Understanding Bilateral And Unilateral Contracts

Introduction to Contracts

Dsicuss about the Difference Between Unilateral Contract And Bilateral.

Generally, contracts are considered a part of taking care and maintaining the business. The contracts that are included consist of unilateral and bilateral. These two kinds deal with something where plenty of individuals deal with it on a regular basis even in certain situations where people does not have the knowledge of it. Firstly, a bilateral contract is regarded as the most simple and easy form of contract. It refers to a situation where an agreement is created between two individuals or more. Majority of the contracts are belong to the category of bilateral contracts. For instance, while purchasing any product, the element of promise is involved and the action to another party is response to that person will be treated to be a unilateral contract. On the other hand, unilateral contacts refer to those contracts where a single individual or a group alone undertakes the actions involved. In relation to the contracts, unilateral contracts usually allow only a single individual to make an agreement. Insurance contracts are treated to be as examples of unilateral contracts. An unilateral contract can be enforced if any agreement forms a legal obligation that is an enforceable contract. The individuals must be competent enough regarding their duties and responsibilities.

Pursuant to the Contracts Act 1950 Malaysia, an offer is generally treated to be a proposal where it is essential for the information of an agreement. As per Section 2(a) of the said Act, when a person is making the proposal is referred to as the promisor while the person accepting the proposal is known as the promissee. Thereafter, as per Section 2(c) of the mentioned Act and that the individual who is not enforceable is void. Advertisements therefore include of both unilateral and bilateral contracts. Advertisements of bilateral contracts are not generally considered offers since he may wish for that before becoming legally bound for assuring him that the opponent party should be capable in carrying out his part of the contract. Such a scenario has been observed in the case of Partridge v. Crittenden [1968] 1 W.L.R. 1204[1]. When the nature of sale of goods has bilateral nature it will not be treated as an offer but an invitation to treat. The advertisements mentioned in the newspapers stated that the advertiser had goods for sale that generally has invitation to treat and not offer. This scenario has been illustrated in the case of Eckhardt Marine GMBH v. Sheriff, High Court of Malay. From this situation and as mentioned before, the advertisements made in the newspapers and magazines are referred to as mere invitations to treat instead of an offer that led to the case of Ah Chong[2]. Therefore, the advertisement that was made by Ah Chong was not an offer but an invitation to treat. In the case of Grainger & Sons v. Gough [1896] A.C. 325 the Court held that the rule and stated that the purchaser is the offeror who had suggested the offer for purchasing. The other person who had advertised was known as the offeree having the choice of rejecting or accepting the offer. In the case of Hyde v. Wrench [1840], the Court had held that an offer was published on the new terms that did not consist in the offer that was stated[3]. It was rather considered to be rejected of the offer that was followed by a counter offer whereas an offeree can make an attempt that will not be accepted in the original offer. Therefore, a communication from the offeree can be construed in the form of a counter-offer even if it takes the form of a question as compared to the willingness of the offeror to diverge the words that have been mentioned in the offer. Thus, this case study can be treated as an example of difference between the unilateral and bilateral contracts[4].

Bilateral and Unilateral Contracts Explained

One of the major and basic distinctions between bilateral and unilateral contracts is that in case of bilateral contracts, the parties have the authority to negotiate the terms and the conditions of a contract and promises are made between the parties. Whereas, in case of unilateral contracts, only one party exists who promises the other in the form of consideration[5]. The concept of unilateral contracts can be illustrated by the case of Carlil v Carbolic Smoke Ball. In this scenario it was observed that one of the members of the Smoke Ball Co. had placed an advertisement in a newspaper. For this advertisement he had promised to pay $100 to anyone who will use the Carbolic Smoke Ball for a period of two weeks and after that contracts influenza. On the other hand, the plaintiff used it, contracted influenza, and therefore claimed for the reward. Therefore, when the reward was denied, Mrs. Carlil sued the Smoke Ball Co. However, the judgment was in favor of the plaintiff. The Court had held that a contract existed and stated that the advertisement was treated to be a promise, which was an offer of the unilateral contract[6]. On the other hand, in the case of Harvey v Facey [1893], a bilateral contract was formed between the plaintiff and the defendant. Both the parties had agreed to promised to sell and buy the product. The promise existed between both of them.

