Home Breach of contract Unilateral contracts : definition, examples, advantages and more

Unilateral contracts : definition, examples, advantages and more

February 23, 2024

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This article is written by Naincy Mishra. It deals with a detailed explanation of unilateral contracts. The first part of the article discusses the concept of contract and the related governing laws in the country and the second part elucidates the concept of unilateral contracts and their examples, elements, advantages and disadvantages, revocability, etc.

This article has been published by Shashwat Kaushik.

Table of Contents

Introduction

In an interconnected and rapidly evolving global landscape, the role of having agreements in fostering confidence, mitigating risks, and facilitating seamless interactions cannot be much stressed upon. From the simplest transactions to the most complex business dealings, contracts serve as the foundational framework upon which our modern society operates. They are formulated to delineate the responsibilities of the parties involved as well as establish the parameters governing interactions between them. Moreover, contracts serve as the safeguard of interests, ensuring that parties involved are protected, obligations are honoured, and disputes are resolved amicably. However, there are contracts where only one party makes the promise, unlike in the case of general contracts, where both parties make promises. These contracts are known as unilateral contracts. This article focuses more on these types of contracts.

Law governing contracts

The Indian legal system comprises a comprehensive framework encompassing various legislations that collectively regulate contracts and associated legal aspects. These statutes, such as the Indian Contract Act, 1872; the Specific Relief Act, 1963; the Sales of Goods Act, 1930, etc., work in tandem to ensure fairness, enforceability, and the protection of rights in contractual relationships across diverse sectors in India.

The Indian Contract Act, 1872

In India, the legal framework regulating contracts is predominantly outlined in the Indian Contract Act of 1872. This comprehensive legislation lays down the principles and rules governing the formation, performance, and discharge of contracts, encompassing various elements essential for a valid contract. Certain key features of this Act are as hereunder:-

Definition of Proposal and Promise

Section 2(a) of the Act defines that a ‘proposal’ is considered to be made when an individual signifies to another his willingness to do or to abstain from doing anything in order to get the assent of the other individual to doing or not doing such act.

Further, when a proposal is accepted, it becomes a ‘promise’. Acceptance is said to take place when the person to whom the proposal is made signifies his assent. Section 7 states that acceptance is required to be absolute, unqualified and expressed in a usual and reasonable manner. Section 9 states that the promise may be express or implied based on whether the proposal or acceptance of the promise is made in words or otherwise than in words. Furthermore, the act or abstinence, as mentioned hereinabove, is called consideration for the promise.

Definition of Agreement and Contract

Section 2 also defines that every promise and every set of promises that form consideration for each other is called an agreement and every agreement that is enforceable by law is called a contract. Thus, the enforceability of a contract is one of its most important features.

Essentials of a Contract

Section 10 of the Indian Contracts Act states that an agreement is a contract when:-

it is made by parties having the capacity to contract- the parties must not be minors, of unsound mind or disqualified from contracting by any law
there is free consent of the parties- ‘Consent’ means the parties must agree upon the same thing in the same sense, and ‘free consent’ means there must be no coercion, undue influence, fraud, misrepresentation, or mistake
there is a lawful consideration and a lawful object- the consideration or object of the contract must not be forbidden by law / of a nature that defeats the provisions of any law / fraudulent / one that involves or implies injury to someone’s life or property / the court regards it as immoral or opposed to public policy
the contract is not void as per the law – the contract must not be partly unlawful / without any consideration / involving restraint of someone’s marriage, trade or any legal proceedings / having or capable of being uncertain / a wager

Contingent Contract

Chapter III lays down provisions relating to contingent contracts. Section 31 defines it as a contract to do or not to do something, in case some event that is collateral to such a contract does or does not happen. Moreover, Section 32 provides that a contingent contract cannot be enforced by law unless and until the event mentioned in the contract has happened.

Obligation to perform and Effect of refusal to perform

Section 37 of the Act provides that the contractual parties are obligated to perform or offer to perform their respective promises, except when such performance is waived or excused as per the provisions outlined in this Act or any other legal statute. Further, Section 39 provides that the promisee may put an end to a contract where any party to the contract has refused to perform or has disabled himself from performing his promise in its entirety. However, it will not apply to a case where the promisee has shown his acquiescence in its continuance by words or by conduct.

