A contract is an agreement between two or more parties that creates legal obligations for the parties involved. They can either be written or oral, but an oral contract is more difficult to enforce and should not be used if it can be avoided.
In order for a contract to be valid and enforceable, it is required to contain certain elements, including:
Consideration is something of value which is exchanged by a party for something else of value or for a benefit. Consideration may include:
- A vehicle;
- Money; or
- Manual labor.
It is important to be aware that there is a difference between a gift and a promise. If an individual gives their friend a handbag or even promises to give them a handbag and does not, it is not considered a contract.
However, if the handbag is being exchanged for completing a task, a contract is formed. For example, an individual will buy their friend a handbag for cleaning out their gutters.
In addition, pursuant to the Statute of Frauds, certain types of contracts must be in writing, including:
- Marriage contracts;
- Contracts which are not performed in one year;
- Interest in land contracts;
- Contracts to pay a decedent’s debt; and
- A contract for the sale of goods over a certain amount.
A contract cannot be formed for an illegal purpose, such as for committing a crime. It is important to note that the majority of contracts are governed by the statutes of the state in which they are formed.
What is a Unilateral Contract?
When most individuals hear the term contract, what comes to mind is usually an agreement between two individuals, such as with business or personal contracts. These are not, however, the only types of contract which exist.
Unilateral contracts are contracts which are created by an offer which can only be accepted by performance. In order to form a unilateral contract, the party who is making the offer, known as the offeror, makes a promise in exchange for performance by the other party.
The offer can only be accepted when the other party performs the requested action completely. One easy way to remember the meaning of this type of contract is to focus on its name, unilateral and break down the word.
In other words, the prefix, “uni-” means one. Therefore, a unilateral contract only allows one individual to make a promise or an agreement.
What are Some Examples of Unilateral Contracts?
A unilateral contract differs greatly from a bilateral contract, so it may be helpful to examine some examples to better understand the differences. One common type of unilateral contract that is seen in everyday life is a reward contract.
For example, suppose that Jane has lost her dog. Jane offers Tommy $100 if he can find her dog.
This example is a unilateral contract because Jane is only required to pay the $100 if, and only if, Tommy finds her lost cat. Tommy is, however, under no obligation to actually find the lost dog.
Technically, Tommy has only accepted the offer once he finds the lost dog. It is important to note that, in some states, there are specific requirements for unilateral contracts.
For example, in some jurisdictions, Jane may be legally obligated to keep her offer open if Tommy begins making sufficient efforts towards finding the lost dog. For example, putting up posters or asking around at local animal shelters.
Are Unilateral Contracts Legally Enforceable?
A unilateral contract may appear to be very one-sided. However, they are typically enforceable in a court of law. One of the most common issues which occurs related to unilateral contracts occurs when the offeror refuses or fails to keep their promise when the other party completes the required action.
Both a unilateral contract and a bilateral contract can be breached, or broken. For example, a unilateral contract may be breached if Jane refuses to pay Tommy the $100 when he finds her lost dog.
In this example, Jane has broken her promise to pay and can be considered in breach of contract. Whether a contract is unilateral or bilateral, if an individual has a situation they believe may constitute a breach of contract, they will be required to establish certain elements to prove it, including:
- The existence of the contract. If no contract existed, it cannot be broken;
- The contract was, in fact, broken. If the contract was not broken there is not a cause of action;
- The individual suffered a loss. If no loss was suffered, there is nothing for a court to rectify; and
- The individual being sued was responsible. It is important to sue the correct party, which is typically the party making the promise.
What is the Difference Between a Unilateral Contract and a Bilateral Contract?
There are some differences between unilateral contracts and bilateral contracts. The easiest difference to spot between the two types of contracts is that the number of parties who are making promises is different.
There is one party making a promise in a unilateral contract. In a bilateral contract, on the other hand, there must be at least two parties who are making promises.
The differences between these two types of contract may be very subtle. It may be helpful to further the example of Jane and her lost dog.
Suppose Jane promises Tommy $100 if he promises to find her lost dog. If Tommy accepts the offer and promises to find her dog, it is considered to be a bilateral contract because both Jane and Tommy have made promises to take certain actions.
In this case, both parties are now legally obligated to perform the required actions under the bilateral contract. Even if Tommy is not successful in finding the cat, Jane will be obligated to pay him the $100 as promised, especially if Tommy made reasonable efforts to find the dog.
The difference between the two examples is subtle, but it may help to examine what is being offered in the contract. In the unilateral contract, the offeror is offering to pay for a completed action.
In a bilateral contract, however, the offeror is offering to pay for the other party’s promise to perform an action. In the unilateral contract, the action is required to be completed in order to obligate the offeror to pay.
Are Advertisements Unilateral Contracts?
In general, an advertisement is not considered a contract. There are, however, certain cases in which an advertisement may be considered a unilateral contract.
For example, if Jane placed a classified ad in the newspaper which offered $!00 to any individual who finds her lost dog, she may be obligated to pay that money to an individual who responds to the ad by finding the lost dog.
Should I Talk to a Lawyer About a Unilateral Contract?
It is essential to have the assistance of a contract lawyer for any issues, questions, or concerns you may have related to unilateral contracts or other types of contracts. Your lawyer can advise you of your obligations under an agreement which you may have formed or can help you draft a contract if you need to enter into an agreement with another party.
Having the help of a lawyer when drafting or entering into a contract helps ensure that the contract is valid and legally enforceable and that the terms of the contract are clear and understood by all parties.
