What is a Unilateral Contract?
A Unilateral Contract is a legally binding contract between two parties, where only one party is required to fulfill its obligations. In this type of contract, one party promises to do something in exchange for something else, while the other party is not required to do anything. The party making the promise is the one that is bound to fulfill its obligations.
Unilateral Contract in More Detail
A Unilateral Contract may refer to a one-sided agreement in which one party (the promisor) agrees to provide some benefit to the other party (the promisee). The promisee does not have to make any promises in return, or provide any consideration to the promisor. Examples of unilateral contracts may include a reward offered for information leading to the capture of a criminal, or an agreement between a contractor and a customer for the completion of a job.
In a Unilateral Contract, the promisor is obligated to fulfill their promise, and the promisee is not obligated to perform any action in return. The promisee is simply entitled to the benefit promised by the promisor. It is important to understand that the promisee may still be able to sue the promisor for breach of contract if the promisor fails to fulfill their promise.
A Unilateral Contract is distinct from a Bilateral Contract, which is an agreement between two parties in which each party is required to fulfill their obligations in order for the contract to be binding. Bilateral Contracts are more common than Unilateral Contracts, and generally involve some type of exchange of goods or services.
Overall, a Unilateral Contract is a legally binding agreement between two parties in which only one party is obligated to fulfill its obligations. It is important to note that the promisee in a Unilateral Contract may still be able to sue the promisor for breach of contract if the promisor fails to fulfill their promise.
Subscribe to The Shield
A bite-sized newsletter outlining industry insights & best practices for high-growth companies.