Time is the essence of the Contract

It is important to note that, as per Section 50, the performance of a promise is to be made in a manner and at a time as the promisee prescribes or sanctions. Nevertheless, Section 46 provides that the time within which the promise must be performed is not specified in any contract; it must be performed within a reasonable time (actually, a question of fact). But in a case where the intention of the parties was that time should be of the essence of the contract and any party fails to do a specified thing at or before the time as specified in the contract, then in such a case, the contract or the extent to which it is not performed becomes voidable at the option of the promisee (Section 55).

Performance of reciprocal promises

Section 51 states that when a contract consists of reciprocal promises that are required to be performed simultaneously, then the promisor need not perform his part of the promise unless the promisee is ready and willing to perform the reciprocal promise on his part. Section 52 further provides that if an order of performance of the respective promises is specified in the contract, then the promise must be performed in the order as specified. Otherwise, it may be performed in the manner the nature of the transaction generally requires.

Damages for Breach of Contract

Chapter VI of the Act provides for the consequences relating to breach of a contract due to non-performance of the acts as specified in the contract. It must be noted that the Act nowhere defines the word ‘breach’ but it does provide for damages in case of a breach. It provides that the party who suffers a breach of the contract must be compensated for the loss or damage arising out of such breach. While Section 73 provides for unliquidated damages, Section 74 provides for liquidated damages, or the damages that are specified in the contract itself.

Indemnity, Guarantee, Bailment, and Agency

The Indian Contracts Act also lays down detailed provisions with respect to indemnity contracts (where a party promises to indemnify the other for any loss caused to him by the acts of the promisor or of any other person), a contract of guarantee (a contract to perform the promise or to discharge the liability of a third person in case of his default), bailment (delivery of goods by a person to another for some purpose and to recover such goods when the specified purpose has been accomplished) and agency (doing any act on behalf of some other person) in various different Chapters.

The Specific Relief Act, 1963

This Act provides remedies for breach of contract and other civil wrongs through the means of specific performance, injunctions, and other equitable remedies. It ensures that parties adhere to their contractual obligations and provides legal recourse in case of a breach.

The Sale of Goods Act, 1930

The Sale of Goods Act, 1930, governs contracts relating to the sale and purchase of goods. It lays down rules regarding the transfer of ownership, warranties, conditions, and other essential aspects involved in the sale of goods. This Act is crucial in regulating commercial transactions involving the exchange of tangible goods.

The Partnership Act, 1932

For contracts related to partnerships, the Partnership Act, 1932, is applicable. It defines the rights, duties, and liabilities of partners and outlines the procedures for the formation, operation, and dissolution of partnerships. This Act ensures the smooth functioning of business relationships among partners.

The Arbitration and Conciliation Act, 1996

In cases where disputes arise in contractual matters, the Arbitration and Conciliation Act, 1996, provides a framework for alternative dispute resolution through the means of arbitration. It facilitates the resolution of disputes outside of traditional court proceedings, offering a faster and more flexible means of settling contractual disagreements.

The Competition Act, 2002

While not solely focused on contracts, the Competition Act, 2002 regulates anti-competitive agreements, abuse of dominance, and combinations (mergers and acquisitions) in the market. It impacts contracts by ensuring fair competition and prohibiting agreements that could lead to adverse effects on competition.

What is a unilateral contract

A unilateral contract is a legally enforceable agreement whereby one party (called “the offeror”) makes a promise in exchange for the performance of a specific act by the other party (called “the offeree”).

For example, if X tells Y, “I will give you Rs. 100 if you go to Delhi,” Y does the same. Can we say that it is a contract? It is clear that X is not asking Y for Y’s promise to go to Delhi. What he wants from Y is the act of going to Delhi. When Y has gone to the specified place, there is a contract, and then X is bound to pay Rs 100 to Y. In that instance, there is a unilateral contract between X and Y.