In a unilateral contract, only one party involved in the contact makes the promise. For instance, a reward contract is a kind of an unilateral contract. If A promises to pay a reward to B if he finds A’s dog. Therefore, as observed B is not forced to find the dog of A but A will be entitled to pay the reward to B if he finds the dog. It can be said that the condition related to this was looking for the dog precedent to the obligation that A has to pay. An offer of an unilateral contract are generally made to plenty of people with the help of an advertisement. In such a situation, the acceptance will arise depending on the satisfaction of the condition involved. For example, like finding the dog as mentioned above[7]. However, if the condition is something related to the fact that only one party can perform both the offeree and the offeror will be protected. The offeror is therefore protected because of the fact that he will be obliged contractually to one of the many existing offerees and he protected thereafter the offeree was protected. This is because if the condition was performed, the offeror will be obliged contractually to pay her. The requirement states that the acceptance can be communicated to the offeror when it is waived. The offeree thereafter accepts the condition by performing the activities. The performance of the offeree is considered the price as related to the promise of the offeror. On the other hand, the Courts usually favor bilateral contracts. However, both the existing contracts are enforceable in the Court. When an individual wishes to fulfill the activities demanded by the promisor it is known as a bilateral contract. It is enforceable as both the parties are bound by the promise[8].

Difference between Bilateral and Unilateral Contracts

The case of Fisher v Bell [1961], stated that the goods or products that are generally displayed in the shops are not always making officers but provides an invitation to treat. The consumer thereafter makes an offer to buy or purchase the goods displayed. Therefore, there was promise and consideration in the contract that was created between the plaintiff and the defendant. In the case of Turner Kempson & Co v Camm, it was observed that there was an exchange of documents that dealt with the sale of raspberry pulp. Lastly, the final contract note them between them was delivered by the plaintiff to the supplier who was the defendant[9]. The provisions for the delivery tool place in 3 lots of 5 tons each within a period of ten days. The defendant later claimed that there was nit contract and sought to ignore the completion of the contract. However, the Counsel for the plaintiff suggested that the differences occurred in the situation was not stipulated.

As per Section 4(1) of the Act, the communication of the offer made by the plaintiff was treated to be completed and effective when the plaintiff was made aware of it. The communication of the said offer with the help of posting was deemed to have been made by any kind of activities of the parties that had proposed the party by which he had intended to communicate the proposal. For instance, when the Pepsi Company had advertised the product of Pepsi by producing the incentives to the customers, they can purchase their products. In return if they gather a certain number of pepsi coins then they will be given a hariet jet. Among the customers, one of them gathers the required number of but they can be rejected for fulfilling the promise[10]. Therefore, the customers can sue the company of Pepsi for the breach of a unilateral contract. This is because they were legally bound to fulfill the promise when the acceptance related to the offer was completed. However, it can therefore be stated that the unilateral contracts must be legally enforced by making use of the socialistic approach. In the situation of a unilateral contract, an advertisement made to the public is generally treated to be as an offer. Therefore, an advertisement that promises a reward to another individual who produces information about a specific criminal will be considered to be an offer[11]. On the other hand, an advertisement is usually issued to the general public by a seller of the goods is not treated to be an invitation to treat and not an offer. When one individual is obliged in fulfilling the promise then he will be bound to do it. In the case of Bowerman v Association of BritishTravel Agents Ltd. it was observed that the plaintiff had ordered or booked a holiday with a tour operator[12]. After his bookings were done, the tour operator became insolvent. Therefore, since a valid bilateral contract existed between the plaintiff and the defendant, the tour and travel company was bound to repay the amount, which the plaintiff had invested. The claimants had therefore accepted the offer by carrying out the duties that were needed to do[13]. Therefore, on the acceptance of the offer, a unilateral contract was formed between the claimant and the other parties. It can be concluded stating that the plaintiff had done his part by accepting the offer and it was made necessary for the ABTA to protect the plaintiff. Otherwise, it would have suffered economic loss since he had relied on the terms of the contract of the tour[14].

