Introduction
A contract unilateral is a legally binding agreement where one party, the offeror, makes a promise in exchange for the performance of a specific act by the other party, the offeree. The offeree is not obligated to perform; however, if the act is completed, the offeror becomes bound by the promise. The technical principle underlying a contract unilateral is that acceptance occurs through the performance of the requested act, rather than by a reciprocal promise. Key requirements for a valid contract unilateral include a clear offer, an intention to create legal relations, and the performance of the specified act. It is crucial to note that formal language is used in its articulation to distinguish it from other forms of agreement, especially bilateral ones.
The Nature of a Contract Unilateral
A contract unilateral differs significantly from a bilateral contract. In a bilateral contract, both parties exchange promises, creating an obligation on both sides from the moment of agreement. However, in a contract unilateral, only the offeror makes a promise; the offeree's obligation arises only upon the full completion of the requested act. This act constitutes both acceptance of the offer and the required consideration. The formation of a contract unilateral is not dependent on explicit communication of acceptance; the action itself is sufficient. This characteristic is especially important in contexts where the offer is made to the public, as demonstrated in cases such as Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256. In this landmark case, the court determined that the company's advertisement constituted a unilateral offer to pay £100 to anyone who contracted influenza after using their product, a promise that was accepted upon the individual using the product as prescribed. The company’s deposit of £1000 further evidenced an intention to be legally bound. The implications of this ruling extend to other situations where performance is sought, rather than a promise in return. This principle is upheld to ensure the protection of the offeree once their action has begun.
Key Cases on Contract Unilateral
Several cases have refined the understanding of a contract unilateral, illustrating its application in various commercial and personal contexts. Blackpool & Fylde Aero Club Ltd v Blackpool BC [1990] 3 All ER 25, exemplifies a situation where an invitation to tender could amount to an offer of a contract unilateral. In this case, the court decided that the local council impliedly offered to consider all timely bids submitted by the invitees, this was due to the formal and prescribed procedure the council followed, and that the circumstances of the case created a contract unilateral. The council, having not considered the claimant’s bid was found to have breached the implied obligation. The court’s decision acknowledged the investment of time and resources made by the bidders in preparing their tenders. Another significant case, Daulia Ltd v Four Mill Bank Nominees Ltd [1978] Ch 231, established that, in a contract unilateral, there is an implied obligation on the offeror not to prevent the performance of the condition of the offer once the offeree has commenced performance. This case further clarified that while full performance is necessary for the offeror’s binding obligation to come into force, there is a preliminary obligation on the offeror to not obstruct completion of the conditions. It is evident from this ruling that legal mechanisms are in place to protect the offeree against arbitrary prevention of performance.
Revocation of a Contract Unilateral
The ability of an offeror to revoke an offer of a contract unilateral is subject to limitations. While an offer can generally be withdrawn at any time prior to acceptance, the legal position becomes more complex when the offeree has commenced performance. The case of Errington v Errington [1952] 1 KB 290 demonstrates that once an offeree has begun performance of the act required under a contract unilateral, the offeror is typically prevented from revoking the offer. Here, a father’s promise to transfer a house to his son and daughter-in-law upon completion of mortgage payments was considered a contract unilateral, and he was bound to his promise once the couple had started to pay the installments. This principle safeguards the offeree from the unfairness of investing time and effort into performance only for the offer to be withdrawn. Soulsbury v Soulsbury [2007] EWCA Civ 969 further affirmed the proposition that the offeror of a contract unilateral cannot revoke their promise once the offeree has commenced performance of the requisite act. This case, regarding an agreement to not pursue alimony payments in exchange for a sum of money, echoed the principles established in Errington v Errington, stressing the importance of protecting the offeree after performance has started.
Intention to Create Legal Relations in a Contract Unilateral
The requirement of an intention to create legal relations is as essential in contracts unilateral as it is in bilateral contracts. The court must determine whether a reasonable person would believe that the offeror intended to create a legally binding relationship, as demonstrated by Esso Petroleum v Commissioners of Custom & Excise [1976] 1 WLR 1. In this case, the House of Lords considered a sales promotion involving World Cup coins as creating a contract unilateral between Esso and the purchasers of its petrol. They decided that the coin promotion was meant to create a commercial advantage and it was undesirable to allow the company to claim the offer was mere puff. The court determined a presumption of intention to create legal relations due to the commercial context, even in the absence of explicit contractual terms. In contrast, social or domestic arrangements generally lack the requisite intention to create legal relations. Therefore, a similar promotion offered in a social context may not be interpreted as a contract unilateral. This distinction between commercial and social contexts demonstrates the importance of considering the background and circumstances surrounding an offer.
Consideration in a Contract Unilateral
In a contract unilateral, the act performed by the offeree constitutes the consideration for the offeror's promise. Unlike a bilateral contract where the consideration is the promise itself, here the act of performance serves this role. The consideration must be sufficient in law, although the courts will not typically enquire into whether it was adequate. Williams v Roffey Bros & Nicholls [1991] 1 QB 1 addressed the issue of consideration in the context of an existing contractual obligation. Here, the court held that a promise to pay more for the performance of an existing obligation was valid if the promisor obtained a practical benefit from the performance of this obligation. Although Williams v Roffey concerned a bilateral contract, it illustrates the principle that something of value, or a practical benefit, must be exchanged, and the same principle would apply to contract unilateral consideration. However, it is of importance to distinguish between a legal benefit, and a practical benefit. The practical benefit is the act that the promisor wants to achieve, for example, timely completion of a building project. Whereas, the legal benefit is the legal obligation of the promisor, for example, to pay an agreed sum of money, which is not sufficient consideration for a contract variation. The court stated that this distinction is made so as to avoid any possibility of economic duress. This understanding that performance, not just a promise, constitutes consideration is a unique characteristic of contracts unilateral.
Conclusion
A contract unilateral represents a critical area of contract law, distinguished by its acceptance via performance rather than reciprocal promise. Key aspects such as a clear offer, intention to create legal relations, and performance of the stipulated act are needed. Landmark cases like Carlill v Carbolic Smoke Ball Company and Errington v Errington demonstrate its implications in various contexts, and cases such as Daulia Ltd v Four Mill Bank Nominees Ltd and Blackpool & Fylde Aero Club Ltd v Blackpool BC demonstrate the obligation on the offeror to not prevent performance, and that an invitation to tender can result in a contract unilateral. These principles provide safeguards against revocation once performance has started and clearly outline how a contract unilateral may arise. Understanding its mechanisms ensures that agreements that operate by performance are seen as just as legally binding as bilateral contracts, which operate via promise. The principles established in the body of case law are crucial for maintaining fair contractual standards.
