Unilateral Contracts: Definition, Key Cases, and Practical R...

Introduction

A unilateral contract is a promise made by one party (the offeror) in return for performance of a specific act by another (the offeree). The offeree is not obliged to act. However, if the offeree performs the requested act, the offeror must keep their promise. Acceptance happens through the act itself, not through a counter‑promise.

Classic examples include reward adverts (for lost property or information) and some tenders or promotions. The leading case is Carlill v Carbolic Smoke Ball Co [1893], where the court treated an advert offering £100 as a binding offer to the world, accepted by using the product as directed.

This guide sets out the rules on formation, acceptance, revocation, intention to create legal relations, and consideration, supported by key cases and practical tips.

What You'll Learn

• What a unilateral contract is and how it differs from a bilateral contract
• How acceptance works through performance (and when communication is not required)
• When and how an offer can be revoked, and what changes once performance has begun
• The role of intention to create legal relations, especially in commercial promotions
• How consideration works where performance is exchanged for a promise
• Key cases: Carlill; Blackpool & Fylde Aero Club; Daulia; Errington; Soulsbury; Esso; Williams v Carwardine
• Practical steps for drafting, advising, and problem questions

Core Concepts

Definition and Formation

• One-sided promise: The offeror promises something (often money) in return for a defined act.
• Open class of offerees: Offers may be made to a particular person, a closed group, or the public at large.
• Acceptance by performance: The offeree accepts by doing the act; no separate promise is required.
• Requirements:
  • Clear offer with definite terms (what act, how to perform, any conditions, and how to claim).
  • Intention to create legal relations (usually presumed in commercial settings).
  • Consideration (the act itself).
  • Certainty: Terms must be sufficiently clear to be enforceable.

Contrast with bilateral contracts, where both parties exchange promises and obligations arise immediately on agreement.

Acceptance by Performance (and Knowledge of the Offer)

• No need to notify acceptance: In Carlill v Carbolic Smoke Ball Co [1893], compliance with the prescribed use of the product was enough. The advert was an offer to the world, accepted by performance.
• Knowledge matters: The offeree must know of the offer when performing the act. In reward scenarios, doing the act without knowledge of the reward does not amount to acceptance. Once the offeree knows of the offer, motive is irrelevant (Williams v Carwardine (1833)): she knew of the reward, even if her motive was not to obtain it.
• Proof of performance: Offerees should evidence compliance with the stated conditions (time limits, method, any verification steps). Offerors should make proof requirements clear to avoid dispute.

Revocation and the Effect of Commencing Performance

• General rule: Offers can be withdrawn any time before acceptance. For unilateral offers, acceptance occurs on full performance unless the offer says otherwise.
• Protection once performance begins:
  • Daulia Ltd v Four Mill Bank Nominees Ltd [1978]: Once the offeree starts performance, there is an implied obligation on the offeror not to prevent completion.
  • Errington v Errington [1952]: Promise to transfer a house once mortgage instalments were paid could not be revoked after the couple started paying, provided they continued.
  • Soulsbury v Soulsbury [2007]: Similar protection where one party started performing the agreed act.
• Public offers and revocation: For offers to the world, the offeror must take reasonable steps to publicise any withdrawal. A hidden or obscure revocation notice is risky.

Intention to Create Legal Relations

• Commercial context: Presumption of intention usually applies. In Esso Petroleum v Commissioners of Customs & Excise [1976], a World Cup coins promotion was treated as legally intended, not a mere sales puff.
• Evidence of seriousness: Language, deposit of money, and the structured nature of the offer can show intention (e.g., the £1,000 deposit in Carlill).
• Domestic and social contexts: Presumption against intention. A promise within a family may not be binding unless facts point clearly to legal intent.

Consideration in Unilateral Contracts

• Performance as consideration: The act requested is the price of the promise. Adequacy is irrelevant; it must be sufficient in law.
• Practical points:
  • Past consideration is not good consideration; the act must be done in response to the offer.
  • Performance of an existing public duty usually is not good consideration unless something extra is provided.
• Modern contract law recognises that where a promisor obtains a practical benefit, consideration may be found in some bilateral variations (Williams v Roffey Bros [1991]). While that case did not concern a unilateral contract, it illustrates the court’s focus on real value conferred. For unilateral contracts, the stipulated act remains the central consideration.