Thus, when an act is wanted in return for a promise, a unilateral contract is created when the act is done. Clearly, only one party is bound. As in the above example, Y is not bound to go to Delhi but X is bound to pay Rs. 100 if Y does so.

In Morton v. Burn (1837) 7 A.&E. 19, Patteson J observed that if a person says to another person that if he furnishes some goods to a third party, he will guarantee the payment and by this, the person to whom the statement is made is not bound to furnish the goods, but if he does furnish in pursuance of the contract, the promisor may be sued on the guaranty.

The concept of unilateral contract can also be well understood in the case of Patton’s Executors v. Hassinger, 19 P. F. Smith 311. In this case, a man became ill while working for the plaintiff and was thus nursed and taken care of by him. Knowing about it, the father of the ill person declared that whoever took care of his son should be well paid. These words were related to the plaintiff, who continued taking care of his son until his death and subsequently called on the father for compensation. Though the father admitted his liability, he said that he would pay as soon as he had the means. A suit was brought against the father and it was held that as the plaintiff had rendered the stipulated service, he was entitled to recover, although he had not announced his intention to the defendant or declared his willingness to accept and act under the promise. In this case, Thompson, C. J., observed that compliance with a proposition is the most significant proof of acceptance, and since the promise was not to pay the son’s debt but an independent undertaking, it did not come within the statute of fraud or was required to be in writing. Thus, it can be established that one who promises to reward another person for doing an act or rendering service cannot withhold the stipulated compensation on the ground that the promisee did not give the reciprocal promise, which was not asked for, and remained free to do as he thought proper.

In another case of Train v. Gold 5 Pick. 380, it was observed that in these types of contracts, until the performance of the condition, there is no consideration and the promise is nudum pactum. However, on the performance of the condition by the promisee, it is clothed with a valid consideration that relates back to the promise, and it then becomes obligatory.

In fact, as the name suggests, a unilateral contract is a one-sided promise. Unlike a bilateral contract where mutual promises are exchanged by the parties involved, a unilateral contract is fulfilled by way of performance rather than a promise in return, and it is legally binding only upon the party that commits to an action.

In Offord v. Davies (1862), 142 E.R. 1336, the Court of Common Pleas correctly applied the doctrine of unilateral contracts. In this case, the defendants agreed jointly and severally to guarantee the due payments of all the BoEs (Bills of Exchange) for 12 months which the plaintiff might discount for a third party. The said offer has a series of unilateral contracts and each act of discounting was to be operated as a separate transaction. However, before certain bills were discounted, the defendants withdrew their offer. The court in this case held that they were within their rights in doing so. Erle, C. J., said that before it ripens into a contract, either party may withdraw and so put an end to the matter. Thus, if A says to B, “I’ll give you $500 if you build a carriage for me,” A has the right to withdraw until the carriage is built.

Elements of a unilateral contract

Apart from the common essentials of a contract, as mentioned earlier, there are certain distinctive elements of a unilateral contract:-

Performance-based

Unlike the differentiating factor in bilateral contracts, where a reciprocal promise is made, a unilateral contract is typically fulfilled by the performance of a specific act or duty and not by making a return promise. For example, if someone makes an offer to reward a person who finds a lost pet, then the person is bound by his offer to pay a reward only when someone actually finds the pet and comes to him to return the pet.

No obligation for acceptance

Any offeree need not inform the offeror of their intention to fulfill the condition conveyed in the offer. They can simply go on to act on it and then inform the offeror. For instance, in the above example, no one needs to come to notify the owner of the lost pet before leaving to find the pet.

Irrevocability once the performance starts

Generally, in unilateral contracts, the offeror cannot revoke the offer once the offeree starts performing the requested action. The revocability of unilateral contracts has been discussed in detail in the later part of this article.

Clear terms

The terms of the offer must be unambiguous and unequivocal in their words or expression so that the offeree is well informed about the performance necessary in order to fulfill the contract. This is to be taken care of because, in the new era, unilateral offers come with a long list of criteria that must be fulfilled in order to be eligible for the payment of a reward for the same. Any unfulfilled action or any action in an unwanted manner other than the way it is expressed in the offer might lead the offeree to lose the reward.

