Bilateral Contract


Unlike a unilateral contract, in which only one party agrees to perform a service, a bilateral contract describes an agreement that requires both parties to perform an obligation. An instance where such a contract may take place is when a seller agrees to pay half of the cost to have a home’s electrical wiring reconstructed if the buyer agrees to pay the other half. When both parties pay their half of the expense, the job will be performed, and the contract fulfilled; both parties are mutually obligated to perform the action or service. Bilateral contracts are sometimes referred to as “reciprocal contracts,” since both parties need to reciprocate in order to fulfill the agreement. A lease agreement can be viewed as a bilateral contract because one party agrees to pay monthly rent, and the other party agrees to allow occupancy of the property.