Traditional contract law classifies contracts into bilateral and unilateral contracts. Bilateral contracts are those involving promises made by all parties, whereas unilateral contracts involve promises made by only one of the parties. This lesson explores the distinction between bilateral contracts (where both parties make promises) and unilateral ones (where only one party makes a promise) and the effect on the obligations of the parties resulting from the classification. This lesson ends with an analysis exercise on unilateral and bilateral contracts.
On completion of the lesson, the student will be able to:
1. Define "unilateral contract" and "bilateral contract."
2. Describe how an option contract is created when a promisor makes an offer to enter into a unilateral contract.
3. Give examples to show comprehension of the differences between 1) offers to be accepted by promise, 2) offers to be accepted by performance, and 3) offers to be accepted by either promise or performance.