A few examples of unilateral contracts

Reward contracts

These are some of the prime examples of unilateral contracts. Offerers use unilateral contracts to make optional or broad requests in an open economy. In a reward contract, someone (the offeror) promises to provide something of value (the reward) in exchange for a particular act or performance by another party (the offeree). Some instances of these types of offers could be a poster for someone’s lost pet, offering a cash prize to the winner of a marathon, etc. These open requests are common in our daily lives. They are conveyed through distributing printed flyers in the neighbourhood, pasting posters in the nearby targeted areas or even online nowadays. The promise is made to the world at large, and anyone who accomplishes the task can claim the reward.

Another example could be a criminal case, where the government may offer a reward to any person who provides important information about a wanted criminal or about the case itself. Then, the reward can be given to one or more people who meet the criteria specified in the offer.

Insurance contracts

Most insurance agreements typically exhibit the characteristics of unilateral contracts. To define, an insurance policy is a legal agreement between an insurance company (called ‘the insurer’) and an individual or entity (‘the insured’) in which the insured pays premiums to the insurer in exchange for a promise of financial protection against specific risks. These are common for situations such as house fire, car accidents, etc.

For example, person X has taken home insurance from an insurance company. Now X performs on it by paying premiums and the company promises to pay him a certain amount of money if something happens to his home. However, if there is no mishap in which X suffers loss or damage to his house, the insurer doesn’t have to pay. This means that the agreements involved in the insurance policies are potentially one-sided, making them unilateral contracts rather than bilateral ones.

Promotions and offers

Entities use unilateral contracts while doing promotional activities. For example, by offering a free product to the first 100 customers or a bonus to employees who can meet specific targets, etc., the companies create unilateral contracts.

‘Pay upon completion’ jobs

Sometimes, there are open offers in the way, such as promising a certain amount related to a request for completing a task or labour, offering to pay for tutoring someone for exams, etc. Thus, they are in the form of work arrangements that are set up where the payment of a specified amount is made upon completion of a job. These can be seen as unilateral contracts because they are only optional but not obligatory for the worker to complete the job and claim the specified amount afterwards.

Advantages of a unilateral contract

Here are some advantages which highlight why a unilateral contract is preferred over any other type of contract in today’s era:-

Simplicity

The most important feature is that unilateral contracts are straightforward. They involve one party making an offer or promise that only requires the other party’s performance for acceptance. This simplicity often leads to ease of understanding and reduces the potential for misinterpretation or disputes. Given their convenience, unilateral contracts are an effective way to publicise a business activity.

Convenience

Unilateral contracts are a convenient way to advertise rewards or put out an open request to receive help from others. They don’t automatically require those receiving the offer to perform an obligation under the contract. Thus, it makes the offer more attractive for the potential offerees and enables the offer to be extended to a larger group of people.

Flexibility

The party making the offer in a unilateral contract retains control until the act is performed. This allows flexibility in defining the terms and conditions, enabling adjustments or revocation of the offer until performance occurs.

Risk management

For the offeror in a unilateral contract, there’s a minimised risk until the performance is completed. This is advantageous when there is uncertainty about the other party’s ability or willingness to fulfil the act. The offeror only incurs obligations once the offeree performs the act as requested.

Incentivizing performance

A unilateral type of contract can motivate action. By offering a reward or benefit upon completion of a specified act, individuals or entities are encouraged to take initiative and fulfil the conditions in order to gain the promised benefit.

Cost-efficiency

These contracts can be cost-effective, especially in scenarios where the act’s completion is uncertain. The offeror avoids the expense or commitment until the desired action is carried out.

Clear acceptance criteria

Unilateral contracts have clear criteria for acceptance—the completion of the specified act. This eliminates ambiguity regarding when the contract becomes binding and enforceable.

Speed

Unilateral contracts can lead to quicker agreements. Once the offeree performs the required act, the contract is formed, and the offeror’s obligation is triggered. This streamlined process can be advantageous in time-sensitive situations.

