Unilateral: Overview, definition and example
What does unilateral mean?
Unilateral refers to something involving only one side or party. In the context of contracts, a unilateral agreement is a deal where only one party makes a promise or commitment. The other party is not obligated to perform unless they choose to, and their performance triggers the obligation of the first party.
For example, a company might offer a $1,000 reward to anyone who finds and returns its lost laptop. This is a unilateral agreement because only the company has made a promise (the reward), and no one is obligated to act unless they choose to find and return the laptop.
Why is unilateral important?
Unilateral agreements are important because they allow one party to set conditions without requiring the other party to commit upfront. They are common in offers, contests, and rewards where the outcome depends on someone taking specific action. These agreements protect the offering party by clearly outlining what they will do if the conditions are met.
For the other party, unilateral agreements provide flexibility since they’re not bound to perform unless they want to claim the benefit or reward.
Understanding unilateral through an example
Imagine an e-commerce company launches a promotional offer: "Spend $500 or more in one transaction and receive a $50 gift card." This is a unilateral agreement. The company promises the gift card, but only if a customer chooses to meet the condition of spending $500. Customers are under no obligation to make the purchase, but if they do, the company must honor the reward.
In another example, a landlord might promise to waive one month’s rent if a tenant refers a new tenant who signs a lease. The landlord’s promise only becomes binding if the current tenant successfully refers someone.
An example of a unilateral clause
Here’s how a unilateral clause might look in a contract:
“The Company agrees to pay a reward of $1,000 to any individual who provides information leading to the recovery of stolen property, provided that such information is submitted within 30 days of this notice.”
Conclusion
Unilateral agreements involve a promise made by one party that becomes binding only if the other party takes specific action. They are often used in offers, rewards, and promotions, providing flexibility for the second party while ensuring clear conditions for the first party’s obligations.
By clearly defining terms in unilateral agreements, businesses can avoid misunderstandings, create fair conditions, and encourage desired actions without overcommitting. They’re a straightforward and practical tool for incentivizing behavior or achieving specific outcomes.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.