What is a unilateral contract?

A unilateral contract is a one-sided agreement. In this case, only one party (i.e., the offeror) promises to offer, usually money, in return for the performance of a specific act by another party (i.e., the offeree). The offeree, however, is not obligated to perform the particular task. These agreements are usually formed for obligations where the duration of the said task is short.

Features of a unilateral contract 

Here are the key features of a unilateral contract:

One-sided agreement: A unilateral contract is a one-sided agreement, meaning only one party makes an offer and is bound to the said offer.

Offer and acceptance: The offeror sets the terms and conditions for the contract and dictates the action the offeree needs to complete to receive the reward.

Acceptance through performance: There is no verbal or written agreement. The offeree needs to accept or receive the reward only after the completion of the action specified by the offeror.

No obligation on the offeree: The offeree is not obligated to perform the specified action. They can choose not to participate in the agreement.

Revoke anytime: The offeror can revoke the contract at any point unless the offeree has already started performing the said task.  

Types of unilateral contracts 

Some common types of unilateral contracts include:

Contests: Reality shows and other contests where people submit entries follow a unilateral contract structure. Here, the event organizer makes an offer, and the applicants accept the offer by submitting their entries or giving their performance.

Reward offer: Contracts where the offeror offers to make a payment or give a reward for the performance of an activity, such as a discount for completing a survey, or a reward for finding a lost pet, is a unilateral contract.

Insurance policies: In insurance policies, the insurance company is obligated to pay you only when a specified event or action happens. This makes it a one-sided agreement because the offeree is not obligated to perform any action.

Open requests for help: Ads that ask for help, such as requests for someone's services for home maintenance, can be considered unilateral contracts because the offeror makes an offer in exchange for the completion of a task.    

Pros and cons of using unilateral contracts 

Pros 

Straightforward: Unilateral contracts are easy to understand because they involve only one party making promises and do not require formal agreements or negotiations.

Cost-effective: Unilateral contracts can be a cost-effective way to achieve outcomes. This is because an offer is made but needs to be fulfilled only after an offeree completes the said obligation, cutting down financial risks associated with unfulfilled obligations.

Flexible: An offeror can revoke the contract at any time. This allows businesses to adjust, issue, or revoke new agreements based on changing circumstances.

Cons 

Lack of guarantee: With a unilateral contract, the offeree is not obligated to perform the said action. This means the offeror may be left without achieving the desired outcome.

Chances of unfairness: Unless the terms and conditions of the unilateral contract are laid out clearly, there is a chance the offeror or offeree may be unjustly enriched.

Are unilateral contracts enforceable?

Yes. Unilateral contracts are fully enforceable in court as long as the offeree has completed the task. The offeror becomes legally bound to fulfill their promise the moment the offeree completes the act, because it symbolizes the acceptance of the offer, which legalizes the contract.