Unilateral Contracts vs. Bilateral Contracts
What is a Unilateral Contract?
Unilateral contracts are ones in which one party promises to undertake a particular activity while the other agrees to accept the performance as contract fulfillment. In other words, it’s an agreement in which only one party is required to accomplish something for their end of the bargain to be considered fulfilled.
For example, let’s say you promise your friend $25 if they pay for the launch today at work. Now, you’re bound by their word – you’ve stated your conditions, and your friend has accepted them. For the agreement to be fulfilled, you must give your friend the money promised. This is what a unilateral contract is.
What is a Bilateral Contract?
Bilateral contracts, on the other hand, are contracts in which each party has to fulfill its terms. This means that all parties involved exchange something of value once the contract has been enforced. For example, consider a bilateral contract when you buy and pay for something from your local store. Here, each party obtains something of value – you get your candy, and the owner collects their money. This is the basis of a bilateral contract.
Unilateral vs. Bilateral Contracts
The most evident distinction between the two types of contracts is the number of people involved in the promise. While only one person is obligated to complete the conditions for unilateral agreements, bilateral contracts create a mutual obligation for all parties, as all of them are required to complete an action.
However, other differences might appear due to the previous mention, such as when conditions are fulfilled. In unilateral contracts, since only one party makes a promise, the contract is finished once that party carries out the contractual obligations. On the other hand, in bilateral agreements, both parties execute their commitments upfront since they both make promises before the contract is fulfilled.