A bilateral contract is a written agreement between two parties that involves the exchange of promises. Consideration is necessary for a legal agreement, and both parties must agree to the promises contained in the document. The distinction between bilateral and unilateral contracts can be difficult to recognize. Legal agreements involving long-term products or services may have disputed conversion points. It is advisable to consult a lawyer before signing any contract to avoid future disagreements.
A bilateral contract is an agreement, usually in writing, that involves the exchange of promises between two parties who agree to do something at a future date or time. For example, if Party A agrees to give Party B a basket of apples in exchange for a basket of oranges, a bilateral contract is formed when both parties formally agree. This is known as consideration, a necessary component of such a legal agreement. The party that keeps a promise is the promissor and the party that receives delivery of the promise is the promisee.
The distinction between bilateral and unilateral contracts is sometimes not easily recognized by people who are not legal professionals. One-sided contracts are binding only on the promisor until a promissory agrees to fulfill the demands outlined in the promisor’s offer. The term “consideration” means the acceptance of an obligation which translates into the assumption of a promise according to the specifics of a contract. When a bilateral contract is signed, there is no consideration until both parties have agreed to the promises contained in the document. This differs from a one-sided contract where immediate consideration is provided only by the promisor.
If a promisor agrees to pay a specified amount of money for products, services, or a combination of the two, his agreement to compensate is his consideration. Only if a supplier of the products or services undertakes to accept the contractual payment conditions can it be affirmed that there is consideration on the part of the promissory party. Most courts would tend to rule that such an example would legally convert what was a unilateral contract into a bilateral contract. Other courts may not issue similar judgments due to the inconsistencies that can arise when trying to apply the concepts of unilateral and bilateral contracts.
Some legal agreements involve the supply of a product or services which may need to be rendered over long periods of time and perhaps in stages. For example, if a promisor agrees to compensate a promisor monetaryly for painting his car, the question of when the conversion from a unilateral to a bilateral contract occurred may be disputed. A court may determine that consideration was provided by both parties at the time the promissory agreed on the price. Another court may rule that there can be no real conversion until the painting is completed to the satisfaction of the promisor. If the promissor cannot be satisfied or declares dissatisfaction to evade contractual obligations, consideration should be given to treating the promissory fairly.
The above questions are just some of the legal questions that are usually asked about contracts. It is generally considered a good idea for both parties to familiarize themselves with the possible options they may have in the event of a breach of contract or dispute. Consulting with a lawyer before signing any contract can help avoid future disagreements.
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