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What is a “Unilateral Contract”?

Ordinarily a contract is defined as an agreement between two or more parties “which creates an obligation to do or not to do a particular thing. Its essentials are competent parties, subject matter, a legal consideration, mutuality of agreement and mutuality of obligations.” Black’s Law Dictionary 291-292 (5th Ed. West 1979).. The ordinary contract is generally known as a bi-lateral contract, meaning that both parties to the contract have mutually and expressly agreed to do or not do something. However, there is another type of contract – the unilateral contract.

Black’s further defines a unilateral contract as “one in which one party makes an express engagement or undertakes a performance, without receiving in return any express engagement or promise of performance from the other…. When the party to whom an engagement is made makes no express agreement on his part, the contract is called unilateral, even in cases where the law attaches certain obligations to his acceptance.” Id. at 295. As the California Supreme Court put it, “[i]n a unilateralcontract, there is only one promisor, who is under an enforceable legal duty. (1 Corbin on Contracts (1993) § 1.23, p. 87.) The promise is given in consideration of the promisee’s act or forbearance. As to the promisee, in general, any act or forbearance, including continuing to work in response to the unilateral promise, may constitute consideration for the promise. (1 Witkin, Summary of Cal. Law, supra, Contracts, § 213, p. 221; 2 Corbin on Contracts (1995) § 5.9, pp. 40-46; Rest.2d Contracts, §§ 71, 72; Civ. Code, § 1584.)” Asmus v. Pacific Bell (2000) 23 Cal.4th 1 , 96 Cal.Rptr.2d 179; 999 P.2d 71 [emphasis in original].

Some examples of the unilateral contract include, but are not limited to:

  • An employer’s no-layoff policy given to employees to gain the employees’ loyalty in return for a promise that the employer will not lay the employee off (see Asmus, )
  • A buyer’s offer to pay the price 30 days after delivery of goods in return for a seller’s delivery of the goods (see Contracts, Section 3.4, page 115, Farnsworth (2ndLittle, Brown and Company 1990)
  • A seller who promises to sell 100 apples for $100.00 for the buyer’s promise to pay $50.00 now and $50.00 in 30 days (see Id.)

To ensure your agreement will be enforceable in California, you will need the services of a rising star like Michael Leonard, Esq., named “Best of the Bar” by the San Diego Business Journal in 2016. You can arrange for a consultation with Mr. Leonard to discuss creating agreements for your business or  other business-related matters by visiting San Diego Corporate Law or by telephone at (858) 483-9200. He has the experience, knowledge and unique qualifications to ensure your agreements are enforceable in the California Courts.

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