Examples of Bilateral and Unilateral Contracts

Bilateral contracts on the other hand are used in the small businesses. These contracts are significant in all the aspects of the business and must make sure that the business grows. Retail businesses are the common examples of bilateral contracts[15]. As observed, every sale of good made is a bilateral contract[16]. The business generally agrees to relocate the ownership of the goods that were exchanged for a specified amount. Therefore, as observed it can be stated that the mutual exchange of promises defined a bilateral contract. However, small businesses generally form plenty of bilateral contracts and the nature of the contracts can be marked usually[17]. The consumers, agreements with purchasers and other businesses can continue to develop and become successful. On the hand, the unilateral contracts are formed either for the public or the entire world. For instance the reward offers and advertisements. There are exceptional cases as well, where the unilateral contracts are formed to single individuals like the unilateral offer. Daulia v Four MilBank Nominees, formal contracts were exchanged but it was argued that they did not attain a unilateral contract because of the first defendants that they would enter into a written contract of sale. The issue of revocation related to the contract stated that if the acceptance is not offered  at the time of the offer is made, then it will not be considered to be valid[18]. However, it can be clearly and evidently distinguished from the bilateral contracts as unilateral contracts are formed for the general public.

Based on arguments mentioned or stated above it can be observed that it is mandatory for the unilateral contracts to be enforced for maintaining the economic and social order in the society. Therefore, it can be stated that in case of the offers of rewards, any kind of reward usually comes from the unilateral contracts. The problems that can arise from the contract is when either of the party breaches or violates the agreement or contract. This is because the unilateral contracts are created by an individual who is said to be legally bound to the promise that have been made[19]. The promisee on the other hand is that individual who carries out the activities that are needed by the promisor. In case of the bilateral contracts, the concept of offers of rewards will not be applied as both the parties involved should make the promises where both of them will agree on it simultaneously[20]. This is because it requires both the parties to make the promises during the time the contract is made. The element of time also distinguishes unilateral contract from a bilateral one. In a unilateral form of contract, the promisor who is making the offer must mention the time period or the duration of the offer. On the contrary, in case of a bilateral contract, the parties involved in the contract should agree upon a particular tine where the goods must be delivered. If either of the parties fail then it will be treated to be a breach of contract. Therefore, it can be concluded stating the fact that after a thorough critical analysis, there are few major difference of opinions regarding the these two contracts of unilateral and bilateral. The legislation of Malaysia has been followed and therefore in such situations, the Company Security. Lastly, it can be stated that individuals can form the contracts of both kind. As per the differences of these two contracts, the importance of it suggests that both can be formed.

Enforcement of Bilateral and Unilateral Contracts

References:

Abdi, Majid, and Preet S. Aulakh. "Locus of uncertainty and the relationship between contractual and relational governance in cross-border interfirm relationships." Journal of Management 43.3 (2017): 771-803.

Afacan, Mustafa O?uz, and Bertan Turhan. "On relationships between substitutes conditions." Economics Letters 126 (2015): 10-12.

Blau, Peter. Exchange and power in social life. Routledge, 2017.

Bowerman v Association of BritishTravel Agents Ltd.

Chueh, Yvonne, Angel Ca?aron, and R?zvan Andonie. "Mortality rate modeling of joint lives and survivor insurance contracts tested by a novel unilateral dependence measure." Computational Intelligence (SSCI), 2016 IEEE Symposium Series on. IEEE, 2016.

Comola, Margherita, and Marcel Fafchamps. "Testing unilateral and bilateral link formation." The Economic Journal124.579 (2014): 954-976.

Eckhardt Marine GMBH v. Sheriff, High Court of Malay.

Fleiner, Tamás, et al. "Trading networks with bilateral contracts." (2016).

Gabbard, Jason, Jana Z. Sukkarieh, and Federico Silva. "Writing and reviewing contracts: don't you wish to save time, effort, and money?." Proceedings of the 15th International Conference on Artificial Intelligence and Law. ACM, 2015.

Grainger & Sons v. Gough [1896] A.C. 325

Hendrikse, George, Patrick Hippmann, and Josef Windsperger. "Trust, transaction costs and contractual incompleteness in franchising." Small Business Economics44.4 (2015): 867-888.

Hill, Andrew. "Something for Nothing: Explaining Single-Sided Contract Variations." Oxford U. Undergraduate LJ (2015): 75.

Hyde v. Wrench [1840]

Lipshaw, J. "Formalism, Speech Acts, and the Realities of Contract Formation." Speaking of Language and Law: Conversations on the Work of Peter Tiersma (2015): 89.

