An agreement between two or more parties that creates a legally binding obligation forms the basis of a contract. These agreements are a part of countless daily interactions, from simple purchases to complex business deals. While many contracts involve both sides making a promise, Louisiana law also recognizes a different structure known as a unilateral contract.
What is a Unilateral Contract in Louisiana?
A unilateral contract is an agreement where one party makes a promise that invites the other party to accept by performing a specific action. Unlike other contracts, acceptance is not communicated through a return promise but through the act itself. The obligation is one-sided, resting on the person making the promise, known as the offeror.
According to Louisiana Civil Code, a contract is unilateral when the party who accepts the obligation does not assume a reciprocal obligation.1FindLaw. Louisiana Civil Code Tit. IV, Art. 1907: Unilateral Contracts This means the person performing the act, the offeree, is never legally bound to perform. The contract only binds the offeror if the offeree completes the task.
How Unilateral Contracts Differ from Bilateral Contracts
The primary distinction between a unilateral and a bilateral contract lies in the method of acceptance. A unilateral contract involves a promise in exchange for an act, whereas a bilateral contract involves a promise in exchange for another promise. In a bilateral agreement, both parties are bound by their mutual promises from the moment the agreement is made.2Justia. Louisiana Civil Code Article 1908: Bilateral or Synallagmatic Contracts
With a unilateral contract, no obligation exists for the offeror until the other party starts performance. The offeree cannot be sued for failing to perform the act.
Creating a Unilateral Contract in Louisiana
The formation of a unilateral contract centers on a clear offer. An offeror must make a clear promise that is conditional upon a specific act by the offeree, with terms clear enough that the offeree understands what performance is required.
Under Louisiana Civil Code, when an offer invites acceptance by performance, a contract is formed the moment the offeree begins the requested act.3Justia. Louisiana Civil Code Article 1939: Acceptance by Performance This commencement of performance is the legal trigger for acceptance, obligating the offeror to their part of the deal once the performance is complete.
Common Examples of Unilateral Contracts
A common illustration is a reward offer. If someone posts a sign offering a $100 reward for the return of a lost dog, they are making an offer for a unilateral contract. The offeror is promising to pay $100, and anyone can accept this offer by performing the act of finding and returning the dog.
Another example is a bonus offered by an employer for achieving a specific sales target. The company promises to pay a bonus if an employee meets the goal. The employee is not required to meet the target, but if they do, the company is contractually obligated to pay the promised bonus.
Changing or Withdrawing the Offer in Louisiana Unilateral Contracts
Generally, an offer can be withdrawn at any time before it is accepted. However, Louisiana law provides specific protection to the offeree once they have started to perform. According to Louisiana Civil Code, once performance has begun, the offeror cannot revoke the offer for the reasonable time necessary to complete the act.4Louisiana State Legislature. Louisiana Civil Code Art. 1940: Acceptance Only by Completed Performance This prevents an offeror from withdrawing to avoid payment when performance is nearly complete.
The offeree can choose to abandon the performance at any time, in which case the offeror is no longer bound. If the offeree begins to perform, they may be required to promptly notify the offeror, as a failure to do so can make them liable for any damages the offeror suffers.
What Happens if the Promise is Broken in a Unilateral Contract?
If the offeree completes the required performance and the offeror fails to fulfill their promise, a breach of contract has occurred. The performing party has legal recourse and can file a lawsuit to enforce the agreement. The primary remedy for a breach is specific performance, which means the court orders the breaching party to fulfill their original promise.5Louisiana State Legislature. Louisiana Civil Code Art. 1986: Right of the Obligee
Alternatively, the court may award damages to the non-breaching party. For instance, in the lost dog example, if the owner refused to pay the $100 reward after the dog was returned, the finder could sue to recover the promised amount.