Unilateral Contract Meaning: Understanding the Basics

If you are in the business world, you may have come across the term “unilateral contract” at some point. It is a legal concept that is often used in a variety of contexts. This article will provide a clear understanding of unilateral contracts and how they differ from other types of contracts.

What is a unilateral contract?

A unilateral contract is a type of contract in which only one party is obligated to perform. This means that one party is offering a specific reward or consideration to anyone who performs a particular act or task. The party offering the reward is known as the offeror, while the party performing the task is known as the offeree.

An example of a unilateral contract is a “reward offer” seen in advertisements. For instance, if a company is offering a $1000 reward to anyone who finds their missing pet, then the company is entering a unilateral contract with whoever finds the pet. The offeror has to keep their promise of paying the reward if the pet is found, but the offeree is not obligated to find the pet.

What are the key elements of a unilateral contract?

There are three main elements of a unilateral contract: offer, acceptance, and consideration. Offer refers to the specific task or act that the offeree has to perform. Acceptance refers to the offeree`s willingness to perform the task or act. Consideration refers to the reward or consideration that the offeror has promised to give to the offeree.

In a unilateral contract, the offeror is bound to keep their promise of providing the reward or consideration if the offeree completes the specific task or act. On the other hand, the offeree is not obligated to perform anything unless they want to, and they will not receive the reward or consideration offered unless they complete the task or act.

How does a unilateral contract differ from a bilateral contract?

A bilateral contract is a mutual agreement between two parties where both parties agree to exchange something of value. In a bilateral contract, both parties are obligated to perform. For example, a homeowner hiring a contractor to renovate their kitchen is a bilateral contract. The homeowner promises to pay the contractor for their services, and the contractor promises to complete the project.

In contrast, a unilateral contract only has one obligated party. Unilateral contracts involve a promise of reward or consideration for completing a specific act or task, whereas bilateral contracts involve promises of exchange.


In summary, a unilateral contract is a legal agreement in which one party offers a specific reward or consideration to anyone who completes a particular act or task. It is a one-sided agreement in which only the offeror is obligated to perform. Understanding the basics of unilateral contracts can help individuals and businesses recognize and benefit from such contracts.