Encourages innovation and creativity

In certain contexts, like contests or competitions, unilateral contracts can promote creativity and innovation. Participants can be incentivized to showcase their skills or ideas in exchange for a reward, fostering a competitive and inventive environment.

Disadvantages of a unilateral contract

While unilateral contracts offer several advantages, they also come with certain drawbacks. Understanding these disadvantages helps in evaluating the suitability of unilateral contracts for specific situations, as they might not always be the most appropriate or fair option, especially in cases requiring mutual obligations or long-term commitments.

One-sided nature

Unilateral contracts can create an imbalance in obligations. The party making the offer (the offeror) holds most of the control and isn’t bound until the offeree performs the requested act. This can lead to potential exploitation or unequal bargaining power.

Potential for unilateral revocation

Until the offeree completes the act, the offeror can revoke or cancel the offer at any time. This uncertainty might lead the offeree to invest time or resources into an action that could end up being unrewarded if the offer is withdrawn.

Reliance on offeree’s performance

The offeror relies entirely on the offeree to initiate the contract. If the offeree chooses not to perform the required act, the offeror cannot enforce the contract and may miss out on the intended benefits.

Difficulty in establishing terms

Ensuring clarity in the terms and conditions of a unilateral contract is crucial. Ambiguity in defining the act to be performed or the conditions for completion can lead to misunderstandings or disagreements about whether the obligation has been fulfilled.

Limited mutual agreement

Unlike bilateral contracts, where both parties exchange promises, unilateral contracts lack mutual agreement until performance occurs. This might lead to a lack of trust or commitment between the parties involved.

Potential for disputes

Ambiguity or differing interpretations regarding what constitutes the completion of the act can lead to disputes. Determining whether the offeree’s performance fulfils the conditions of the contract may become a point of contention.

Inadequate consideration for offeree

In some cases, the consideration or reward offered might not be perceived as sufficient to motivate the offeree to perform the required act, leading to a lack of interest or participation.

Limited long-term relationships

This could be one of the important disadvantages of unilateral contracts, as they often lack the continuity and ongoing commitment seen in some bilateral agreements. This might limit the potential for fostering long-term relationships between parties.

Unilateral contracts vs. bilateral contracts

Bilateral contracts

In unilateral contracts, on one side we find just an act but a promise on the other side. However, in bilateral contracts, one party barters away his willingness for some act in return for an exchange of promises or assurances from the other party and both parties are bound from the moment their promises are exchanged. Thus, if A offers to sell certain articles to B and names the price, the contract is not binding until B agrees to buy for the stipulated price. It is to signify that until the purchaser is bound, there is no consideration for the promise.

Acceptance within time is an important factor in these types of contracts. In Stone v. Harmon (1884), 31 Minn. 512, it was held that the offer should be accepted while it is still standing and in force, i.e., within a reasonable time, or before the time as fixed by the party who makes the offer has expired. In Elizabeth Maclay v. John Harvey 1878 WL 10198 (Ill.), an acceptance that was mailed on the fourth day after the receipt of the offer was held to be out of time, although the letter was sent at once to the post office by a messenger and the delay was due to his neglect.

In Boston and Maine Railroad Company v. Bartlett (1903) 3 Cush. 224, the defendant gave thirty days to the complainant for consideration and the offer was accepted before the time went by. The court said that the promise, when originally made, was without consideration and did not constitute such a contract. It was a mere offer and it could have been withdrawn at any time before acceptance. However, when the defendants gave their assent to it, the minds of the parties were met, and it was too late for either party to withdraw without the consent of the other party.

Further, mutual assent is another important feature of bilateral contracts. A mutual assent where a justifiable mistake exists with respect to the person with whom a party is contracting is invalid. For example, if A intends to contract with B and justifiably supposes that he is doing so, but it later turns out that the party with whom he is actually contracting is C, there is no contract. Similar facts were involved in the case of Stoddard v. Ham (1880), 129 Mass. 383, in which the Court held that the plaintiff’s mistake was not reasonable as a matter of fact and thus that there was a contract with C. But there would clearly have been no contract if the situation had justified the mistake, because the plaintiffs had no intention of contracting with C, i.e., with the personality before them, but with a person who was not before them.