Key Examples or Case Studies

• Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

  • Facts: Advert promised £100 to anyone who used the smoke ball as directed and still caught influenza; company deposited £1,000 as a show of seriousness.
  • Held: Advert was an offer to the world. Mrs Carlill accepted by performance. No separate communication of acceptance was needed.
  • Why it matters: Confirms acceptance by performance, and presumption of intention in a commercial promotion with definite terms.

• Williams v Carwardine (1833) 5 C & P 566

  • Facts: Reward for information leading to conviction. Claimant knew of the offer but provided information mainly for other reasons.
  • Held: Knowledge of the offer sufficed; motive did not matter.
  • Why it matters: Reinforces that knowledge of the offer is needed, but the reason for acting is irrelevant.

• Blackpool & Fylde Aero Club Ltd v Blackpool BC [1990] 3 All ER 25

  • Facts: Invitation to tender with strict conditions. A timely and compliant bid was wrongly not considered.
  • Held: There was a unilateral contract to consider all conforming bids submitted on time; breach occurred.
  • Why it matters: Tender processes may give rise to a unilateral obligation to consider compliant submissions.

• Daulia Ltd v Four Mill Bank Nominees Ltd [1978] Ch 231

  • Facts: Negotiations for sale; buyer had conditions to fulfil before a contract would be executed. Buyer started to perform; seller refused to proceed.
  • Held: Once performance is underway, there is an implied obligation on the offeror not to hinder completion.
  • Why it matters: Limits the offeror’s ability to withdraw after performance begins.

• Errington v Errington [1952] 1 KB 290

  • Facts: Father promised to transfer a house if son and daughter‑in‑law paid mortgage instalments. After the father died, the widow sought possession.
  • Held: The promise could not be revoked as long as payments continued.
  • Why it matters: Shows continuing protection for an offeree who keeps performing the stated condition.

• Soulsbury v Soulsbury [2007] EWCA Civ 969

  • Facts: Agreement involving forbearance from pursuing maintenance in exchange for a payment.
  • Held: Treated as a unilateral offer; once performance commenced, the promise could not be withdrawn.
  • Why it matters: Confirms the protective approach to unilateral offers after performance starts.

• Esso Petroleum v Commissioners of Customs & Excise [1976] 1 WLR 1

  • Facts: Petrol promotion offering coins to customers.
  • Held: Presumption of intention in commercial settings; the promotion could be contractual.
  • Why it matters: Shows how promotional schemes can amount to binding unilateral offers.

Practical Applications

• Drafting reward adverts and promotions

  • Use clear, definite wording. Specify conditions, time limits, numbers available, eligibility, and how to claim.
  • Include a clear revocation clause and method (e.g., date/time of withdrawal and where it will be announced).
  • Avoid ambiguous phrasing that could be read as a mere puff unless that is truly intended (and make that plain).

• Managing tenders and procurement

  • If you intend to consider only compliant bids, say so and set out the criteria and submission requirements.
  • If you do not want to be bound to consider all conforming bids, make this explicit.
  • Maintain an audit trail showing that all timely, compliant bids were considered.

• Advising on revocation

  • Before performance starts: Revocation is generally possible if effectively communicated.
  • After performance starts: Treat the offer as temporarily irrevocable; avoid actions that obstruct completion.
  • For offers to the public: Take reasonable steps to publicise withdrawal in the same channels used for the offer.

• Evidence and dispute avoidance

  • Offerors: Keep records of terms, publication dates, deposits (if any), and revocation notices.
  • Offerees: Keep evidence of knowledge of the offer and compliance (timestamps, receipts, witness statements).

• Exam or problem question approach

  • Is the promise unilateral or bilateral?
  • Was there a clear offer with legal intention and certainty?
  • Did the offeree know of the offer when performing?
  • Has performance started (and if so, can the offer still be revoked)?
  • Is there valid consideration (the act) and any bars (e.g., past consideration)?
  • Which cases support the analysis (Carlill; Williams v Carwardine; Daulia; Errington; Blackpool; Esso)?

Summary Checklist

• Unilateral offer: one promise in return for a defined act
• Acceptance occurs through performance; no need to notify separately
• Offeree must know of the offer when performing; motive does not matter
• Revocation is possible until performance begins; after that, do not hinder completion
• Commercial settings usually show intention; social settings usually do not
• The act is the consideration; it must be in response to the offer
• Tenders can create a duty to consider compliant bids if the process implies it
• Keep terms clear: conditions, time limits, proof requirements, and revocation method
• Use case law to anchor each step: Carlill; Williams v Carwardine; Blackpool; Daulia; Errington; Soulsbury; Esso

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