UNIVERSITY OF PETROLEUM & ENERGY STUDIES

Topic: laws relating to unilateral contracts

Submitted to:
Ms. Shradha Baranwal

Submitted by:
Akul Tiwari :500017883 Kumar Sagar :500018435 Ayushi Chaudhary :50001 Radhika Sharma :500017505 Kriti Kumar :500017910 Monalisa Panda :500017969 ( BBA.LLB 1st SEM)

Introduction :
Law related to unilateral contracts : A contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party. unilateral contract . an agreement to pay in exchange for performance, if the potential performer chooses to act. A "unilateral" contract is distinguished from a "bilateral" contract, which is an exchange of one promise for another. Example of a unilateral contract: "I will pay you $1,000 if you bring my car from Cleveland to San Francisco." Bringing the car is acceptance. The difference is normally only of academic interest. (See: contract,bilateral contract, performance, consideration) UNILATERAL CONTRACT, civil law. When the party to whom an engagement is made, makes no express agreement on his part, the contract is called unilateral, even in cases where the law attaches certain obligations to his acceptance. Civ. Code of Lo. art. 1758. Code Nap. 1103. A loan of money, and a loan for use, are of this kind. Poth. Obl. part 1, c. 1, s. 1, art. 2; Lee. Elemen. Sec. 781. A unilateral contract is one in which the offeror is bargaining for a completed performance. For example an offer of a reward to catch a fugitive (or a fish) is an offer that looks towards the formation of a unilateral contract. A bilateral contract is one inwhich the offeror is bargaining for a promise to perform. Most contracts which have commercial significance are bilateral. In a unilateral, or one-sided, contract, one party, known as the offeror, makes a promise in exchange for an act (or abstention from acting) by another party, known as the offeree. If the offeree acts on the offeror's promise, the offeror is legally obligated to fulfill the contract, but an offeree cannot be forced to act (or not act), because no return promise has been made to the offeror. After an offeree has performed, only one enforceable promise exists, that of the offeror. A unilateral contract differs from a Bilateral Contract, in which the parties exchange mutual promises. Bilateral contracts are commonly used in business transactions; a sale of goods is a type of bilateral contract. Reward offers are usually unilateral contracts. The offeror (the party offering the reward) cannot impel anyone to fulfill the reward offer. An offeree can sue for breach of contract, however, if the offeror does not provide the reward after the offeree has fulfilled the contract's requirements.

BILATERAL V. UNILATERAL CONTRACTS

Contracts may be bilateral or unilateral. The more common of the two, a bilateral contract, is an agreement in which each of the parties to the contract makes a promise or promises to the other party. For example, in a contract for the sale of a home, the buyer promises to pay the seller 200,000 in exchange for the seller's promise to deliver title to the property. In a unilateral contract, only one party to the contract makes a promise. A typical example is the reward contract: A promises to pay a reward to B if B finds A's dog. B is not obliged to find A's dog, but A is

obliged to pay the reward to B if B finds the dog. In this example, the finding of the dog is a condition precedent to A's obligation to pay. An offer of a unilateral contract may often be made to many people (or 'to the world') by means of an advertisement. In that situation, acceptance will only occur on satisfaction of the condition (such as the finding of the offeror's dog). If the condition is something that only one party can perform, both the offeror and offeree are protected the offeror is protected because he will only ever be contractually obliged to one of the many offerees; and the offeree is protected, because if she does perform the condition, the offeror will be contractually obliged to pay her. In unilateral contracts, the requirement that acceptance be communicated to the offeror is waived. The offeree accepts by performing the condition, and the offeree's performance is also treated as the price, or consideration, for the offeror's promise. The most common type of unilateral contract is the insurance contract. The insurance company promises to pay the insured a stated amount of money on the happening of an event if the insured pays premiums; note that the insured does not make any promise to pay the premiums. Courts generally favor bilateral contracts. The general rule in the United States is: "In case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses." Restatement (Second) of Contracts 32 (1981) (emphasis added). Here the law attempts to provide some protection from the risk of revocation in a unilateral contract to the offeree. Note that if the offer specifically requests performance rather than a promise, a unilateral contract will exist. See option contracts for more information on protection given to the offeree in a unilateral contract.