Difference between unilateral and bilateral contracts

In an interesting case of Los Angeles Traction Co. v. Wilshire (1902), 135 Cal. 654, the defendants agreed to pay the plaintiff $2000 after the plaintiff completed the street railway. Plaintiff did some work on the railway and thereafter, the defendants revoked their offer before the completion of the railway. It was conceded that the offer contemplated a unilateral contract. In this case, the Supreme Court of California held that when the plaintiff had paid money and begun work relying on the offer, the contract became bilateral and thus, the defendants were held liable. Court ruled that an offer that, if accepted, would constitute a unilateral contract becomes a bilateral contract when there is part performance of the required act.

The main difference between both types of contracts may be understood by the table herein below:-

S. No.	Parameters	Unilateral Contracts	Bilateral Contracts
1.	Definition	One party makes a promise, and the contract is formed when the other party performs a specified act.	Both parties exchange promises, creating mutual obligations that each must fulfil.
2.	Parties making commitment/ promise	Only one party makes a promise or agrees to do something to induce an act from another	At least two parties make a promise to each other
3.	Acceptance	Acceptance is signified through the performance of the specified act by the offeree	Acceptance is signified when the parties signify their assent to the contract
3.	Time frame	Promisor specifies the time frame of the offer	Both parties agree on the time frame in which each party has to perform their obligations under the contract
4.	Consideration	Provided by the offeror	Mutual consideration is exchanged by both parties
5.	Legally bound	Only the party making the promise is legally bound when the offeree performs the act specified as per the offer	In bilateral contracts, both or all the parties signatory to the contract are legally bound
6.	Relationships	They are often transactional, minimal ongoing relationships	Can entail ongoing relationships and obligations
7.	Examples	Lost pet rewards, contests with a prize for performance, etc.	Sales contracts, leases, service agreements, etc.

Difference between unilateral and contingent contracts

As mentioned in the earlier part of this discussion, a contingent contract is a contract to do or not to do something in case some event that is collateral to such a contract does or does not happen. Provisions relating to contingent contracts are given in Chapter III of the 1872 Act.

S.No.	Parameters	Unilateral Contracts	Contingent Contracts
1.	Nature of Promise	Involves a promise in exchange for an act	Involves a promise dependent on a specific event
2.	Performance Requirement	Performance is triggered only upon completion of the specified act	Performance is triggered by the occurrence of a specific event
3.	Acceptance	Performance of the act is considered acceptance	Acceptance is often through express agreement or implied conduct
4.	Revocation of Offer	The offer can generally be revoked before the performance begins	Revocation is limited once the contingent event is set in motion or the contract is accepted
5.	Example	Reward offers, where performance is finding a lost item	Insurance contracts, where payment depends on the occurrence of a specific event

Revocation of unilateral contracts

One of the main concerns with respect to unilateral contracts is whether a promise in return for an act can be revoked once the act has been commenced, although not completed. For instance, consider the first example taken in this article:- X tells Y, “I will give you Rs. 100 if you go to Delhi”. In this example, can the offer to pay Rs.100 be revoked once the person to whom it is directed is halfway to Delhi?

Firstly, there is no doubt that acceptance of a unilateral offer is signified when the performance is completed with respect to the act specified in the contract and thus, in unilateral contracts, the communication of acceptance is impliedly waived as held in cases like Carlill v. Carbolic Smoke Ball Co. [1893] IQ. B. 256 and Houston v. Williams (1921) 35 Cal. App. Dec. 470.

As per the general rule, an offer may be revoked at any moment before it matures into a contract by acceptance (Payne v. Cave (1789) 3 T.R.148). In the case of White Trucks Pty Ltd v. Riley (1948) 66 N.S.W.W.N. 101, the defendant placed an order for a bus on the order form of the plaintiff. On receipt of the order, the plaintiffs placed orders for materials with various firms. However, before the plaintiffs could proceed any further with the building of the bus, the defendant cancelled his order. In this case, the court held that there was a binding contract created once the plaintiffs had done the overt acts of ordering portions for the bus. It is important to note one provision in the contract in this case that the contract became binding once the plaintiffs signed their order form. While this had not been done, the Court considered that this was not the only way in which acceptance was contemplated. Had the plaintiffs signed the form, it would have been a simple bilateral contract; they had not done so, and thus the agreement was unilateral. This commencement of the act (i.e., ordering portions of the bus) was sufficient to create a binding contract, and the defendant was unable to revoke his original order.

