What is a unilateral contract?
A unilateral contract is one accepted by performance alone, so the promisor is bound only when the act is completed.
A unilateral contract is a promise exchanged for an act, like a reward offer.
Where the word "Unilateral Contract" comes from
The distinction between unilateral and bilateral contracts comes from the classical theory of offer and acceptance. In a unilateral contract, the offer invites an act, not a return promise, a structure most familiar in reward and bounty situations.
Why Unilateral Contract matters
It determines when a party becomes bound. In a unilateral deal, the offeree is not obligated to perform, and the offeror is not obligated to pay until the act is done, so the moment of acceptance is performance itself.
Common confusion about Unilateral Contract
People assume every offer invites a promise, but some invite only an act. If a neighbor offers $50 to anyone who finds a lost dog, the finder accepts by returning the dog, not by promising to look, and a mere promise to search creates no contract.
A real-world example of Unilateral Contract
A company posts a $1,000 reward for information leading to an arrest. A caller supplies the information. The company owes the reward upon completion of the act, even though the caller never promised anything in advance.
A worked example of Unilateral Contract
An insurer promises a bonus to any salesperson who closes ten accounts by year-end. A salesperson closes the accounts but is denied the bonus. Because the offer invited performance rather than a promise, the completed act is the acceptance, and the insurer must pay, even if the salesperson never said they would try. Had the insurer instead asked for a commitment to sell, the deal would be bilateral and enforceable from the start.
How Unilateral Contract works in practice
If you are offering a reward or a bonus conditioned on an act, state clearly whether you want a promise or an act, because that choice sets the contract type. If you are the performer, complete the act fully and document it, since payment is due only on completion. Be aware that once you begin performance, some courts protect you from a mid-task revocation of the offer.
Questions about Unilateral Contract
When is a unilateral contract formed?
When the offeree performs the requested act.
Can the offeror revoke?
Usually until performance begins or completes, per the rules.
Is a reward a unilateral contract?
Yes — pay on completion of the requested act.
What if the act is partly done?
Some states protect reliance once performance has started.