When it comes to business operations in Los Angeles, understanding unilateral contracts and the potential legal implications of such agreements become an integral part of any long-term success. Unilateral contracts are agreements between parties where only one party benefits, and one of the most common situations where this may play out involves a promise to pay in return for an act or performance. In such cases, the person promising payment is usually the one to benefit, while the other party essentially performs “for free” though they may get to keep whatever was created through the performance.

To make sure you’re ready for any potential issues that may arise when dealing with a unilateral contract, there are five key points to consider:

1. Is the Contract Legal?

The most important factor for any unilateral contract is to make sure a legally binding agreement is actually in place. This means ensuring that any payment or promise of payment cannot be found to be illusory or unenforceable due to any ambiguity or extraneous outside influences. Consider potential arguments that may arise due to public policy (i.e. restrictions on gambling and medical service contracts) or any other public restrictions that may come into play.

2. Potential Risk of Non-Payment

When it comes to a unilateral contract, chances are the promise of payment is not guaranteed. If your counterparty fails to deliver on any payments owed, you’ll need to be sure you’ll have the right recourse in place to recoup any losses and/or damages if the need arises.

3. Establish Fair Consideration

In order for a unilateral contract to be legally binding, it must include consideration—or something of value—on both sides. If you’d like to avoid any potential issues, you’ll want to make sure both parties feel their side of the agreement is fair. If your counterparty provides something of lesser value than what you are promising, it’s possible that the contract may be deemed invalid.

4. Role of Security Deposit

If you’re providing something of value before any payment is due, you may want to consider asking for a security deposit. This is a legally binding agreement that should include information regarding when and how the deposit will be returned, and typically provides some sort of financial protection in the event that the other side fails to honor the agreement.

5. Consult a Local Business Attorney

Finally, it’s always a good idea to consult with a local business attorney if you’re entering into a unilateral contracts agreement. A lawyer with experience in the Los Angeles area can help you navigate any potential legal issues and provide appropriate legal advice should any terms of the agreement become unclear or disputed.

By keeping these five points in mind, you can rest assured that you’re doing all that you can to protect yourself and your interests before, during, and after entering into a unilateral contract in the Los Angeles area.


Unilateral Contracts,

Los Angeles,

Business Attorney