What is a contract?
Contracts are an integral part of everyday life. Working for an employer; insuring your car or your house and even buying a pint of milk are all governed by the law of contract. Although each of the three situations given above have their own specialist areas of law (employment law, insurance law and consumer law respectively) they are all governed by a set of underlying fundamental principles often referred to as the "general law of contract". The increasing development of specialised areas for particular types of contract has led to some discussion as to whether this general part should be abolished. Whilst as a matter of legal practice there is unlikely to be a case involving purely the general contractual principles outlined here, it should be emphasised that the basic rules are still fundamental for an understanding of these more advanced fields. In seeking a definition of what a contract is, that given in the US Restatement may provide a useful starting point: A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. This may be seen as giving three interconnected elements:

1. A promise In the context of English law, a reference to a promise here may be seen as misleading. It is often (rightly) stated that English law will not give effect to a mere promise and that an agreement, or meeting of minds, is required. In fact, this is simply a way of distinguishing between two types of promise, namely those which do and don't give rise to a legal duty. Thus, a promise to meet one's other half for dinner at 7pm gives rise to no legal obligation - it is a "mere" promise - whereas a promise to sell someone a car for 5000 gives rise to legal obligation. 2. A legal duty arising from that promise Here, English contract doctrine distinguishes between bilateral and unilateral contracts. A bilateral contract gives rise to obligations on both sides. Thus in a contract of sale, the seller has an obligation to transfer title in the thing sold to the buyer, whilst the buyer has an obligation to pay the price. A unilateral contract, by contrast, gives rise to obligations on one side only. Thus "I will give you 100 if you run a marathon" gives rise to a legal duty on the maker of the statement (the promisor) to pay the money if the race is run, whilst the person to whom the statement is made (the promisee) is under no obligation to run in the first place. 3. A remedy for breach of that duty In considering the development of remedies, a fundamental distinction in English law between common law (often just abbreviated to law) and equity must be understood. For much of its history, England had two separate systems of law working side by side, each of which had different rules. One, administered by the courts of common pleas and king's bench, was called "the common law"; the other, presided over by the Lord Chancellor in the court of chancery was "equity". Since the Judicature Acts of the nineteenth century the two systems have been administered by the same courts, although they remain separate sets of doctrine. Most important for our current purposes is that the two systems developed different sets of remedies for breach of contract, although other equitable rules which have application to contracts will be discussed as they arise.

THE TRUE CONCEPTION OF UNILATERAL CONTRACTS:

Suppose A says to B, "I will give you $ioo if you walk across the Brooklyn Bridge," and B walks-is there a contract? It is clear that A is not asking B for B's promise to walk across the Brooklyn Bridge. What A wants from B is the act of walk-ing across the bridge. When B has walked across the bridge there is a contract, and A is then bound to pay to B $too. At that moment there arises a unilateral contract. A has bartered away his volition for B's act of walking across the Brooklyn Bridge. When an act is thus wanted in return for a promise, a uni-lateral contract is created when the act is done. It is clear that only one party is bound. B is not bound to walk across the Brooklyn Bridge, but A is bound to pay B $ioo if B does so. Thus, in unilateral contracts, on one side we find merely an act, on the other side a promise. On the other

