When we talk about contracts, there are two main types – unilateral and bilateral. A unilateral contract is a legal agreement in which one party promises to do something in exchange for the other party`s performance. A bilateral contract, on the other hand, involves two parties making mutual promises to one another. But did you know that there are some contracts that begin as unilateral but can eventually become bilateral? Let`s take a closer look at which of the following falls under this category.
1. Offers for Rewards
An offer for a reward is a classic example of a unilateral contract. For instance, if you post a lost pet notice offering a reward for its return, someone who finds your pet can claim the reward by complying with the conditions you set forth. This is a unilateral contract because the person who finds the pet is not making a promise in exchange for the reward. However, if you then offer to pay the same person an additional amount of money to care for the pet until you can pick it up, it becomes a bilateral contract.
2. Insurance Policies
Insurance policies are another example of contracts that can begin as unilateral and turn into bilateral. When you purchase an insurance policy, you agree to pay premiums in exchange for the company`s promise to cover losses that may occur. This is a unilateral contract because you are the only one making a promise. But if a loss occurs and you file a claim, the insurance company must also fulfill its promise by paying out the agreed-upon amount. At this point, the contract becomes bilateral.
3. Option Agreements
Option agreements are contracts in which one party pays another for the exclusive right to buy property or assets at a predetermined price. For example, a real estate developer might pay an option fee to a landowner for the right to buy a piece of property within a specified time frame. Initially, this is a unilateral contract because the landowner is not making any promises in return for the option fee. However, if the developer decides to exercise the option and purchase the property, the landowner must then convey the property to the developer for the agreed-upon price – making it a bilateral contract.
In conclusion, many contracts begin as unilateral and can transform into bilateral over time. Offers for rewards, insurance policies, and option agreements are all examples of contracts that can follow this pattern. It`s important to understand the nuances of contract law and be mindful of the terms and conditions of any agreements you make.