Description of the legal term Unilateral Contract:
A unilateral contract is a promise in exchange for an act, where one party, the offeror, promises to pay upon the other party, the offeree, completing a certain task. Unlike a bilateral contract, where there is an exchange of mutual promises between parties, a unilateral contract is one-sided in the sense that only one party is legally bound to perform their promise upon the completion of a specific act by another party.
The essential elements of such an agreement include an offer that is clearly intended to become binding upon the performance of the act, and it must be communicated to the other party. The offeree does not need to communicate their acceptance of the offer; instead, acceptance is effectively communicated by the performance of the specified act. The performance of this act by the offeree constitutes both an acceptance of the offer and the satisfaction of the condition for the offeror‘s promise. Once the act is completed, the offeror is legally obligated to fulfill the terms of the promise.
The offer in a unilateral contract is made to the world at large or to any individual who performs the act. This is known as a general offer and can be accepted by anyone who completes the condition(s) specified in the offer. The classic legal case of Carlill v Carbolic Smoke Ball Company [1892] established that such general offers are legally enforceable, provided the terms are clear, and the offeree knows about the offer at the time they perform the act.
One of the controversies surrounding this kind of contract is the revocation of the offer. The general rule is that the offer can be revoked any time before the act performance is completed, and it does not become binding until the act is fully executed. However, if one party starts performing the act, there may be some legal protections in place to prevent the other from unfairly revoking the offer.
Legal enforcement occurs upon the completion of the act when the offeror is bound to honor the terms. The offeror cannot retract the offer once the act has been completed, and the offeree has a legal right to the promised consideration.
Understanding the concept of such contracts is fundamental to interpreting and enforcing contracts that do not fit the traditional bilateral framework. These agreements play a significant role in modern commerce and personal transactions, particularly in situations where offers are made to large groups of people or the general public.
Legal context in which the term Unilateral Contract may be used:
Imagine a homeowner who wishes to sell their house and offers a £1,000 reward to anyone who finds a willing buyer who completes the purchase. The homeowner is essentially extending a general offer to the world at large, contingent upon someone performing a specific act – finding a buyer for the house. If a person, having seen this offer, successfully finds a buyer and the sale is completed, the homeowner is obliged to pay the £1,000 to that individual. This scenario is an example of such a contract because there is no promise of payment in exchange for a promise to find a buyer – payment is conditional only upon the successful completion of the act of finding a buyer.
Another context where this arises is in reward cases. A common example is when a company issues a public offer of a reward for the return of lost property. For instance, an advert is placed indicating that a £500 reward will be offered for the return of a lost dog with no questions asked. Here, the company is not seeking a promise from anyone in particular but is offering to pay anyone who performs the action of returning the lost dog. When a person returns the dog, they have accepted the offer by performing the required act, obligating the company to pay out the reward.
These agreements articulate a critical aspect of contractual liability, one where the emphasis is on a party’s action rather than mutual promises. They underpin a wide range of legal and commercial activities, emphasising the flexibility and adaptability of contract law to accommodate various forms of agreement. Understanding the nuances of such contracts allows parties to navigate situations where an exchange of promises is not practical or desirable. They ensure that parties who act on the faith of an offer can secure legal recourse, thereby reinforcing the importance of trust and reliability in social and economic relations.