Miller, Lauren D. "Is the Unilateral Jurisdiction Clause No Longer an Option: Examining Courts' Justifications for Upholding or Invalidating Asymmetrical or Unilateral Jurisdiction Clauses." Tex. Int'l LJ 51 (2016): 321.

Osmonbekov, Talai, et al. "The impact of social and contractual enforcement on reseller performance: the mediating role of coordination and inequity during adoption of a new technology." Journal of Business & Industrial Marketing31.6 (2016): 808-818.

Partridge v. Crittenden [1968] 1 W.L.R. 1204.

Poole, Jill, James Devenney, and Adam Shaw-Mellors. Contract law concentrate: law revision and study guide. Oxford University Press, 2017.

Pouryousefi, Sareh, and Jeff Frooman. "The problem of unilateralism in agency theory: towards a bilateral formulation." Business Ethics Quarterly 27.2 (2017): 163-182.

Spitko, E. Gary. "The Will as an Implied Unilateral Arbitration Contract." Fla. L. Rev. 68 (2016): 49.

[1] Partridge v. Crittenden [1968] 1 W.L.R. 1204.

[2] Grainger & Sons v. Gough [1896] A.C. 325

[3] Hyde v. Wrench [1840]

[4] Eckhardt Marine GMBH v. Sheriff, High Court of Malay.

[5] Blau, Peter. Exchange and power in social life. Routledge, 2017.

[6] Miller, Lauren D. "Is the Unilateral Jurisdiction Clause No Longer an Option: Examining Courts' Justifications for Upholding or Invalidating Asymmetrical or Unilateral Jurisdiction Clauses." Tex. Int'l LJ 51 (2016): 321.

[7] Hendrikse, George, Patrick Hippmann, and Josef Windsperger. "Trust, transaction costs and contractual incompleteness in franchising." Small Business Economics44.4 (2015): 867-888.

[8] Osmonbekov, Talai, et al. "The impact of social and contractual enforcement on reseller performance: the mediating role of coordination and inequity during adoption of a new technology." Journal of Business & Industrial Marketing31.6 (2016): 808-818.

[9] Spitko, E. Gary. "The Will as an Implied Unilateral Arbitration Contract." Fla. L. Rev. 68 (2016): 49.

[10] Lipshaw, J. "Formalism, Speech Acts, and the Realities of Contract Formation." Speaking of Language and Law: Conversations on the Work of Peter Tiersma (2015): 89.

[11] Pouryousefi, Sareh, and Jeff Frooman. "The problem of unilateralism in agency theory: towards a bilateral formulation." Business Ethics Quarterly 27.2 (2017): 163-182.

[12] Bowerman v Association of BritishTravel Agents Ltd.

[13] Afacan, Mustafa O?uz, and Bertan Turhan. "On relationships between substitutes conditions." Economics Letters 126 (2015): 10-12.

[14] Abdi, Majid, and Preet S. Aulakh. "Locus of uncertainty and the relationship between contractual and relational governance in cross-border interfirm relationships." Journal of Management 43.3 (2017): 771-803.

[15] Fleiner, Tamás, et al. "Trading networks with bilateral contracts." (2016).

[16] Comola, Margherita, and Marcel Fafchamps. "Testing unilateral and bilateral link formation." The Economic Journal124.579 (2014): 954-976.

[17] Poole, Jill, James Devenney, and Adam Shaw-Mellors. Contract law concentrate: law revision and study guide. Oxford University Press, 2017.

[18] Hill, Andrew. "Something for Nothing: Explaining Single-Sided Contract Variations." Oxford U. Undergraduate LJ (2015): 75.

[19] Gabbard, Jason, Jana Z. Sukkarieh, and Federico Silva. "Writing and reviewing contracts: don't you wish to save time, effort, and money?." Proceedings of the 15th International Conference on Artificial Intelligence and Law. ACM, 2015.

[20] Chueh, Yvonne, Angel Ca?aron, and R?zvan Andonie. "Mortality rate modeling of joint lives and survivor insurance contracts tested by a novel unilateral dependence measure." Computational Intelligence (SSCI), 2016 IEEE Symposium Series on. IEEE, 2016.