Unilateral vs. Bilateral Contracts

May 24, 2024
Byron Whitehead

Unilateral Contracts

A unilateral contract is a contractual agreement in which one party promises to provide a reward or payment upon the completion of a specific task or action by the other party. Unlike bilateral contracts, which involve promises exchanged by both parties, unilateral contracts are characterized by the unilateral promise made by one party. This makes unilateral contracts inherently one-sided, as only the party offering payment or consideration is bound by contractual obligation until the task is completed.

Consider a simple example of a unilateral contract: a reward offered for the return of a lost dog. In this scenario, the owner of the lost dog announces publicly a reward for anyone who successfully locates and returns the missing pet. Until the dog is found and returned, the owner is under no legal obligation to fulfill the promise of the reward. The individual seeking to claim the reward can only do so by fulfilling the condition stipulated in the contract, which is finding and returning the lost dog. Once this condition is met, the contract becomes enforceable, and the owner is obligated to provide the promised reward.

Bilateral Contracts

On the other hand, bilateral contracts are the more common type of contract encountered in everyday life. Unlike unilateral contracts, bilateral contracts involve mutual promises exchanged by both parties, resulting in reciprocal obligations. A quintessential example of a bilateral contract can be found in the dining experience at a restaurant.

When you dine at a restaurant, you implicitly enter into a bilateral contract with the establishment. By sitting down and ordering a meal, you are making an implied promise to pay for the food you consume. Similarly, the restaurant undertakes an obligation to provide you with the meal you ordered in exchange for the payment you will make upon receiving the bill.

Although no formal contract may be signed, the actions and conduct of both parties constitute a binding agreement recognized by the courts. In this transaction, both parties derive benefits: the diner receives a meal, and the restaurant receives compensation for providing the food and service.

Consideration and Acceptance

An essential characteristic of contracts is consideration. Consideration is the benefit that each side will receive from participating in the transaction. For the unilateral contract example of the lost dog, there is consideration in that contract as well. The dog owner gets his dog returned to him and the individual who returns the dog receives some sort of compensation for his time and effort.

In both unilateral and bilateral contracts, the principle of offer and acceptance remains fundamental. In unilateral contracts, the offer is extended by the party promising payment or reward upon the completion of a specified task, while acceptance occurs when the other party fulfills the required condition. Conversely, bilateral contracts involve a reciprocal exchange of promises, with offer and acceptance occurring simultaneously.

Additionally, it's essential to recognize that while unilateral contracts may appear one-sided initially, they are treated as real and legally binding contracts once the specified task is completed. Upon fulfillment of the condition, both parties are considered to have obligations to one another, one party has already completed their obligation by fulfilling their task and now the other party must fulfill its promise to compensate.


In summary, while unilateral contracts involve one party making a promise contingent upon the completion of a specified task, bilateral contracts entail mutual promises exchanged by both parties. Understanding the distinctions between these contract types is crucial for navigating various legal and commercial transactions effectively.

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