Unilateral and bilateral contracts

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Unilateral and bilateral contracts
In general terms, a bilateral contract is one where a promise by one party is exchanged for a promise or exchange of promises, referred to as "mutuality of undertakings".


Unilateral and bilateral contracts

The distinction between bilateral and unilateral contracts has been considered a fundamental principle of contract law and essential to the order of the contractual system. The focus of this analysis is to critically evaluate the theoretical legal dichotomy between unilateral and bilateral contracts and consider the practical similarities between the two.

If we firstly consider unilateral contracts, the concept of a unilateral contract is illustrated by reference to a classic contract law case of Carlil v Carbolic Smoke Ball Limited4. In this case, the defendant was the proprietor of a medical substance and placed and advert in the Pall Mall Gazette promising to pay $100 to anyone who used the carbolic smoke ball for two weeks and who for a limited time after contracted the flu virus. Mrs Carlil took the substance and contracted the flu virus and sued for the $100. Mrs Carlil's claim succeeded and on appeal, Carbolic Smoke Ball Limited argued that the advert did not constitute an offer but was rather an invitation to treat.

The Court of Appeal rejected this argument and held that there was a legally enforceable contract. The advertisement constituted an offer to the whole world and was capable of amounting to an offer of a unilateral contract without the requirement for acceptance. Moreover, this decision was the first case to highlight the requirement of intention to create legal relations. The Carlil decision had far reaching implications for contract law, with some commentators arguing that there is no difference between an “invitation to treat” and a contractual “offer”. ...
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