The unilateral offer definition is a legal contract in which one individual, the buyer, pays for a specific action from another party. This is a one-sided agreement because a promise to pay is exchanged for action or forbearance of action. If the action is completed, the contract must be fulfilled by the buyer, but the other party cannot be forced to complete the action. The legally enforceable promise does not exist until the action promised has been performed.

Unilateral Contracts

Case law governing unilateral contracts was established in 1940 in Oklahoma with Petroleum Research Corp. v. Barnsdall Refining Corp. Imagine you offer a friend $2,000 to install new floors in your home. This is a unilateral contract because if the floors are not installed, you have no obligation to pay. On the other hand, your friend has no obligation to install the floors. If he or she does so, the contract takes effect and is legally enforceable.

In most unilateral contract disputes, legal action is taken when the party who has made the offer refuses to pay as agreed after the work is completed. The court will determine whether the contract terms were clear and whether the work was adequately performed in accordance with these terms.

Another example: If you put up a reward for the return of your wallet, a unilateral contract exists with anyone who returns the wallet. This is a rare instance in which an advertisement constitutes a legal agreement.

Unilateral contracts can be enforced by the legal system. However, issues can arise if one party completes the action in question but the other party fails to pay. For example, if a reward is promised for a lost cat and a person returns the cat but does not receive the reward, he or she may be entitled to legal remedy.

Bilateral Contracts

Bilateral contracts consist of a legal agreement between at least two individuals or entities. This category comprises most personal and business contracts. For example, buying food at a restaurant, paying for medical service, and checking out a library book all involve bilateral contracts. You are promising an action in exchange for an action by the other person or individual.

Unlike unilateral contracts, bilateral contracts obligate each party to complete an action. Let's revisit the lost cat example above. If you pay a certain individual to find your cat, this constitutes a bilateral contract with legally binding obligation on both sides. If the person you hire fails to search for the cat, he or she may be found liable for contract breach. As the offeror, you are responsible for paying only the individual you hired to find the cat and not opening the offer to other individuals.

Legal Enforceability

Both types of contracts can be breached, or broken. This is the failure to fulfill the contract terms without a legally valid excuse. To prove a contract breach in court, you must establish:

  • Existence of the contract
  • Breach of the contract
  • Loss suffered as a result of this breach
  • Responsibility for the loss on behalf of the challenged party

Both types of contracts can be enforced in court. A bilateral contract is immediately binding, while a unilateral contract cannot be enforced until the action in question is fulfilled.

Enforcement of a unilateral contract can be complicated, particularly involving technical terms such as offer, consideration, and acceptance. A business attorney can assist with legal issues that arise with a unilateral contract. He or she can determine whether you are under obligation with an existing unilateral contract, as well as help you draft a contract that clearly states your intentions.
