed in unilateral contracts, and can advise small businesses and Fortune 1000 companies in the U.S. on the applicable regulations and terms applicable to their contracts. Our attorneys have extensive knowledge in this area and can provide in-depth counseling to help ensure clients remain in compliance with legal protocols and regulations.