How often have you seen any promise being performed instantaneously? Maybe,
when you visit a small shop and ask for something of daily use, the shopkeeper
would give it to you at a fixed price that is payable immediately in cash.
But in business transactions involve promises made at one time and performance
follows much later. For example, a trader asks a transporter to provide for
ferrying goods for which he pays the transportation charge after a specific
period. In such situations, the parties involved may go back on their promises
putting the other party in trouble.
To protect the deal from such kind of problems, The Law of Contract is enacted.
In plain words, it lays down the legal rules relating to the promise made, the
formation of the contract, their performance, and their enforceability.
The Indian contract act defines a contract as 'an agreement enforceable by law'.
Therefore, Contracts should have agreements and corresponding legal obligation
to honor the agreements.
Now, one must think about what is an agreement?
When a person to whom a proposal is made signifies his acceptance, it results in
Hence, the main component of the Agreement is offer and acceptance. It is
obvious that there should be more than one party to come to an agreement and all
the parties should think of the same thing in the same manner. This is known as
'meeting of minds'.
a person is willing to sell a racehorse to another person and the
other person is ready to buy a working horse. So, here they both are not on the
same page because one is selling a racehorse and the other person needs a
There are different types of contract on the basis of
- its enforcement
- mode of creation/formation
- extent of execution
- nature of consideration
Within this unilateral and bilateral contract comes under the basis of the
nature of consideration.
A unilateral contract is a contract agreement in which an offeror promises to
pay after the occurrence of a specified act. In general, unilateral contracts
are most often used when an offer or has an open request in which they are
willing to pay for a specified act.
An example of a unilateral contract is an insurance policy contract, which is
usually partially unilateral. In a unilateral contract, the offeror is the only
party with a contractual obligation.
Another example of such a contract is:
A reward contract is a common unilateral contract that we see often in daily
Suppose that Mr.Kumar has lost his cat. He offers Raju Rs.100 if he finds his
cat. This is a unilateral contract because Mr.Kumar is only obligated to pay the
Rs100 if, and only if, Raju finds the lost cat. However, Raju is under no
obligation to find the lost cat€”technically, he has only accepted the offer
once he finds the lost cat.
Some states have specific requirements regarding unilateral contracts. For
example, in some areas, Mr.Kumar may be legally obligated to keep her offer open
if Raju begins making sufficient efforts towards finding the lost cat (maybe he
put up posters, maybe he's been asking around at local shelters).
Are Unilateral Contracts Legally Enforceable?
- Unilateral contracts may seem very one-sided, but they are enforceable in court.
The most common issue occurring with unilateral contracts happens when the
offeror fails or refuses to keep their promise even when the other party
completes the required action.
- Both unilateral and bilateral contracts can be €śbreached,€ť or broken. An
example of breaching a unilateral contract might be if Mr.Kumar refuses to pay
Raju the Rs.100 when he finds his lost cat. In that case, he has broken her
promise to pay and can be considered in breach of contract.
- Whether the contract is unilateral or bilateral, if you have a situation that
you think constitutes a breach of contract, you will need to establish certain
- The Contract Existed: If there was no contract, to begin with, then it can't be
- The Contract was Broken: If the contract hasn't been broken, there is no cause
- You Suffered a Loss: If you haven't suffered a loss of some sort, there is
nothing for the court to correct; and
- The Person You're Challenging was Responsible: You need to make sure that you
are challenging the right party. Usually, the party making the promise is likely
to be responsible.
A bilateral contract is an agreement between two parties in which each side
agrees to fulfill his or her side of the bargain.
In more complex situations such as multinational trade negotiations, a bilateral
contract can be a so-called "side deal." In which, both parties are involved in
the general negotiations but may also see the need for a separate contract
relevant only to their shared interests.
Any sales agreement is an example of a bilateral contract. For example, A car
buyer may agree to pay the seller a certain amount of money in exchange for the
title to the car. The seller agrees to deliver the car title in exchange for the
specified sale amount. If either party fails to complete one end of the bargain,
a breach of contract has occurred.
A bilateral contract is very common and also enforceable by law.
What is the Difference Between Unilateral and Bilateral Contracts?
The easiest difference to spot between unilateral and bilateral contracts is the
number of parties making commitment-one in unilateral contracts, while bilateral
contracts need at least two parties making commitments.
The difference between the two types of contracts can be very thin. Let's look
at Mr.Kumar and his lost cat once again. Say Mr.Kumar promises Raju Rs.100 if
he promises to find his lost cat. If Raju accepts his offer and promises to find
Mr.Kumar's cat, this is considered a bilateral contract. Both Mr.Kumar and Raju
have made promises to do certain things.
They are now both legally obligated to perform the required actions under this
bilateral contract. Even if Raju is not successful in actually finding the cat,
Mr.Kumar will be obligated to pay him the
Rs.100, especially if Raju made reasonable efforts to find the poor little cat.
Again, the difference is very subtle, but it helps to look at what is being
offered in the contract. In a unilateral contract, the offeror is offering to
pay for the completed action. However, in a bilateral contract, the offeror is
offering to pay for the other party's promise to perform the action. In a
unilateral contract, the action must be completed in order to obligate the offeror to pay.
Conclusion of differences are:
- Parties involved in Unilateral and Bilateral agreements:
While unilateral contracts involve one person or party, bilateral contracts
involve one or more parties.
- Offers of rewards for Unilateral and Bilateral agreements:
In a unilateral contract, any offer of a reward is made and effected only be
the promisor, who is legally bound to the promise he made. The promisee in this case
only accepts the offer. On the other hand, in a bilateral contract, offers and
rewards do not apply since both parties are required to make promises.
In a unilateral contract, the promisor has to specify the
duration of the offer. In bilateral contracts, however, both parties have to
agree on a timeframe in which the agreed service or product shall be delivered,
failure to which can lead to a breach in the contract.