Unilateral offer cases are agreements in which one party negotiates for a completed performance instead of a promise to perform. Unilateral contracts differ from bilateral contracts, in which each party makes a promise to the other.

In order to establish a unilateral contract, the offerer makes an agreement in exchange for the performance of the other party. In other words, the other party must fully perform the requested action in order for the offer to be accepted. Once the offeree has completed the agreed-upon act, the offerer may not reject it.

In terms of business, just one party agrees to take a specific action. These types of contracts don't require the offerer to be notified of another party's acceptance of the agreement until it is fulfilled. This is an important distinction between a unilateral business contract and a bilateral business contract, which will be compared below.

Both the offerer and the offeree may be protected by a unilateral business contract. If the applicable terms of a unilateral agreement may only be fulfilled once, then the offerer has protection from several parties trying to fulfill the contract actions at the same time. For example, a reward poster may promise a cash reward in exchange for a returned pet, which may only be fulfilled once.

The definition of a unilateral contract is one in which no offerer receives a promise as consideration for their own promise. However, based upon American court history, another kind of unilateral contract also exists. According to American law, a bilateral agreement fulfilled by just one of the parties may be considered a unilateral agreement, regardless of its initial bilateral nature. The performance of only one party may categorize such an agreement as a unilateral contract.

Examples of Unilateral Offers

As mentioned above, a typical example of a unilateral offer or contract is that of a reward agreement. Let's suppose that Alice agreed to pay Bella a total of $200 if Bella can find Alice's missing dog. Only Alice is required to pay $200 once Bella finds the missing dog, hence it is a unilateral agreement. This means that Alice is obligated to pay if Bella can locate the missing dog, but Bella is not legally obligated to find the dog. Bella will only have accepted Alice's promise once she finds the missing dog.

Depending on the jurisdiction, Alice may be legally required to keep the offer open if Bella starts searching for the dog. In this case, Bella's partial performance may generate an obligation on Alice's end.

Another typical example of such a contract is an insurance contract. The insured party does not have any obligation of action, rather the insurance company is the one obligated to provide services in certain cases.

Unilateral and Bilateral Contracts

In legal terms, contracts are agreements made between two or more parties that are legally enforceable. If a party to the contract does not act as they have promised, the other can sue them for breach of contract, and the court will determine damages to the injured (wronged) party. For an agreement to be legally binding, the parties must exchange something of value. Each party must do something or give up something, which may or may not be monetary.

  • A bilateral contract involves an exchange of mutual promises. For example, Katie may agree to walk Alice's dog, and Alice may agree to pay Katie $50 per month in exchange for the dog-walking service. Both parties have agreed to offer something, and thus, both parties are bound by a promises made to each other.
  • In a unilateral contract, only one party promises something to the other. In this example, Alice may promise to pay Katie for her dog-walking services, but Katie does not promise to walk the dog. In this example, only one party has promised to fulfill an action. In this type of contract, the offerer's agreement only comes in effect when the other party fulfills the condition(s) of the agreement. Katie has no obligation to walk Alice's dog. However, if she does, Alice is bound to the terms of the contract and must pay for the dog-walking service.

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