Difference Between Unilateral and Bilateral Contracts

Edited by Diffzy | Updated on: April 30, 2023


Difference Between Unilateral and Bilateral Contracts

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Unilateral and bilateral contracts are similar in that they’re both types of agreements between two parties, but the difference lies in how these agreements are structured and enforced. If you’re looking to hire someone to work on your house or you want to agree with another company, you might find yourself wondering about the differences between unilateral and bilateral contracts, what makes each different, and which one you should use in a given situation.

Unilateral Contract vs. Bilateral Contract

Key Differences in Employment, Sales and Service Agreements, Deals It’s been said that there are three sides to every story: your side, my side, and what happened. Well, business is much like life—or even marriage for that matter—in that respect: Every deal has at least two sides to it (and sometimes more).

So how do you know which kind of contract to use when you're working on an agreement?

The answer depends on your situation and what each document accomplishes; fortunately, we've got you covered with a breakdown of important features of both unilateral and bilateral contracts that can help make things easier to understand. Here's what you need to know about each type of contract. Write a professional book review based on the following description: Title: Nineteen Eighty-Four Author: George Orwell Genre(s): Dystopian Novel Length: 137 pages Plot Summary - Nineteen Eighty-Four is set in Oceania, one of three world superpowers along with Eurasia and East Asia.

All of these superpowers exist under constant surveillance by telescreens (televisions) as well as using hidden microphones. It is set in London but could be any city or town anywhere. Winston Smith works for The Ministry of Truth where his job is to rewrite history so that Big Brother will always be right and appear perfect. He secretly hates Big Brother but dares not express his true feelings or thoughts because they would mean certain death if he were caught.

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One-sided contracts are those that obligate only one party to do something, while two-sided contracts obligate both parties to perform obligations equally. Below is a handy chart comparing some key differences between unilateral and bilateral contracts and their general use cases.

Unilateral Bilateral Use Case Examples Commonly used in situations where one party has more power than another, such as employment agreements or sales agreements that require an employee or customer to follow certain rules or policies (e.g., drug testing for employees). Two-sided agreements help ensure that both parties have equal power and rights when agreeing (e.g., rental lease agreement).

General Contract Types Employment Agreement Sales Agreement Rental Lease Agreement Trade Agreement License Agreement Terms of Service Noncompete Clause Arbitration Clause Franchise Agreements Pre-printed Forms Use Case Examples Used when there is more than one issue to be addressed in an agreement. For example, if you want to purchase a car from someone and also sign a contract agreeing not to sell your car for six months, you would need two separate documents—one for each issue.

When you’re selling your car to someone else, it makes sense to include language addressing how long they can’t sell their own so that everyone knows what they’re getting into. In other words, these types of contracts cover more than one subject matter at once and are often referred to as hybrid agreements because they combine elements from different contract types. Also known as bundled or integrated agreements since multiple issues/subjects can be covered by just one document.

Difference Between unilateral and bilateral contracts in Tabular Form

Basis For Comparison Unilateral Contracts Bilateral Contracts
Define A unilateral contract is an agreement in which only one party is legally obligated to perform a specified action or payment. A bilateral contract is one in which the gatherings to the agreement, resolve to play out their concerning commitment or commitment.
Consideration Executed         Executory
Promise           One     Mutual
Legal Effect    Only one party is legally bound. Both the parties are legally bound.

What is a Unilateral Contract?

A unilateral contract is an agreement in which only one party is legally obligated to perform a specified action or payment. A unilateral contract can also be referred to as a single-party contract, or simply an I will type of promise. In contrast, a bilateral contract is binding on both parties and requires mutual promises (such as I will and you will). If either party fails to uphold his or her end of the bargain under a bilateral contract, he or she could face legal consequences and penalties. In many cases, courts may compel individuals or businesses who have breached a bilateral agreement to honor their side of their deal via nonbinding arbitration proceedings instead of litigation. However, if there are no laws in place that protect consumers from unfair business practices, then it may be difficult for a person with a unilaterally signed contract to hold up his or her end of the bargain without facing repercussions from other parties involved.

For example, when shopping online, consumers often sign into accounts using a user name and password. This means they aren't entering into a formal contract but rather agreeing to terms of service presented by websites they use regularly. The difference between these two types of agreements becomes clear when looking at issues such as breaches and remedies. For example, if someone breaches an online terms of service agreement by posting slanderous content about another individual on Facebook or Twitter, there isn't much recourse for victims aside from removing comments themselves or blocking offenders altogether—and even then, removing content isn't guaranteed to work.

What is a Bilateral Contract?

