What is a unilateral contract?

A unilateral contract is best defined as a promise seeking performance. In this type of contract, one party makes a promise in exchange for the other party's performance of a specific action. The key characteristic of a unilateral contract is that only one party is bound to fulfill their promise, while the other party is not required to undertake any obligations until the specific act is completed.

For instance, if someone offers a reward for the return of a lost item, they create a unilateral contract. The offeror is promising to pay the reward, but the offeree is only required to perform the act of returning the item to receive the payment. This distinguishes unilateral contracts from other contract types that require mutual agreement or exchange of promises, as seen in bilateral contracts where both parties have obligations.

Understanding unilateral contracts is crucial as it highlights the uniqueness of situations where offers are made with the expectation of performance rather than agreements based on mutual consent from the outset.