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Unilateral contracts occur when one party puts out an offer that is accepted only once the other party completes the specific performance requested. In 2025, these agreements continue to play a vital role in everyday transactions and modern marketing strategies across Australia.
It may sound a little perplexing, but unilateral contracts are as commonplace as any other form of agreement. If you’ve noticed a poster offering a reward for a missing item, taken part in a store promotion, or entered into a competition, then chances are you’ve encountered a unilateral contract in action. For further insights into contract law, you might also explore our comprehensive Contracts Guide.
These contracts are unique because only one party sets the terms, leaving it up to the other party to decide whether to perform the requested act, without any reciprocal obligation. This model is especially popular in digital promotions, loyalty programmes, and performance-based partnerships in today’s competitive environment.
In this article, we will delve into unilateral contracts and discuss how you can use them effectively in your business. This includes:
- Defining a unilateral contract
- Distinguishing between unilateral and bilateral contracts
- Breaching and enforcing unilateral contracts
- Consideration in unilateral contracts
- Termination of a unilateral contract
What Is A Unilateral Contract?
Unilateral contracts are predominantly one-sided agreements. In most contracts, each party accepts terms offered by the other to create a mutual obligation. However, in a unilateral contract, only one party makes a promise that is triggered when the other party performs a specified act.
In a unilateral contract, the consideration is provided only once the required performance has been completed. This means that the promisor becomes legally bound to uphold their promise as soon as the other party fulfils the specified condition-a concept that remains especially effective for rewards-based promotions in 2025.
| Example Nick runs a trendy coffee shop in Sydney and has implemented a digital loyalty system: for every five drinks purchased, the sixth one is free. This special offer is a unilateral contract because it requires customers to complete the purchase cycle before they are eligible for the reward. |
While unilateral contracts must satisfy the standard elements present in every agreement-such as offer, acceptance, consideration, intention to create legal relations, capacity, and legality-the key distinction is that the promise is contingent upon an act, rather than an exchange of promises. To understand more about these fundamental elements, read our article on What Makes a Contract Legally Binding.
- Offer and Acceptance
- Consideration
- Intention to be legally bound
- Capacity
- Legality
Most unilateral contracts meet these core requirements, although the consideration is not mutual until the specified performance occurs.
Bilateral Vs Unilateral Contract
Bilateral contracts involve reciprocal obligations, where both parties exchange promises and offer consideration. This is the more common form of contract encountered, such as in an Employment Agreement, where the employee provides their labour in return for payment from the employer.
By contrast, unilateral contracts create an obligation solely for the promisor once the condition is met, leaving the promisee with the choice-but no obligation-to perform the requisite action.
What Constitutes A Breach Of A Unilateral Contract?
A unilateral contract is breached when the party making the offer fails to fulfil their promise despite the other party having completed the specified performance. Such a breach may lead not only to legal claims but also to allegations of misleading conduct.
For instance, if a store advertises a ‘buy one, get one free’ promotion and then refuses to provide the free item when a customer complies with the offer, the business is likely in breach of the unilateral contract. This can lead to potential legal and reputational risks.
Therefore, if you decide to use a unilateral contract in your business, ensure that you are fully prepared to meet your promise. For assistance with drafting robust contract terms, you might explore our Contract Review service.
How Can I Enforce A Unilateral Contract?
Despite being one-sided, unilateral contracts are legally binding once the required performance is completed. If the promisor fails to deliver on their promise, legal action can be pursued to enforce the agreement. For further details on contract enforceability, consult our discussion on what makes a contract legally binding.
If you encounter difficulties enforcing a unilateral contract, our legal consultants are available for a free, no-obligation consultation to discuss your options.
What Is Consideration In Unilateral Contracts?
In a unilateral contract, consideration is provided only after a specific action is successfully completed. Consequently, the promisor’s obligation to perform-such as issuing a reward-is triggered only when the required performance has occurred.
Typically, the promisee holds the option to perform the required act, without being legally compelled to do so, whereas the promisor must deliver upon the act being completed. This distinction is critical when assessing if your business can responsibly engage in such agreements.
| Example Dave posts a social media update about his missing bicycle with a $200 reward for its return. Grace finds the bike and opts to deliver it to him. Once Grace completes this act, Dave is legally obligated to pay the promised reward. |
When Would I Need A Unilateral Contract?
If you are a small business owner in 2025, you might choose to utilise a unilateral contract to roll out special offers, promotions, or partnerships that are performance-based. These contracts enable you to clearly set the terms of engagement while only incurring costs if the desired outcome is achieved.
| Example Hannah, who runs an online clothing store, invites Mike-an influencer with a significant following-to promote her brand. Her offer states that if Mike’s promotion results in at least five purchases, she will refund the cost of any three items he purchases. This unilateral contract ensures that Hannah only pays when the agreed performance is met. |
How Can I Terminate A Unilateral Contract?
Terminating a contract can occur in several ways. Typically, a unilateral contract concludes naturally when the conditions of the offer are met or when its stated expiry date is reached.
For example, if your promotion specifies that the offer is valid only until a certain date or until a designated performance metric is achieved, the unilateral contract will naturally terminate once that condition is fulfilled. Likewise, once the performance is completed, the contract is automatically concluded.
If you need to terminate a unilateral contract early-before the performance has occurred-it is wise to seek legal advice to avoid potential claims for damages. For more guidance on ending contractual relationships, please see our Terminating a Contract article.
In today’s evolving legal landscape, many businesses are leveraging digital tools to manage and terminate unilateral contracts efficiently. For instance, deploying automated contract management systems can help you track performance deadlines and ensure timely termination upon fulfilment. Learn more about digital legal solutions in our Online Lawyer resource.
Key Takeaways
Unilateral contracts provide a flexible way for businesses to engage in arrangements where only one party commits to performing an action once specific conditions are met. To summarise what we’ve discussed:
- Unilateral contracts are one-sided agreements where the promisor is legally bound only after the required performance is completed.
- They differ significantly from bilateral contracts, which involve mutual obligations and consideration for both parties.
- The enforceability of unilateral contracts relies on the completion of the specified act, making clarity in the terms essential.
- These contracts can terminate naturally upon reaching a set date or upon performance fulfilment, though early termination may require legal advice.
- Modern digital tools are increasingly used to enhance contract management and compliance in 2025.
If you would like a consultation on unilateral contracts or need help drafting a clear, enforceable agreement, please contact our team at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligation chat. Our experts are here to help you navigate the complexities of contract law in today’s fast-paced business environment.
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