Bilateral Contract
A Bilateral Contract is a legally binding agreement between two or more contract parties in which each party makes reciprocal promises to the other.
- AKA: Reciprocal Agreement, Two-Party Contract.
- Context:
- It requires each contracting party to perform an obligation or exchange something of value.
- It can (typically) involve both parties making commitments to perform specific actions or provide goods/services, as seen in employment contracts, sales agreements, or leases.
- It can (often) function in common business scenarios where both sides are obligated, like a buyer promising to pay for goods while a seller promises to deliver them.
- It can range from a simple promise-for-promise arrangement (e.g., buying a car) to more complex agreements such as multinational trade deals.
- It can include legal remedies for breaches, such as monetary damages or specific performance, ensuring enforceability in court.
- It can cover sectors like real estate (sales of property) or employment (exchange of work for wages).
- ...
- Example(s):
- A real estate transaction, where one party agrees to sell a house and the other promises to pay a specific price. Both parties are bound to their promises, with the seller obligated to transfer ownership and the buyer to pay the agreed amount.
- An employment contract, where an employee agrees to work under specific terms, and the employer commits to paying a salary in exchange.
- ...
- Counter-Example(s):
- Unilateral Contract, where only one party makes a promise that is contingent on the other party’s performance (e.g., a reward for a lost pet, where only the person offering the reward is bound to pay).
- Gift Agreement,
- Letter of Intent.
- See: Contract Offer and Acceptance, Consideration, Mutual Assent, Conditional Contract, Employment Agreement, Sales Contract, Contract Law.
References
2024a
- (Accountend, 2024) ⇒ "Understanding Bilateral Contracts: Definition, Examples, and Applications". In: Accountend. Retrieved: 2024-10-16.
- QUOTE: A Bilateral Contract is a legally binding agreement between two parties where each party makes a promise to the other. Unlike unilateral contracts, which involve a promise for an act, bilateral contracts entail reciprocal promises, where both parties are obligated to perform or refrain from certain actions.
2024b
- (ChatGPT-OpenAI, 2024) ⇒ Prompt: Summarize the concept Bilateral Contract in 1- 2 paragraphs. ChatGPT (model:gpt-4o). Retrieved: 2024-10-16.
- QUOTE: A bilateral contract is a type of agreement in which both parties exchange mutual promises to perform certain acts or obligations. The essential characteristic of a bilateral contract is that the commitments or promises made by both parties serve as the consideration (or the motivating factor) for each party entering into the contract. This means that each party is both a promisor (making a promise) and a promisee (receiving a promise). A common example of a bilateral contract is a sales agreement where one party promises to deliver goods or services, and the other party promises to pay for those goods or services.
In bilateral contracts, the obligations arise at the moment the promises are exchanged, which means the contract is binding from that point forward. This is different from unilateral contracts, where only one party makes a promise and the other party accepts by performing an action. Bilateral contracts are prevalent in everyday transactions and underlie many business and legal dealings, including employment contracts, real estate purchases, and service agreements. Essentially, they facilitate predictable business relationships by clearly defining the duties and expectations of each party involved.
- QUOTE: A bilateral contract is a type of agreement in which both parties exchange mutual promises to perform certain acts or obligations. The essential characteristic of a bilateral contract is that the commitments or promises made by both parties serve as the consideration (or the motivating factor) for each party entering into the contract. This means that each party is both a promisor (making a promise) and a promisee (receiving a promise). A common example of a bilateral contract is a sales agreement where one party promises to deliver goods or services, and the other party promises to pay for those goods or services.
2024c
- (Hayes, 2024) ⇒ Adam Hayes, David Kindness, and Suzanne Kvilhaug (2024). "Bilateral Contract: Definition, How It Works, and Example". In: Investopedia, Laws & Regulations -- Investing Agreements. Updated April 22, 2024.
- QUOTE: A bilateral contract is an agreement between two parties in which each side agrees to fulfill their side of the bargain. Typically, bilateral contracts involve an equal obligation or consideration from the offeror and the offeree, although this need not always be the case.
In more complex situations, such as multinational trade negotiations, a bilateral contract can be a so-called "side deal". That is, both parties are involved in the general negotiations but may also see the need for a separate contract relevant only to their shared interests.
- QUOTE: A bilateral contract is an agreement between two parties in which each side agrees to fulfill their side of the bargain. Typically, bilateral contracts involve an equal obligation or consideration from the offeror and the offeree, although this need not always be the case.
2020
- (LII/Wex, 2020) ⇒ Wex Definitions Team (2020). "bilateral contract". In: Wex Definitions, Legal Information Institute (LII) -- Cornell Law School.
- QUOTE: A bilateral contract is a contract in which both contracting partys exchange promises to perform. One party’s promise serves as consideration for the promise of the other. As a result, each party is an obligor on that party’s own promise and an obligee on the other’s promise (compare: unilateral contract).
The most common types of bilateral contracts are business contracts such as sales contracts for which the buyer promises to pay the price and the seller promises to deliver the goods. In this example, the buyer and the seller obligate themselves reciprocally, so that the obligation to pay the price is correlative to the obligation to deliver the goods. Other examples of bilateral contracts include employment contracts, leases, and warranties.
- QUOTE: A bilateral contract is a contract in which both contracting partys exchange promises to perform. One party’s promise serves as consideration for the promise of the other. As a result, each party is an obligor on that party’s own promise and an obligee on the other’s promise (compare: unilateral contract).