Question

Define a bilateral contract and a unilateral contract,  and give an example of each. In your example of a bilateral contract, identify and describe the four elements that are necessary for a contract to exist.

Answer 1

•     In an agreement when each party agrees to fulfill her obligation we term it as bilateral agreement. In other words, there are reciprocal obligations in a bilateral agreement. Example of a bilateral agreement is any sales agreement, where a buyer agrees to pay to the seller definite amount in exchange of the tile and the seller agrees to transfer the title for the said amount. In a bilateral agreement, both the parties to the agreement are equally involved.
•     In an agreement when one party is obliged to do his obligation only on the performance of the other party by completing a definite task. The said agreement is termed as a unilateral agreement whereby only the offeror has an obligation. Example of a unilateral agreement is if someone makes an advertisement to pay a specified amount to any person upon responding to the advertisement while fulfilling the conditions of the agreement. In this case when the respondent has done his task the one who has made the advertisement is obliged to pay the amount specified.                                                                                                The four elements that are necessary for a contract to exist.
•     Offer: A promise made to do something or avoid doing something made in return for a return promise to do the same. An offer is a promise in exchange for an act done by the offeree.
•     Acceptance: when someone gives assent to the terms of an offer however in the mode specified by the offer. In other words, in order to make a contract binding, the acceptance must be relayed in a prescribed manner.
•     Consideration: When one party provides something of worth so that it induces the other party to enter the agreement. According to it, there must be something exchanged among the parties which have a value.
•     Mutuality of Obligation: According to this each and every party must be bound to act upon their obligations. However, the lack of the same will treat it as no party was bound to do her obligation.