hand, in bilateral contracts, A barters away his volition in return for another promise; that is to say, there is an exchange of promises or assurances. In the case of the bilateral contract both parties, A and B, are bound from the moment that their promises are exchanged. Thus, if A says to B, "I will give you $Ioo if you will promise to walk across the Brooklyn Bridge," and B then promises to walk across the bridge, a bilateral contract is created at the moment when B promises, and both parties are thereafter bound. The conception of the bilateral contract, while present-ing various theoretical difficulties, has in the main been developed by the courts with a reasonable degree of precision; but the unilateral contract has proven a stumbling block to nearly every court which has had occasion to consider the question. In no domain of the law are the opinions marked by such lack of clear thinking.' It is plain that in the Brooklyn Bridge case as first put, what A wants from B is the act of walking across the Brooklyn Bridge. A does not ask for B's promise to walk across the bridge and B has never given it. B has never bound himself to walk across the bridge. A, however, has bound himself to pay $ioo to B, if B does so. Let us suppose that B starts to walk across the Brooklyn Bridge and has gone about one-half of the way across. At that moment A overtakes B and says to him, "I withdraw my offer." Has B then any rights against A ? Again, let us suppose that after A has said "I withdraw my offer," B continues to walk across the Brooklyn Bridge and com-pletes the act of crossing. Under these circumstances, has B any rights against A ? In the first of the cases just suggested, A withdrew his offer before B had walked across the bridge. What A wanted from B, what A asked for, was the act of walking across the bridge. Until that was done, B had not given to A what A had requested. The acceptance by B of A's offer could be nothing but the act on B's part of crossing the bridge. It is elementary that an offeror may withdraw his offer until it has been accepted.2 It follows logically that A is perfectly within his rights in withdraw-ing his offer before B has accepted it by walking across the bridge-the act contemplated by the offeror and the offeree as the acceptance of the offer. A did not want B to walk half-way across or three-quarters of the way across the bridge. What A wanted from B, and what A asked for from B, was a certain and entire act. B understood this. It was for that act that A was willing to barter his volition with regard to $ioo. B understood this also. Until this act is done, therefore, A is not bound, since no contract arises until the completion of the act called for. Then, and not before, would a unilateral contract arise. Then, and not before, would A be bound. The objection is made, however, that it is very "hard" upon B that he should have walked half-way across the Brooklyn Bridge and should get no compensation. This suggestion, in-variably advanced, might be dismissed with the remark that "hard" cases should not make bad law. But going a step further, by way of reply, the pertinent inquiry at once suggests itself, "Was B bound to walk across the Brooklyn Bridge ?" The answer to this is obvious. By hypothesis, B was not bound to walk across the Brooklyn Bridge. B had never surrendered his volition with regard to walking across the bridge. B had never promised A that he would walk across the bridge. There had been no interchange of promises. A was bound to pay B $ioo in the event that B should walk across the bridge, but B had not bound himself to walk. It follows that at the moment when A overtook B, after B had walked half-way across the bridge, that B was not then bound to complete the crossing of the bridge. B, on his side, could have refused at that time, or at any other time, to continue to cross the bridge without making himself in any way legally liable to A. If B is not bound to continue to cross the bridge, if B is will-free, why should not A also be will-free? Suppose that after B has crossed half the bridge he gets tired and tells A that he refuses to continue crossing. B, concededly, would be perfectly within his rights in so speaking and acting. A would have no cause of action against B for dam-ages. If B has a locus poenitentiae, so has A. They each have, and should have, the opportunity to reconsider and withdraw. Not until B has crossed the bridge, thereby doing the act called for, and

