Unilateral or Bilateral: Everything You Need to Know
When it comes to unilateral or bilateral agreements, a unilateral agreement only requires one person or entity to begin a contract for anyone to enter, and a bilateral contract requires two people to agree to the contract. 3 min read
2. Bilateral Agreements
3. Unilateral Agreements
4. Broken Contracts
Updated November 25, 2020:
Unilateral or Bilateral
When it comes to unilateral or bilateral agreements, a unilateral agreement only requires one person or entity to begin a contract for anyone to enter, and a bilateral contract requires two people to agree to the contract. Agreements, whether spoken or written, are contracts made between two parties with duties that are legally enforceable. Through agreements, the relationship between parties is regulated because it contains duties, rights, and other factors that both sides have mutually agreed to.
Once such arrangements are violated by either party, that person or entity may be held accountable under the law. Contracts ensure that personal and professional business is handled accordingly. Unilateral and bilateral agreements are something people deal with as a regular part of life, even though you may not be aware of it.
You must know the difference to help you navigate legal issues with confidence. The most common agreement is a bilateral one. It is a basic contract between two or more parties.
- Note: Personal and business contracts fall into the bilateral category.
You make a bilateral agreement each time you:
- Enter a store
- Order a meal at a restaurant
- Go to the doctor
- Check out a library book
In every case, you promised an action to a party or person in return for action from that person. Each party is an obligator, which is the person who is bound to the other and the promise binds parties together. The obligee is the person to whom the other is obligated to.
For one of the agreements to be legally binding, there must be a record that all parties can agree to, and this takes the form of a signed agreement. If any party fails to live up to the agreement, this would entail a violation. Business agreements are bilateral in nearly any circumstance. Virtually any business provides some type of service or product in return for financial compensation and most companies, therefore, enter into bilateral agreements with suppliers and customers. Employment agreements, where a company promises to pay employees at an established rate for completing certain tasks, are also called bilateral contracts.
The best way to understand a unilateral business agreement is through analysis of the word unilateral. In simple terms, unilateral agreements involve actions undertaken by a group or one person. Under contract law, unilateral agreements only allow a single person to make an agreement or promise. You may also see examples of unilateral in the form of a reward contract.
- Example: You lost your dog and place an ad in a newspaper and on the Internet offering a $100 reward to any person who returns your missing pet. Therefore, you’re offering a unilateral contract to anyone who finds your dog. You’re the only person who has started the contract, and it is up to the person who finds the pet to notify you so he or she can receive payment and return your dog.
Another notable example occurs in the world of insurance. An insurance company promises to pay an injured party a certain sum in case an accident occurs. If this never happens, the insurance company never has to pay. It’s also worth noting that bilateral and unilateral contracts can be violated or breached. The word breach is synonymous with break, meaning the breach constitutes a broken agreement that stems from the failure of one party to honor his or her end of the contract. When it comes to a broken unilateral contract, this could mean a person who promises to issue payment for a task but fails to do so.
- Example: If you offer $100 for the return of your pet, but do not pay a person who returned your pet, this would constitute a unilateral contract breach.
Also, bilateral contracts can be broken in the following cases:
- If a worker refuses to finish a task
- If an employee violates an employment agreement in some fashion
- A customer or client stops a contractor from finishing a project
You also must prove your case in court to legally enforce a bilateral or unilateral breach. In every case, you need to prove the following:
- The agreement existed
- You suffered a loss of some kind
- The opposite person was responsible
- The agreement was violated
At first glance, the most notable difference between unilateral and bilateral is the number of parties or people who promise an action. Bilateral agreements need at least two parties, while a unilateral agreement only needs one component.
To learn more about a unilateral or bilateral contract, you can post your job on UpCounsel’s website. UpCounsel’s attorneys will provide more information on drafting a unilateral or bilateral contract, whether for personal or business reasons. Moreover, they will lay out your options if a party in an agreement breaches the contract.