Bilateral Contracts vs Unilateral Contracts: The difference? Real estate license exam questions.

Contracts are used personally and professionally. The two types of contracts are unilateral and bilateral. The difference between the two is in the number of parties involved. In a unilateral contract, only one party makes a promise, while in a bilateral contract two parties make promises. Today we are going to cover the full definitions of both and more. What is a Bilateral Contract? Definition: A bilateral contract is an agreement between two or more parties. Most business and personal contracts fall into this category. Example: Bilateral contracts are very common. You’ve probably took part in one within the last week. Every time you buy groceries, go to the doctors, or even subscribe to Netflix, you are taking part in a bilateral contract. Traditionally, when people discuss contracts they are talking about bilateral contracts. Someone promises a certain action to another party in response to another party’s action. It’s a two way street. What is a Unilateral Contract? Definition: A unilateral contract is a contract in which only one party makes a promise to perform an action. Example: An insurance contract or a reward contract are both examples of unilateral contracts. Unilateral contracts appear more often than you may think; one of the most common instances is a reward contract. Imagine you’ve lost your cat, Coco. You place an advertisement online offering a $250 reward to the person who returns Coco. By providing a reward, you’re offering a unilateral contract. Your promise to pay for anyone returning your cat is a single promise. You’re the only person who has taken any action in this contract because no one is specifically responsible for finding your cat, it’s completely optional. What’s the Difference Between Bilateral and Unilateral Contracts? The difference between bilateral and unilateral contracts is the number of parties promising an action. In a unilateral contract, only one party makes a promise, while in a bilateral contract two parties make promises.