accepting the offer, is a contract born. At that moment, and not one instant before, A is bound, and there is a unilateral contract. Critics of the doctrine of unilateral contract on the ground that the rule is "hard" on B, forget the primary need for mutuality of withdrawal and in lamenting the alleged hardships of B, they completely lose sight of the fact that B has the same right of withdrawal that A has. To the writer's mind, the doctrine of unilateral contract is thus as just and equitable as it is logical. So long as there is freedom of contract and parties see fit to integrate their understanding in the form of a unilateral con-tract, the courts should not interfere with their evident under-standing and intention simply because of alleged fanciful hardship. Suppose, reverting to the second case, that B completes the act of crossing the bridge after A has told him that the offer The objection is made, however, that it is very "hard" upon B that he should have walked half-way across the Brooklyn Bridge and should get no compensation. This suggestion, in-variably advanced, might be dismissed with the remark that "hard" cases should not make bad law. But going a step further, by way of reply, the pertinent inquiry at once suggests itself, "Was B bound to walk across the Brooklyn Bridge ?" The answer to this is obvious. By hypothesis, B was not bound to walk across the Brooklyn Bridge. B had never surrendered his volition with regard to walking across the bridge. B had never promised A that he would walk across the bridge. There had been no interchange of promises. A was bound to pay B $ioo in the event that B should walk across the bridge, but B had not bound himself to walk. It follows that at the moment when A overtook B, after B had walked half-way across the bridge, that B was not then bound to complete the crossing of the bridge. B, on his side, could have refused at that time, or at any other time, to continue to cross the bridge without making himself in any way legally liable to A. If B is not bound to continue to cross the bridge, if B is will-free, why should not A also be will-free? Suppose that after B has crossed half the bridge he gets tired and tells A that he refuses to continue crossing. B, concededly, would be perfectly within his rights in so speaking and acting. A would have no cause of action against B for dam-ages. If B has a locus poenitentiae, so has A. They each have, and should have, the opportunity to reconsider and withdraw. Not until B has crossed the bridge, thereby doing the act called for, and accepting the offer, is a contract born. At that moment, and not one instant before, A is bound, and there is a unilateral contract. Critics of the doctrine of unilateral contract on the ground that the rule is "hard" on B, forget the primary need for mutuality of withdrawal and in lamenting the alleged hardships of B, they completely lose sight of the fact that B has the same right of withdrawal that A has. To the writer's mind, the doctrine of unilateral contract is thus as just and equitable as it is logical. So long as there is freedom of contract and parties see fit to integrate their understanding in the form of a unilateral con-tract, the courts should not interfere with their evident under-standing and intention simply because of alleged fanciful hardship. Suppose, reverting to the second case, that B completes the act of crossing the bridge after A has told him that the offer belongs to him. Yet, in a case like this, it seems that A is unjustly enriched by an improvement to his land, consisting of one-half a garage, if no return therefor is made to B. If the law will permit A, without B's consent, to retain this improve-ment to the land, it is only just that the law should afford B compensation for the improvement he made, even against A's express dissent. Accordingly, B should be permitted to recover from A (quantum valebat) the reasonable value of the extent to which the land of A is enriched unjustly at B's expense. Such procedure in quasi-contract affords a just and equitable solution of the problem, without offending any rules of logic, clear-think-ing, and contract law. An offer contemplating an act as its acceptance is revocable at any time before the act has been performed. Yet, a recovery may be permitted in quasi-contract in any instance, where defendant would be otherwise unjustly enriched at the expense of the plaintiff. In the case of Offord v. Dazies, the Court of Common Pleas correctly applies the doctrine of unilateral contract.4 The de-fendants agreed jointly and severally to guarantee for the

space of twelve months the due payment of all bills of exchange which the plaintiff might discount for a third party. The offer contemplated a series of unilateral contracts. Each act of dis-counting would operate as a separate transaction. Before certain bills were discounted, defendants withdrew their offer. The court rightly held that they were within their rights in so acting. The interest in this case lies not only in the opinion of the court, but in the interesting discussion that took place between the Judges and E. James, Q. C., in the course of the argument of the appeal. Williams, J., said, "Suppose I guarantee the price of a carriage to be built for a third party who, before the car-riage is finished and consequently before I am bound to pay for it, becomes insolvent, may I recall my guaranty?" Mr. James replied, "Not after the coach-builder has commenced the car-riage." Thereupon, Erle, C. J., said, "Before it ripens into a contract either party may withdraw and so put an end to the matter. But the moment the coach-builder has prepared the materials he would probably be found by the jury to have con-tracted." Erle, C. J., thus recognized the conception of unilateral belongs to him. Yet, in a case like this, it seems that A is unjustly enriched by an improvement to his land, consisting of one-half a garage, if no return therefor is made to B. If the law will permit A, without B's consent, to retain this improve-ment to the land, it is only just that the law should afford B compensation for the improvement he made, even against A's express dissent. Accordingly, B should be permitted to recover from A (quantum valebat) the reasonable value of the extent to which the land of A is enriched unjustly at B's expense. Such procedure in quasi-contract affords a just and equitable solution of the problem, without offending any rules of logic, clear-think-ing, and contract law. An offer contemplating an act as its acceptance is revocable at any time before the act has been performed. Yet, a recovery may be permitted in quasi-contract in any instance, where defendant would be otherwise unjustly enriched at the expense of the plaintiff. In the case of Offord v. Dazies, the Court of Common Pleas correctly applies the doctrine of unilateral contract.4 The de-fendants agreed jointly and severally to guarantee for the space of twelve months the due payment of all bills of exchange which the plaintiff might discount for a third party. The offer contemplated a series of unilateral contracts. Each act of dis-counting would operate as a separate transaction. Before certain bills were discounted, defendants withdrew their offer. The court rightly held that they were within their rights in so acting. The interest in this case lies not only in the opinion of the court, but in the interesting discussion that took place between the Judges and E. James, Q. C., in the course of the argument of the appeal. Williams, J., said, "Suppose I guarantee the price of a carriage to be built for a third party who, before the car-riage is finished and consequently before I am bound to pay for it, becomes insolvent, may I recall my guaranty?" Mr. James replied, "Not after the coach-builder has commenced the car-riage." Thereupon, Erle, C. J., said, "Before it ripens into a contract either party may withdraw and so put an end to the matter. But the moment the coach-builder has prepared the materials he would probably be found by the jury to have contracted." Erle, C. J., thus recognized the conception of unilateral .

