A unilateral contract is a type of contract in which one party makes a promise or an offer that can be accepted only by the performance of a specific act or condition by another party. In a unilateral contract, one party is obligated to fulfill their promise or offer if the other party chooses to accept it by completing the required act or meeting the specified condition. Once the act is performed or the condition is met, the contract is considered binding, and the party who made the initial offer must fulfill their promise.
Key characteristics of a unilateral contract include:
- One-sided obligation: In a unilateral contract, only one party (the offeror) is bound by a promise or obligation. The other party (the offeree) has the option to accept or decline the offer by performing the required action.
- Acceptance by performance: The acceptance of the offer is achieved through the completion of the specified act or condition. Until that act is performed, there is no binding contract.
- Revocability: In most cases, the offeror can revoke or withdraw the offer before the offeree accepts it by performing the required act. However, some legal jurisdictions may impose limitations on the revocability of certain unilateral contracts.
Examples of unilateral contracts include:
- A reward offer: If someone offers a reward for the return of a lost item, the contract is unilateral. The finder of the lost item can accept the offer and claim the reward by returning the item to the owner.
- Promotions or contests: When companies offer prizes or rewards for specific actions, such as entering a contest, completing a survey, or making a purchase, they are creating unilateral contracts. Participants accept the offer by taking the required action, and the company is obligated to provide the promised reward.
- Performance-based contracts: Contracts in which payment is contingent on the completion of a specific task or job can also be unilateral. The contractor accepts the offer by successfully completing the work, and the client is then obligated to pay for the services.
It’s important to note that the legal principles surrounding unilateral contracts can vary by jurisdiction, and specific requirements and rules may apply. Additionally, the terms of the contract and the clarity of the offer are crucial factors in determining the enforceability of a unilateral contract.