Unilateral Contract
Definition and meaning of Unilateral Contract in real estate.
A unilateral contract is a one-sided agreement where one party promises to perform an action in exchange for an actual performance from another party, rather than a reciprocal promise.
In more detail
In this type of contract, the second party is under no legal obligation to act, but if they choose to do so, the first party is legally bound to fulfill their promise. This differs from a bilateral contract, where both parties exchange mutual promises to perform.
A classic example in real estate is an open listing agreement, where a seller promises to pay a commission to any agent who brings a ready, willing, and able buyer, but the agents are not obligated to look for one. Another example is an option agreement, which gives a buyer the right, but not the obligation, to purchase a property within a set timeframe.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Contract nature | One-sided promise |
| Obligation | Only the promisor is bound to perform if the condition is met |
| Common forms | Open listings, option contracts, reward offers |
A property owner signs an open listing contract promising to pay a commission to any real estate broker who brings a buyer, though no broker is legally required to search for a buyer.
Frequently asked questions
What is the main difference between a unilateral and a bilateral contract?
A bilateral contract involves mutual promises between two parties, whereas a unilateral contract involves a promise from only one party that becomes binding only when the other party performs the requested action.
Can a seller revoke a unilateral real estate contract?
Typically, a seller can revoke the offer before any party has begun performing the requested action, though laws regarding revocation can vary by state.
Related terms
Sources & references
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