Bilateral Contract

In one sentence

A contract where both parties make binding promises to each other.

Plain English

A bilateral contract is the most common type of contract—it's a mutual exchange of promises between two parties. Each side commits to do something (or to refrain from doing something), and both promises are binding from the moment the contract is formed. Neither party has to actually perform yet; the contract is complete once both have agreed to their obligations. Most everyday contracts, like employment agreements and sales contracts, are bilateral.

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Example

You agree to sell your car to a friend for $10,000. You promise to deliver the car in good condition, and your friend promises to pay you $10,000 by next Friday. Both promises are binding the moment you shake hands or sign the agreement.

Used in a sentence

“The bilateral contract required both the buyer and seller to perform their respective obligations within 30 days.”

Related terms

Unilateral Contract

A contract where only one party makes a binding promise in exchange for the other's performance.

Express Contract

A contract where the parties clearly state all terms, either in writing or orally.

Implied Contract

A contract where the parties' intent to be bound is shown by conduct rather than explicit words.

Mutual Assent

Both parties agree to the same contract terms at the same time.

Breach of Contract

Failure to do what a contract requires, without a valid legal excuse.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Consideration

Something of value exchanged by each party to make a contract binding.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.