Definition
A contract where one party makes a promise in exchange for a specific act (not a promise) by the other party — acceptance occurs through performance of the act, not through a promise to perform.
In a unilateral contract, only one party is bound by a promise from the outset — the promisor promises to pay/perform if the other party does a specified act. The offeree is not bound to perform the act; they simply perform it to accept the offer and earn the reward. Classic example: a public reward advertisement ('₹10,000 for information leading to recovery of stolen goods'). The finder of information is not obliged to provide it, but if they do, the advertiser must pay. Under Indian law (Section 8 ICA), acceptance by conduct is recognised — performance of the act constitutes acceptance.
Statutory Definition
Section 8, Indian Contract Act, 1872: 'Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.' This provision recognises acceptance by performance — the mechanism of unilateral contract formation. Section 2(b): 'When the person to whom the proposal is made signifies his assent thereto, he is said to accept the proposal' — assent can be by performance (conduct) under Section 8.
Etymology & Origin
From Latin 'unilateralis' (one-sided) from 'unus' (one) + 'latus' (side). A unilateral contract is 'one-sided' in the sense that only one party has made a promise at the time of formation — the other party's obligation is entirely optional and conditioned on their choice to perform.
Full Legal Analysis
Unilateral Contract: One Promise, One Act
A unilateral contract is the offer of a reward in exchange for an act — not a promise. The classic form is the public advertisement: “₹50,000 reward for information about the missing child.” The advertiser has made a promise; the public has made no promise. Anyone who performs the act (provides the information) accepts the offer and earns the reward. This structure creates an interesting legal puzzle: when does the contract become binding on the promisor, and can the offer be revoked mid-performance?
Can the Offer Be Revoked Mid-Performance?
The critical issue in unilateral contracts is revocability once the offeree has begun performance. In English law (Errington v. Errington [1952] 1 KB 290), once performance has begun, the offeror cannot revoke the offer. Indian courts have not definitively resolved this — but under Section 5 ICA, a proposal may be revoked at any time before the communication of its acceptance. Since acceptance in a unilateral contract occurs only on completion of the act, there is a risk that revocation mid-performance is technically valid under the ICA. Practical courts lean against allowing this as inequitable.
Examples in Indian Commercial Practice
Common unilateral contracts in Indian commercial life: (a) Reward advertisements for lost property or missing persons; (b) Prize competitions ('first person to solve this problem wins ₹1 lakh') — though regulated under the Prize Competitions Act, 1955; (c) Agent's commission contracts in some structures ('I will pay 2% if you find me a buyer' — no obligation on the agent to search); (d) Indemnity contracts where one party promises to indemnify another against consequences of their own acts (Section 124 ICA).
“In a unilateral contract, the promisor says: ‘Do this, and I promise to pay.’ The other party says nothing — they simply do. And in the doing, the contract is formed and the promise becomes due.”
This Term in Indian Statutes
Indian Contract Act, 1872, 1872
"Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal."
Acceptance by performance — the mechanism of unilateral contract formation
