What is a bilateral contract, and how is it used?

A business man in an office uses his laptop to create a bilateral contract.

Dive into this examination of bilateral contracts in comparison with unilateral contracts.

Explore bilateral agreements versus unilateral contracts to grasp their meanings, applications, and the value they bring. It’s likely you’ve heard the terms bilateral contract and unilateral contract before — but what does each really mean? Read on for the ultimate — and brief — guide to understanding the difference between the two.

What is a bilateral contract?

A bilateral contract is a binding agreement between two parties where they both exchange promises to perform and fulfill one side of a bargain.

Of all types of contracts, a bilateral contract is one of the most common binding agreements used because it turns both parties into what is known as an “obligor” — in other words, a person or party that is bound to another.

A bilateral contract is so commonly used that it is often interchanged with the term sales contract. Within the bilateral contract, if an obligor fails to meet their end of the deal, then they’ve breached the contract (and of course, vice versa).

Bilateral agreement examples.

Now, let’s explore a few everyday scenarios where bilateral agreements come into play, shaping the promises and responsibilities between parties.

Difference between unilateral vs. bilateral contract.

A unilateral contract and a bilateral contract are legally binding agreements that promise a result — so, what exactly is the difference between them? We’ve laid it out below.

With unilateral agreements, one person or organization becomes the offeror and extends an agreement to another to perform an act or a service in order to receive whatever was promised. In other words, the onus is only on one party to fulfill — there is no promise between parties.

Bilateral contracts, as the name suggests, demand that two parties both have set promises, agreements, and requirements. If either fails to provide, that’s considered a breach of contract.

Pros and cons of a bilateral agreement.

Now, let’s go over the pros and cons of bilateral agreements.



How to make sure a bilateral agreement is enforceable.

Ensuring enforceability in bilateral agreements is important to protecting your interests. Consider these key guidelines:

Revamp bilateral contracts and other document capabilities.

It’s easy to create and sign contracts like bilateral agreements with an intuitive e-signature software program.