Bilateral contract

Bilateral Contract

A bilateral contract is a type of contract that involves mutual exchange of promises between two parties. Each party is both a promisor and a promisee, and each party has an obligation to the other. This is in contrast to a unilateral contract, where only one party makes a promise to perform upon the occurrence of a specified act by the other party.

Definition

In a bilateral contract, both parties are legally bound to fulfill their respective promises. The promises may be performed at the same time, or one may be performed before the other. The key element of a bilateral contract is that there is a promise made by each party to the other.

Formation

The formation of a bilateral contract requires the following elements:

• Offer and acceptance: One party must make an offer, and the other party must accept it.
• Consideration: There must be something of value exchanged between the parties.
• Mutual assent: Both parties must agree to the terms of the contract.
• Legality: The contract must not involve illegal activities.

Examples

Common examples of bilateral contracts include employment contracts, sales contracts, and real estate contracts. In each of these examples, both parties make promises: the employer promises to pay the employee, who promises to work; the seller promises to deliver the goods, and the buyer promises to pay for them; the seller of real estate promises to transfer ownership, and the buyer promises to pay the purchase price.

Enforcement

If one party fails to fulfill their promise, the other party may seek legal remedy for breach of contract. The remedies may include damages, specific performance, or rescission of the contract.

See also

• Contract law
• Unilateral contract
• Quasi-contract