A reward offer creates a unilateral contract upon performance.
A contract is an agreement between two or more parties that is enforceable by the law. A unilateral contract is one in which only an offeror makes a promise in exchange for an act, or for an offeree to refrain from an act. The offeror is the person making the promise, while the offeree is the party performing the act. A unilateral contract is a one-sided contract in the sense that only one party makes the offer, which the other party is not obligated to fulfill.
Unilateral Vs. Bilateral Contract
While the unilateral contract is one-sided, a bilateral contract involves an exchange of a promise on the part of both parties. As such, if John offers to pay Dan $40 to mow his lawn and Dan promises to do so, this is a bilateral contract. This is due to the fact that a promise was made by both John and Dan regarding the terms of the contract. The difference between a unilateral contract and a bilateral contract is that the offeror in a bilateral contract is not offering to pay for a completed performance of an act. The offeror is offering to pay for the promise by the offeree to perform an act.
Advertisements As Unilateral Contracts
Some types of advertisements are considered to be unilateral contracts. One common example of such an advertisement is a rewards advert. If someone offers to pay $5,000 for anyone who finds his lost cat, this is an offer that will become a legally binding unilateral contract as soon as someone finds the cat. The contract does not have to name anybody specifically because it is based on the complete performance of the act of finding the dog.
Liability
Another element of a unilateral contract is that an offeree only accepts to create a legally binding contract by completing an act. There is no liability for not following through with an act. As such, John cannot sue Dan for failing to complete mowing his lawn. Dan is under no obligation to mow John's lawn and can quit whenever he wants without any liability. His failure to finish mowing the lawn does not constitute a breach of contract.
Tags: unilateral contract, bilateral contract, contract one-sided, contract that, legally binding