Nevertheless, the fact that the performance of the act is an adequate indication of assent does not prevent the possibility that something less than a complete performance may also signify assent. In certain cases, the offeror would be unable to revoke his original promise when the performance has begun but has not been completed. For example, in the case of Roth v. Moeller (1921), 61 Cal. Dec. 444, the Court held that the person who makes an offer contemplating it a unilateral contract cannot revoke his offer when the partial performance of the offeree has caused some expense.

In the case of Great Northern Railway v. Witham (1873) L.R. 9C. P. 16, the plaintiff Great Northern advertised for tenders for the supply of iron for twelve months. The defendant Witham tendered to supply the iron required for the period at certain fixed prices and “in such quantities as the company’s store-keeper might order from time to time.” The plaintiff accepted the tender but eventually, Witham stopped supplying the iron. A suit for breach of contract was filed by the plaintiff. The defendant in this case alleged that the agreement was not an enforceable contract as there was no consideration by the plaintiff. The court in this case held that there was a complete contract as the commencement of the act at the request of the other party is a sufficient consideration for the promise. Thus, it would be wrong to countenance the notion that a man who tenders for the supply of goods in this way is not bound to deliver them when an order is given.

Thus, it can be said that when the offeree’s performance causes him no expense or hardship, a revocation of the offer can be allowed at any time before the complete performance. However, when the performance requires expenditures before its completion, the courts have been reluctant to allow the revocation after part-performance by the offeree due to the fear of loss or damage to him. Hence, when the offer is revoked after part-performance, the offeree can recover the reasonable value of the services rendered to the offeror. Even generally, it can be said that once the performance of the act has begun, the offer becomes irrevocable and this is one of the most important features of a unilateral contract.

Tips for drafting a unilateral contract

Executing a unilateral contract could seem easy, but it is only possible when it is drafted in a conducive manner. Some things are to be considered while drafting a unilateral contract:-

Ensuring the fulfilment of basic elements of a contract

As mentioned earlier, Section 10 of the Indian Contracts Act states the essential ingredients for an agreement to be a contract. Thus, it must be ensured that a unilateral contract also fulfils such conditions to make it legally enforceable. The conditions are reiterated briefly:-

it is made by parties having the capacity to contract
there is free consent of the parties
there is a lawful consideration and a lawful object
the contract is not void as per the law

Clearly defining the promise

It is quintessential to clearly frame out the offer. Any ambiguity with respect to the extent of completion of the offer must be avoided. There must not be any scope for interpretation by the person who is going to accept the offer. This is to ensure that the offeror doesn’t face any problems while fulfilling his part of the promise after the offeree has completed the act.

Disclosing everything

The offeror must disclose everything concerning the offer to make it a good unilateral contract. It is to ensure that potential offerees know about the existence of such an offer. That’s why the offer must be communicated well in general parlance or to the intended offeree.

Understanding acceptance through performance

The acceptance of the offer can be understood only when the offeree acts upon it. And thus, the contract becomes legally binding on the offeror for him to complete his part of the promise.

Conclusion

Unilateral contracts present a distinctive approach to agreements, relying on the performance of a specified act by one party to bind the other. Their simplicity, flexibility, and ability to incentivize an action make them valuable in the present era. However, certain disadvantages, for example, their one-sided nature, potential for revocation, reliance on the offeree’s performance, etc., introduce reluctance to be involved in them. Thus, understanding their advantages and drawbacks is crucial in determining their suitability for specific circumstances. Choosing a particular type of contract and drafting it effectively is very important in the present era to prevent any unwanted ambiguities or disputes in the future. This will encourage ease of doing business and will ultimately contribute to the growth and development of the country’s economy.