Unilateral Contract: Everything You Need to Know
A unilateral contract, or one-sided contract as it is also called, is an agreement between an interested, service-requesting party (the offerer) and a potential service-rendering party (the offeree) to lawfully render a specified service for a fee.3 min read
2. Examples of a Unilateral Contract
3. Differences Between Unilateral and Bilateral Contracts
4. A Bilateral Contract
5. The Similarity Between Unilateral and Bilateral Contracts
6. Where to Get Help
A unilateral contract, or one-sided contract as it is also called, is an agreement between an interested, service-requesting party (the offerer) and a potential service-rendering party (the offeree) to lawfully render a specified service for a fee.
A Unilateral Contract
In a unilateral contract, the party to perform the duty is free to decide whether they should render the requested service or not, while the service-requesting party is bound to pay the agreed amount of money once the duty is performed by the service-rendering party. Unilateral contracts are deemed enforceable by contract law. However, there can't be legal issues until one party claims to have rendered the requested service.
Since, with a unilateral contract, there can't be a contract breach until after the service-rendering party has taken action, a lawsuit would mostly become necessary only when the service-requesting party refuses to pay the agreed amount of money, claiming unsatisfactory service. Therefore, determining a contract breach would depend on how clear or vague the terms of the contract were and if the disputing party can prove that they satisfactorily rendered the requested service.
Examples of a Unilateral Contract
An example of a unilateral contract would be someone advertising about their stray pet and offering anyone who helps them recover their pet a definite sum of money. Anyone can go into the unilateral contract by recovering the pet. This is one instance of an advertisement becoming a contract.
Another instance of a unilateral contract is the insurance business. The insurance company undertakes to pay the insured entity a specified amount of money if a certain bad thing happens. If the named bad thing doesn't happen, the insurance company won't have to pay.
Differences Between Unilateral and Bilateral Contracts
Different from a bilateral contract, also known as a two-sided contract, the party to render the service in a unilateral contract isn't duty-bound to do so. The difference between a unilateral and bilateral contract is the two-sidedness of a bilateral contract, absent in a unilateral contract.
The first thing to notice about bilateral and unilateral contracts is the number of parties making legally binding commitments. Again, unilateral contracts don't require any upfront payments, but bilateral contracts do.
A Bilateral Contract
A typical example of a bilateral contract is a business transaction involving the sale of goods. Most businesses are bilateral by their makeup. We see bilateral contracts around us on a daily basis. Each time you buy something at your favorite grocery, order dinner at an eatery, get medical attention for a fee, or even get a book at the library, you're entering into a bilateral contract. In all of those occasions, you make a commitment to another transacting party in response to the other party's commitment.
The Similarity Between Unilateral and Bilateral Contracts
Both contract models, unilateral and bilateral, can be breached. The word “breach” holds the same meaning as “break.” That means a breach of agreement is the same as a broken agreement, resulting from a deliberate refusal to fulfill the terms of the agreement. An example of a breached unilateral contract would be any occasion in which the service-requesting party unjustly refuses to pay the service-rendering party after the service is rendered.
For instance, if you refuse to pay the agreed amount of money to the person who helps you recover your lost pet because you suspect they stole your pet in the first place, you're breaching the unilateral contract. A bilateral contract, on the other hand, is breached when a coworker refuses to finish their part of a job, when an employee goes against established office rules, or when a client stops a contractor from finishing a duty in an ongoing project without good reasons.
If you have to sue a party for breaching a unilateral or bilateral contract, you should be ready to prove that:
- There was a contract.
- There was a breach of contract.
- You incurred a loss.
- The person you're suing was responsible.
Where to Get Help
A unilateral contract can be complicated, especially regarding technical terms like "offer," "consideration," and "acceptance." Furthermore, contract breaches can't be completely avoided. However, if a contract was broken and resulted in a loss for you, or someone is claiming payment for an unsatisfactory service, you need the help of an experienced business lawyer to protect your interest and remedy your loss without further complications and losses that could result from trying to go it alone.
If you need help with a unilateral contract, you can post your legal need 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 like Google, Menlo Ventures, and Airbnb.