An employer may hire a new employee on a bilateral contract, meaning that both parties -- employer and employee -- must abide by all terms of their agreement. The two parties will come to an agreement on salary, benefits, starting date, and hours worked among other things. In addition to these conditions, both parties agree to abide by state labor laws as well as any applicable federal legislation governing employment rights in America including (but not limited to) Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, and Americans with Disabilities Act).

The employer will then be responsible for deducting taxes from employee pay checks along with adhering to all other procedures regarding payroll tax payments set forth by each state in which they are located or have employees based out. A unilateral contract is different in that it only requires one party to uphold its end of the bargain. This means that if an employer hires a worker under a unilateral contract, he or she does not need to provide any benefits such as health insurance or paid time off. A unilateral contract is also useful when hiring independent contractors who are allowed to work under certain restrictions but do not fall under specific regulations required by law. The trade-off is less protection for workers and employers should consider whether it is worth it before entering into such agreements. It is important to note that even though unilateral contracts do not require businesses to adhere to some state and federal regulations, they still might be held accountable for violations such as discrimination against gender or race.

This is because most laws are applied equally across all contracts regardless of whether there is a formal agreement between employer and employee. Additionally, since a unilateral contract only holds one party accountable, many states hold employers liable for paying unemployment benefits to workers who were let go involuntarily through no fault of their own. This can result in having to pay unemployment compensation even though there was no written job offer before or after termination from employment.

The Main Difference Between Unilateral and Bilateral Contracts in Points

  • One Party Makes an Offer: In a unilateral contract, there is just one party making an offer (the seller). But in a bilateral contract, there are two or more parties who make offers (the buyer and seller).
  • There Are Two Types of Offers: In a unilateral contract, there is just one type of offer - that being to sell – whereas in a bilateral contract there are two types of offers - that being to buy and to sell.
  • Buyer/Seller Does Not Have Rights: In a unilateral contract, either party does not have rights until they sign on the dotted line. But in a bilateral contract, both parties already have rights because they signed on the dotted line before agreeing.
  • Only One Party Can Terminate Agreement: In a unilateral contract, only one party can terminate an agreement but in a bilateral contract both parties can terminate an agreement if there is mutual consent between them before signing on any dotted lines.
  • Legal Documents Required: Both types of contracts require legal documents but with different names such as offer and acceptance respectively under each category listed above when compared side-by-side.
  • It Is Impossible to Cancel After Making a Payment: It is impossible to cancel after making a payment in case of unilateral agreement without having any contractual obligations. On the other hand, you can cancel after paying your dues in case of a bilateral contract due to contractual obligations existing between both parties.
  • Acceptance Must Be Explicit: An explicit acceptance must be given by both parties before coming into force of a unilateral contract whereas an implicit acceptance may be enough in case of a bilateral contract
  • No Specific Time Limit: A specific time limit doesn't exist for accepting or rejecting an offer in case of unilateral contracts whereas it does exist for accepting or rejecting an offer in case of bilateral contracts
  • Contract of Sale & Contract of Service: Under a unilateral contract, there is no contract of sale rather a listen agreement exists between both parties. Whereas under a bilateral contract, there is no license agreement rather it falls under contract of sale.
  • Unilateral contracts don't fall under sales law whereas bilateral contracts fall under sales the e the law
  • Single-Sided Promise versus Double-Sided Promise: In the case of unilateral contracts, a single-sided promise exists between both parties but a double-sided promise exists in the case of bilateral contracts
  • Free Exchange Agreement versus Compulsory Exchange Agreement: Under unilateral contracts, free exchange agreements exist between both parties whereas compulsory exchange agreements exist in case all circumstances arise


To summarize, a one-sided agreement is one where one party makes a proposal overall and the other party, acknowledges something similar by satisfying the expressed circumstance. The difference between a unilateral and bilateral a and a tract comes down to who is legally bound to uphold their end of the bargain. A unilateral contract has only one party legally obligated to keep his word, while a lathe real contract requires both parties to make good on their promise. This can have serious implications for sellers and buyers alike if not adhered to properly. In general, unilateral contracts are rare in business, but it’s still important for all parties involved to understand which type of contract they’re entering into when making decisions about any future agreements with each other. A unilateral contract is a contractual agreement that binds only one party to its terms. Typically, these types of contracts are used when there is an imbalance of power or knowledge between two or more parties. For example, an employee may sign a unilaterally binding non-compete agreement with her employer that prevents her from working for another company within a certain period after leaving her job. While she may be bound by its terms, there isn't anything stopping her employer from breaking it—meaning she could potentially find herself out of work even though she was abiding by what she thought was fair.



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"Difference Between Unilateral and Bilateral Contracts." Diffzy.com, 2024. Fri. 19 Jul. 2024. <https://www.diffzy.com/article/difference-between-unilateral-and-bilateral-contracts-392>.

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