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Bilateral and Unilateral Contracts Essay

There are two many types of contracts in the world of business: Bilateral contracts and Unilateral contracts are two of them. Each type with its special form and rules. In the world of business, a bilateral contract” is one where both parties are to perform their promises or obligations at some future time but not necessarily at the same time”. And a unilateral contract “is one where one of the parties performs his promises at the time of making the contract and the other party promises to perform in the future” (Contracts, 2006).

Which one is more common in the world of business? There are some reasons that make the bilateral contracts more common than the unilateral contracts in the world of business. Bilateral contracts have something called “mutuality of undertaking” which means each party of the contract has the same level of commitment. But in unilateral contracts there is only one party who undertakes the contract (offeror), and he will never pay the other (the offeree) party until he complete the commitment ,and he (the offeree) is not obligated to do it (Contracts, 2006).

Under what circumstances would someone prefer one or the other? What really determines which type of contract to use is the type of business: 1. Bilateral contracts: A Bilateral contract is the perfect choice in trading processes. For example, if John (the offeror) offers to pay $20,000 for Jack (the offeree) if Jack gives John his car, then this is a bilateral contract (Contracts, 2006). 2. Unilateral contracts: It is the suitable choice in any business depends on offering from one side, and it is up to the other party to agree or disagree.

For example, “An insurance contract is a unilateral contract because only the insurer has made a promise of future performance and only the insurer can be charged with breach of contract” (Unilateral Contract, 2006). Offering a “reward” to anyone helps arresting a criminal is also an example of unilateral contract (unilateral contract). What are the advantages of each type for the offeror? 1. Bilateral contracts: For the offeror, the advantage that he gets using this type of contracts is that he guarantees that the other party in the contract will do his duties in the contracts.

And the reason for that is that this contract is an exclusive contract between two parties, and the contracts includes “mutual contractual obligation” (Contracts, 2006). 2. Unilateral contracts: The nature of this type of contracts gives the offeror an advantage by giving him many opportunities to make contracts. And that’s because this type of offers is like an invitation for any party who is willing to make a contract. What are the advantages of each type for the offeree? 1.

Bilateral contracts: The offeree guarantees that the offeror will not break the rules of the contract, and he will get his rights. Both parties have the same position in the contract. The offeror and the offeree have the same level of obligation because of the “mutual contractual obligation” (Contracts, 2006). 2. Unilateral contracts: This type of contracts includes certain conditions, and the offeree enters the contract only if he is agree with it and able to do his duties.

This contract guarantees the offree’s rights because if the offeree did his part of the contract, the offeror is enforced by the law to pay the offeree. The offeror doesn’t have the authority of “obligating the second party to perform” (Unilateral Contract, 2008). Conclusion Two different types of contracts with two different natures. A combination of obligation and freedom in every type. In bilateral contracts, there is a complete level of obligation between the offeror and the offeree.

In unilateral contracts, it is not the same level of obligation, there is a high level of obligation if the offeree did his duties (Unilateral Contract, 2008). References Bilateral Versus Unilateral Contracts. (2006). Retrieved August 3, 2008, from http://www. echeat. com/essay. php? t=30968 Unilateral Contract. (2008). Retrieved August 3, 2008, from http://www. answers. com/topic/unilateral-contract-3 unilateral contract. (n. d. ). Retrieved August 4, 2008, from http://www. businessdictionary. com/definition/unilateral-contract. html


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