Unilateral Contract, as the name suggests, is a contract in which the obligation of one party is yet to be performed. As against, Bilateral Contract is the contract, in which the obligation of both the parties is due.
Contracts are all about legal enforcement, in the sense that if an agreement possesses legal enforceability, they are considered a contract, whereas, if they lack the same, they are nothing more than an agreement. Now, based on the performance, the contracts are divided into two categories, i.e. Executed Contract and Executory Contract.
Executed Contract is the contract in which the parties to the contract have performed their part or obligation, and nothing is left to be done. In these contracts, the consideration is the action or forbearance, which when completed or brought to notice, then the contract is said to be completed.
On the other hand, an Executory Contract is a contract wherein the parties obligation is yet to be completed. The consideration in these agreements is the corresponding promise or obligation. An executory contract is further subdivided into a unilateral contract and bilateral contract.
Content: Unilateral Vs Bilateral Contract
Comparison Chart
| Basis for Comparison | Unilateral Contract | Bilateral Contract |
|---|---|---|
| Meaning | Unilateral Contract is the contract wherein only one party needs to perform the promise or obligation. | Bilateral Contract is one in which the parties to the contract, commit to perform their concerned obligation or promise. |
| Consideration | Executed | Executory |
| Promise | One | Mutual |
| Legal Effect | Only one party is legally bound. | Both the parties are legally bound. |
Definition of Unilateral Contract
Unilateral Contract is said to be a one-sided contract, wherein only one party needs to perform his part, while forming the contract, as the other party has already completed his part, at the time of the contract or before it comes into being. In this contract, the promisor has already performed his duty or obligation and the other party’s obligation is outstanding.
In this type of contract, the promisor makes a promise to whoever undertakes or performs the activity stipulated in the offer itself. Hence, there is no mutual reciprocal promise between the two parties. It must be noted that the period to which contract is valid, has to be stipulated.
Definition of Bilateral Contract
A Bilateral Contract is a dual-sided contract, wherein both the parties to the contract has not yet fulfilled their part, at the time of entering into the contract.
The contract comes into existence when the parties to the contract make mutual, reciprocal promises to one another, that require performance or non-performance of an act. Hence, both the parties are promisor as well as promisee. The commitment made by one party acts as adequate consideration, for the promise made by another party.
Key Differences Between Unilateral and Bilateral Contract
The difference between unilateral and bilateral contract is given hereunder:
- A unilateral contract is a contract, wherein one party commits to do something, which is open and available to the public at large until someone undertakes the action required, which is a prerequisite to the completion of the promise, made by the promisor. As against, Bilateral Contract is a contract, wherein the obligation is due from both the sides, at the time when the contract comes into force.
- A unilateral contract is the contracts with executed consideration, whereas Bilateral contract is the contracts with executory consideration.
- In a unilateral contract, there is a promise in exchange for performance. Conversely, there are mutual, reciprocal promises in case of a bilateral contract.
- In a unilateral contract, only one party is legally bound to perform his part, when the contract comes into force. On the other hand, in a bilateral contract, both the parties are legally bound to perform their obligation.
Example
Unilateral Contract
- Dev gives an advertisement in the newspaper that whoever finds and brings his missing dog “Bruno”, he/she will be rewarded with ₹ 10000. Now, a person named Amit finds the dog and hands over him to Dev. In this situation as Amit has performed his obligation, a contract comes into existence with an executed consideration. Hence Dev needs to pay the reward money to Amit.
Bilateral Contract
- Mr Malhotra promises to sell his flat to Mr Arora, for ₹20 lacs, for which Mr Arora pays ₹1 lac as earnest sum, to confirm the contract and promises to pay the rest of the amount in 4-5 days. Mr Malhotra transfers the possession of the flat to Mr Arora and promises the execution of sale deed, after receiving the balance amount. Here the contract between the two parties is executory, as something is not yet completed on both the ends.
Conclusion
To sum up, a unilateral contract is one where one party makes an offer in general and the other party, accepts the same by fulfilling the stated conditions. On the contrary, bilateral contracts are the contract wherein both the parties promise to do something which remains incomplete when the contract comes into force.
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