The Unilateral/Bilateral Distinction: History, Theory, and Doctrine According to classical contract doctrine, a traditional unilateral contract is different from a bilateral contract because it always and necessarily contains a promise on only one side. In exchange for that promise, the promisor seeks a performance and only a performance from the other party no promise of performance will do. It is at the instant of completion of performance that the contract is formed, and fully executed on one side. On the other hand, in a bilateral contract, an offer may be accepted by a return promise or by the beginning of performance. At the moment the promise is made or promised performance begins, a bilateral contract is formed and each party is bound.

The unilateral/bilateral distinction, although a staple of Twentieth Century contract law, particularly in law school, was of little or no import until well into the late Nineteenth Century. Harvard Law Dean and case method inventor Christopher Columbus Langdell is generally credited with elevating the unilateral/bilateral distinction to contract laws great dichotomy even though the term was familiar enough to have been used in opinions issued prior to Langdells casebook. Although it was not a common feature of case law, the unilateral-dichotomy feature appears to have become established contracts orthodoxy by the early Twentieth Century as reflected in the Williston treatise, the Corbin treatise and other authorities of the era. There was, however, debate about the accuracy of the unilateral/bilateral terminology and its utility. The resulting taming of the potential unfairness of the unilateral contract helped to cement its status as part of the legal lexicon. The first Restatement of Contracts formally recognized the unilateral/bilateral dichotomy and divided the universe of contracts accordingly. However, the Restatement also established a presumption in favor of a bilateral characterization of contracts where feasible, reflecting the prevailing common law approach. Notwithstanding its firm place in the contracts establishment, the concept of the unilateral contracts continued to be questioned and even attacked, initially and most prominently by leading law professor Karl Llwellyn and later more directly by then-prominent Australian contracts scholar Samuel Stoljar. However, the unilateral/bilateral dichotomy continued to hold its ground as part of mainstream contract theory for some time, although gradually losing ground in academic and lawmaking circles. The Uniform Commercial Code, largely authored by Llewellyn, did not incorporate the concept while the Restatement (Second) of Contracts also attempted to shed the unilateral/bilateral contract dichotomy.54 The Restatement (Second) of Contracts dropped references to unilateral and bilateral contracts in its black letter text, determining that the terms confused rather than clarified the law of contracts, stating, It has not been carried forward because of doubt as to the utility of the distinction, often treated as fundamental, between the two types. In the courts, however, the dichotomy retained support and even arguably enjoyed a renaissance of sorts as the unilateral construct was applied to a range of emerging contract matters involving claims by at-will employees and persons seeking to enforce claimed entitlements conferred by government56 as well as continuing to be used in cases involving rewards and prizes57 or brokerage commissions.58 The courts alternative vision of the role of unilateral contract theory gives pause to any impulse for abolishing this genre of contract. Despite that, it appears to us that these arguably beneficial roles of the doctrine could be equally achieved under theories of promissory estoppel, equitable estoppel, and attachment of due process rights to the creation of reasonable expectations of an entitlement by governments. Although the Restatement (Second) eliminated unilateral and bilateral contracts from its lexicon, it did not eliminate the concept that some contracts could be accepted only by performance, and that they were fully executed on one side by that performance.61 Moreover, even while abandoning the dichotomy, the Restatement (Second) retained a preference for bilateral construction of contracts in a roundabout fashion, providing that, In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or rendering the performance, as the offeree chooses. The preference for bilateralism remains if the offeree may choose between accepting by promise or performance, because Such an acceptance operates as a promise to render a complete performance. In cases of doubt, the offerees performance stands in the place of a promise by which the offeree is bound and must complete performance. In addition, despite the retreat in the Restatement (Second) of Contracts from the unilateral/bilateral dichotomy, courts generally continue to use the terminology and continue to adhere to the presumption in favor of bilateralism. As contract law entered the Twenty-First Century, the often-maligned unilateral contract was perhaps bloody but largely unbowed, with use of the concept continuing in judicial decisions, to the praise of some commentators.

