What is unilateral contracts and bilateral contracts?

Finance ManagementBanking & FinanceGrowth & Empowerment

If an agreement has legal enforceability then those are called as Contracts. Contracts are categorized into executed and executory contract. In executed contract, parties involved in contract have performed their obligation and nothing is left. Whereas executory contract, obligations of parties are yet to complete. Unilateral contract and bilateral contracts comes under executory contract

As the name suggest in unilateral contracts obligation of party is due whereas in bilateral contracts obligations are both parties are due.

Unilateral contract

It is one side contract. One party already performed his part at the time of contract and only one party or remaining party in the contract has to perform their part.


Mr. X gives an advertisement in newspaper for his missing PET (details includes Photo, phone number). In that advertisement he stated that whoever finds his PET is rewarded (Rs. 20000/-). A person Mr. E finds Mr. X’s PET and handover to Mr. X and gets his rewards. In this case Mr. E performs his obligation and Mr. X needs to Pay to Mr. E

Bilateral contract

In this contract both parties are yet to perform their part while entering the contract.


Let’s say Ajay sells his flat to Vijay for Rs.30, 00,000/-. Vijay pays Rs.5, 00,000/- to Ajay to confirm the contract and rest will be paid in a week. Now Ajay transfers the possession to Vijay and sale deed after finial payment. In this case both parties are yet to complete their obligations.

The major differences between a unilateral contract and a bilateral contract are as follows −

Unilateral contractsBilateral contracts
One party will perform the obligation/promise.Both the parties commit to perform their concerned obligation/promise.
One promise.Mutual promise.
One party is legally bounded.Both parties are legally bounded.
One party is known as offeror and the other is called as offeree.Both parties are called as obligators and obligee respectively.
Not time bounded.Has time restriction.


In unilateral contract, one party makes an offer and the second party accepts the offer and fulfills the conditions whereas in the bilateral contract both parties promise each other to do something which is due.

Updated on 18-May-2022 10:14:19