Unilateral Contract: An Agreement Based on Performance

A Unilateral Contract involves one party making a promise in exchange for the other party's action or refraining from action, rather than a mutual exchange of promises.

Definition

A Unilateral Contract is an agreement in which one party makes a promise to do, or refrain from doing, something in return for the other party’s actual performance or act, rather than a mere promise of performance. This differentiates it from bilateral contracts, where there is an exchange of promises between the parties involved.

Key Characteristics

• Promise for Performance: In a unilateral contract, only one party, the promisor, makes a promise.
• Actual Performance is Required: The other party, the promisee, must perform the specified act to trigger the promisor’s obligation.
• No Reciprocal Promise: Unlike bilateral contracts, the promisee is not required to make a promise but must instead perform the agreed action.

Types of Unilateral Contracts

Common Examples

• Rewards: Offering a reward for the return of lost property.
• Contests and Prizes: Announcing a prize for winning a competition.
• Service Contracts: Offers made by companies for performing specific tasks.

Legal Considerations and Enforceability

Consideration

In contract law, consideration refers to something of value exchanged between parties. In unilateral contracts, the consideration for the promisor’s promise is the actual performance by the promisee.

Acceptance

Acceptance of a unilateral contract occurs when the promisee performs the required act. This performance is what constitutes acceptance and enforces the promisor’s obligation.

Breach and Remedies

If the promisor fails to fulfill their promise after the promisee has performed the stipulated act, the promisee can seek legal remedies, such as damages or specific performance.

Historical Context

Evolution of Contract Law

Unilateral contracts have been recognized in legal systems for centuries. Historically, these contracts were significant in scenarios involving rewards or where one party could not ascertain the identity of the other party until the performance had been completed.

Applicability and Comparisons

Comparisons with Bilateral Contracts

• Bilateral Contract: Mutual exchange of promises. Both parties are bound from the moment promises are exchanged.
• Unilateral Contract: One party’s promise is contingent on the other party’s performance.

Related Terms

• Bilateral Contract: A contract involving mutual promises between two parties.
• Acceptance: The action of consenting to receive or undertake something offered.
• Consideration: Something of value exchanged for a promise in a contract.

FAQs

What constitutes acceptance in a unilateral contract?

Acceptance in a unilateral contract occurs when the promisee performs the stipulated act required by the promisor.

Are unilateral contracts enforceable?

Yes, unilateral contracts are legally enforceable, provided there is clear evidence of the promise and the performed act.

Can a unilateral contract be revoked?

A unilateral contract can generally be revoked before the performance begins. Once the promisee starts performing the act, the promisor cannot revoke the contract.

References

1. “Contract Law: Text, Cases, and Materials” by Ewan McKendrick.
2. “Principles of Contract Law” by Robert A. Hillman.

Summary

In conclusion, a Unilateral Contract is a unique form of agreement where one party’s promise is contingent on the other party’s performance. This type of contract becomes enforceable when the promisee completes the required action, making it distinct from bilateral contracts where mutual promises form the basis of the agreement. Understanding its dynamics is crucial for both legal professionals and individuals involved in contract formation and enforcement.