Bilateral contracts

Bilateral contracts. A Bilateral Contract is also one of the classifications of contract. It is a contract between two parties. Most times, this type of contract consists of exchange of promises. The offeror promising to do something in exchange for the offeree promising to do something in return.

Furthermore, contracts is one which involves two parties. It is a contract whereby an offer (the party who purposes the terms of the contract) communicates his offer to an offeree and the offeree in response accepts the offer. In bilateral contracts, the two parties are mutually bound.

A bilateral contract consists of exchange of promises; the offeror promising to do something in exchange for the offeree promising to do something else in return.

However, although a contract has come into existence at this stage, all we have is a mere exchange of promises. There is as yet no performance by either party. This type of contract is called a bilateral contract, and the consideration (the mutual promises) is referred to as executory consideration.

Furthermore, if a consideration consists of actual performance in return for a promise, it is called a unilateral contract and performance is referred to as executed consideration. See the famous Queens Bench case of Carlill V. Carbolic Smoke Ball Co. (1893) 1 Q.B 256; the above case is a good example of a unilateral contract.

Facts of the case were as follows:

The defendant company advertised in the newspapers to pay £100 to anyone who used its medical preparation called smoke ball for two weeks, and nevertheless contracted influenza.

The plaintiff Carlill bought one smoke ball and used it as specified, and still caught influenza. The company was held liable to the plaintiff for the £100. The court held that by the terms of the contract, there was no need to notify the defendant company of the fact of acceptance.

This had been waived by the company, and acceptance took the form of performance, in this case, using the smoke ball for two weeks. Performance, in this case, also constituted the consideration.

Unilateral contracts are also well-illustrated by the reward cases; cases in which the offeror or promisor offers a reward for information leading to the arrest and conviction of criminals, or leading to the location of a lost loved one, or a reward for finding and returning of a lost object of great value to the offeror, like a favorite dog or jewellery or even money.
In such situations, the offeree “accepts” by actually providing the information or locating the missing person or object and re-uniting it with the offeror. The act of finding or giving the relevant information constitutes the consideration furnished by the offeree.

Furthermore, it should be noted that only one party, the offeror or promisor, is under a contractual obligation at any relevant period in a unilateral contract.

Bilateral contracts

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