All about unilateral contracts in real estate – definition, examples, principles & more!

Whenever we hear the word contract, it always comes to mind that the agreement is between two people or parties over a business or personal-related matter.

However, these are not the only types of contracts that can exist. There is also a most common contract that we unknowingly use in our daily lives, where a person agrees to pay the other person for a specified task only after its completion. It is known as a unilateral contract. 

In more detailed terms, the unilateral contract is a type of agreement where a person or party, often called ‘offeror,’ makes an offer to an individual, organization, or general public, known as ‘offeree.’ They have to perform a certain act or service to receive whatever the offeror promises.

After the other party performs the required action, then only the contract is said to be completed. The unilateral contract is not two-sided as in a bilateral contract. It allows only one person to make a contract or an agreement.    

What are some unilateral contract examples?

To explicitly understand the Unilateral Contract, the reward contract is the most common example that we usually encounter in our daily lives. Suppose that a man lost his dog, and he offers Rs.7000 cash prize to the person if he/she finds his dog. Here the man is obligated to pay off the price only if somebody finds his dog. Therefore, the other person doesn’t provide a commitment to finding the dog, but if he does so, he technically accepts the offer. 

Another example is the Insurance Contracts. The insurance firm promises to pay off a specific amount of money to the insured individual if a certain period completes or a specific event happens. Since it is a unilateral contract, an insurer is not obligated to pay any amount unless a certain event occurs. Therefore, a one-sided agreement is made in the Insurance contract as well.  

How does a unilateral contract work?

In a unilateral contract, the person making an offer or promise has the freedom to determine all the criteria or clauses of the contract. The person accepting the offer has the right to fulfill the duty if they wish so. 

The reward cannot be offered by asking someone to breach the law. Both the parties are abiding by the law of Unilateral Contract. However, a legal situation cannot arise until there’s a claim to finish a certain task. In any case, if someone believes they were duped into doing something and subsequently denied the reward without notice, they can take their case to court. Though, some of the following conditions should meet before taking the matter into justice:

• There should exist actual proof of the unilateral contract.  
• Proof that the one has spent their time and money and didn’t receive any rewards in return or suffered a loss. 
• The person has broken or revoked the contract after one has already spent their time doing the task.
•  The one responsible for the breaching is the one to sue in court.

Are unilateral contracts legally enforceable?

Unilateral contracts are one-sided, but they are generally enforceable in court. The common issue in the unilateral contract is that the one suffered a loss of time and money despite completing the required action, and the offeror refuses or fails to keep the said promise. 

Unilateral contracts can be ‘breached’ or broken. For example, if the person refuses to pay Rs.7000 to the one who found his dog, then he is charged for breaching the contract. 

Conclusion 

The court has distinguished between both bilateral and unilateral contracts. Bilateral contracts bind both parties once they exchange the promise. However, a unilateral contract binds only the offeror and does not bind the offeree unless he accepts it by performing the obligations specified in the promisor’s offer. 

The three major things that occur in Unilateral contracts are- 

• Only one party makes the promise and is as legally binding as bilateral contracts. 
• The completion of a task is the only way to accept unilateral contracts. 
• The person (offeree) should have no objection to performing the determined task.

 The only way to avoid complications in a unilateral contract is- 

• The contract should be written as clearly as possible. 
• Both parties have reviewed the contract thoroughly. 
• The contract should not have unclear words or phrases. 

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.