Definition of Bilateral Contract§
A bilateral contract is a type of agreement where both parties involved make mutual promises to do or refrain from doing something. Each party’s promise serves as consideration for the contract, meaning each side is obligated to fulfill their respective commitments as specified. This mutuality sets bilateral contracts apart from unilateral contracts, where only one party makes a promise contingent upon the performance of an act by another.
Examples of Bilateral Contracts§
-
Employment Contracts: The employer promises to pay a salary, and the employee commits to performing specified duties.
-
Sales Agreements: A seller agrees to deliver goods, and the buyer agrees to pay for them.
-
Service Contracts: A company promises to provide services, and the client promises to pay for those services.
Frequently Asked Questions (FAQs)§
What distinguishes a bilateral contract from a unilateral contract?§
A bilateral contract involves reciprocal promises between two parties, creating obligations for both. In contrast, a unilateral contract consists of one party making a promise that is accepted through the performance of an act by the other party.
Can a bilateral contract be revoked?§
Typically, a bilateral contract cannot be revoked unilaterally by one party. Both parties must mutually agree to terminate the contract, or one party may seek termination through legal means if the other party breaches the contract.
What happens if one party fails to fulfill their promise in a bilateral contract?§
Failure by one party to fulfill their obligations constitutes a breach of the contract. The non-breaching party may be entitled to legal remedies, including damages, specific performance, or cancellation of the contract.
Are verbal bilateral contracts enforceable?§
Verbal bilateral contracts can be enforceable; however, some contracts must be in writing to be legally binding, such as real estate transactions. The statute of frauds outlines which types of contracts require written documentation.
Do bilateral contracts require consideration?§
Yes, bilateral contracts require consideration, which is an exchange of value between the parties. Each party’s promise acts as consideration for the other party’s promise.
How can a bilateral contract be formed?§
A bilateral contract is formed when one party makes an offer that the other party accepts, and both parties exchange consideration, thus manifesting mutual assent to the agreement’s terms.
Related Terms§
- Unilateral Contract: A contract in which one party makes a promise contingent on the other party’s performing a specific act.
- Consideration: A benefit or detriment exchanged between parties in a contract, necessary to form a legally binding agreement.
- Breach of Contract: The failure to perform any term of a contract, written or oral, without a legitimate legal excuse.
Online References§
Suggested Books for Further Studies§
- “Understanding Contract Law” by Jeffrey Ferriell
- “Principles of Contract Law” by Robert A. Hillman
- “The Law of Contracts and the Uniform Commercial Code” by Pamela Tepper
Fundamentals of Bilateral Contract: Business Law Basics Quiz§
Thank you for embarking on this journey through our comprehensive business law lexicon and tackling our challenging quiz questions. Keep striving for excellence in your legal knowledge!
