Thread: contract law

Could anyone tell me what are the similaraties between unilateral and bilateral contracts?
Thnak you

Bilateral-where the offeror makes a promise in return for the offeree's promise. The exchange brings about a bilateral contract and performance follows afterwards.
Uniliteral-where the offeror makes a promise in return for an act.

When something happens unilaterally, it generally connotes the occurence of an event which takes place in the absence of an agreement. Thus, thus, for example, Prime Minister Ian Smith declared Rhodesia independent 'Unilaterally'on 11 November 1965. A bilateral event connotes some form of mutuality or relationship between one person and another or one group and another. It is the stand-alone terms 'unilateral' and 'bilateral' as stand-alone words that first need to be understood.

Translated into the world of contracts; Unilateral contracts are those in which one party unilaterally promises to do something in return for an act by the other. For example, where [A] posts an advertisement promising a reward for anyone who will find Osama Bin Laden. The essence of the contract is that only one party, [A] is actually obliged to do anything. There is no corresponding obligation on the world and his wife to find the man. However, if (B), having seen the advertisement, finds Bin Laden and hands him over to [A], then [A] is bound to pay the reward. Lord Diplock observed in United Dominions Trust (Commercial) Ltdf v Eagle Aircraft Services Ltd [1968] 1 WLR 74:

"a unilateral contract of itself never gives ise to any obligation upon the poromisee to do or refrain from doing anything"

Unilateral contracts are generally those which involve an offer made to the word and his dog. It is important to remember that you cannot unilaterally contract with the entire planet but you can make a unilateral offer to them. The obvious example is Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256. The Smoke Ball Company posted a newspaper advertisement offering a reward to the world and his wife through an advertisement to anyone who caught influenza after using their smoke ball. Ther Company were held to be bound to pay the reward to Mrs Carlill who satisfied the conditions by using the embrocation and catching flue.

An individual can make an offer, 'unilaterally' to another individual, or a group of individuals. [A] may say to [C], "I will give you £20 and a bottle of beer if you cut my front garden lawn tommorrow". If [C] responds to [A]'s offer by saying "OK" you have a deal" we have something that would probably ripen into a bilateral contract.

In a bilateral contract, a promise made by one party [A] is exchanged for a matching promise by another [C]. This exchange of promises is enough to make them enforceable. Thus, in a contract for the sale of goods, the buyer opromises to payd the price and the selelr romises to deliver the goods. One they have reached agreement, both are contractually bound with each party being simultaneously a promisor, and promisee.

Big deal, you may say. Why is this distinction important?

Well. one of the difficulties encountered in the law of contract between a unilateral offer and a bilateral officer is the general requirement to communicate an acceptance of an offer and the requirement to communicate a revocation of an offer prior to an acceptance

We know that as soon as a clear and unambiguous offer has been unequivacally accepted, a binding contract comes into force from that point on. However, we also know from Routledge v Grant [1828] 4 Bing 653, and Payne v Cave [1789] 3 Term Rep 148 that an offeror is free to withdraw his offer at any time before acceptance. We also know that for a valid contract to exist, that an acceptance must be communicated to the offeror and this poses difficulties for contracts of the unilateral type. In other words, is it practical for everyone reading the advertisement for the capture of Bin Laden to write in and 'accept'?

A similar argument was raised by the Smoke Ball Company. They claimed that Mrs Carlill had not communicated her 'acceptance' to the Smoke Ball Company. Bowen LJ rejected this contention by saying that in advertisement cases the acceptor is not to notify his acceptance before he performs the conditions set down by the offeror. The offeror impliedly waives the requirement to communicate an acceptance. 'Acceptance of the offer occurs by actually performing the contractual conditions.

If the offer is revoked, the revocation is ineffective unless it is communicated to the offeree. In bilateral contracts such as the my offer to [C] relating to my front garden lawn [A]. I can withdraw the offer to [C] at any time before [C] accepts. But what about [A]'s
newspaper advertisement offering a reward for Bin Laden?

If the law says that no-one need communicate an acceptance of the offer, how does [A] effectively revoke his unilateral offer placed by newspaper advertisement? He cannot communicate a revocation to everyone who might have read the advertisement and he cannot afford to spend the rest of his life with a potential contractual liability hanging over his head if someone turns up years later with Bin Laden.

It may surprise you to know that there is not a single English authority to the point!

There is however a pursuasive authority the United States Supreme Court in Shuey v United States 92 US 73 (1875). This was a 'reward' case. Strong J held that an effective revocation of a unilateral offer might occur if the revocation was given the same notoriety as the offer. Thus, a unilateral offer in the form of a newspaper advertisement might be validly revoked if the revocation was communicated by he same means.

Hope this makes the distinction a little clearer.


Regards and best wishes