Continuing Utility of the Unilateral/Bilateral Distinction: A definite offer can be accepted in any reasonable way of expressing agreement unless the offeror specifically requires otherwise. Real people outside of lunatic asylums do not offer a promise for a promise. What businessmen offer is an assurance that after a deal is on, it will not be withdrawn, and that performance will occur in due course.87 Perhaps the most vocal critic of the unilateral contract concept itself was Professor Stoljar, whose attack on unilateral contract theory as insufficiently protective of reliance interests likewise resonates well in the modern legal world. The distinction between bilateral and unilateral contracts is false because it establishes a contrast between expectation-and restitution-contracts but totally ignores the reliancebargain. The distinction completely obscures the logical interrelation involved in the protection of the three contractual interests. If our law of contract at one end protects restitution (and indeed must protect promised restitution if promises are to be enforceable at all), and at the other end protects promised expectations (including purely aleatory expectations), the law must logically also protect actual reliance justifiably induced by the promisor. Again, by confusing two different meanings of acceptance, the distinction disregards a third type of acceptance and hides the identity of acceptance and reliance in the reliance-bargain. The promisees reliance is as much a manifestation of assent to the exchange which the promisor proposes in his promise as is the counter-promise in the bilateral contract. The unilateral/bilateral distinction focuses almost exclusively on matters of contract formation and revocation. The substantial body of ink spilled during the Twentieth Century on the topic centered on the factors that made for creation of a contract and on whether one offering a unilateral contract could pull the plug on an unsuspecting incipient acceptor after it had begun to perform the requested act sought by the offeree. The horrible hypotheticals surrounding the issue such as walking across the Brooklyn Bridge were exclusively focused on whether the promisor would evade a contract when the performer was only a few yards from making it to the other borough and emphasized that the contract formed by performance rather than a return promise.

Cases related to UNILATERAL contracts:

C.T. Chacko vs Kerala State Electricity Board on 4 August, 1989:

Kerala High Court C.T. Chacko vs Kerala State Electricity Board on 4 August, 1989 Equivalent citations: AIR 1990 Ker 280 Author: Krishnamoorthy Bench: U Bhat, P Krishnamoorthy.
Rajeshekar Basavaraj Patil vs Subash Kallur And Ors. on 8 October, 2002:

Rajeshekar Basavaraj Patil vs Subash Kallur And Ors. on 8 October, 2002 Equivalent citations: AIR 2002 SC 3524, (2003) 1 CALLT 35 SC, JT 2002 (8) SC 176 Author: Dharmadhikari Bench: M Shah, D Dharmadhikari.

Union Of India vs M/S. Ajit Mehta And Associates, ... on 9 August, 1989:

Union Of India vs M/S. Ajit Mehta And Associates, ... on 9 August, 1989 Equivalent citations: AIR 1990 Bom 45, 1989 (3) BomCR 535 Author: Sawant. Bench: Sawant, Dudhat.

Biblography
Yale Law Journal http://www.jstor.org/ http://lawexams.com/unilateral-contracts http://works.bepress.com/jeffrey_stempel/ http //en.wikibooks.org/wiki/UK_Contract_Law http://www.indiankanoon.org