Unilateral Contract is a type of agreement where only one party makes a legally enforceable promise in exchange for a specific act or performance by another party. In simpler terms, it’s a one-sided contract that becomes binding only when the requested action is completed. This concept is commonly seen in insurance, contests, and reward-based scenarios.

In a unilateral contract, the offeror (the party making the offer) promises to fulfill an obligation if the offeree performs the required task. For example, if a person announces a reward for finding a lost item, they are bound to pay once someone returns that item. Until the task is performed, the offeror is not obligated to act, and the offeree has no legal obligation to perform it either. This distinguishes it from a bilateral contract, where both parties exchange promises and are immediately bound by the agreement.

In the financial and investment context, understanding unilateral contracts helps investors and traders recognize the nature of commitments in various agreements, especially in service-based arrangements or incentive-driven offers. It’s essential to read the terms carefully, as performance-based contracts can carry specific conditions that determine eligibility or payout.

From a legal perspective, unilateral contracts are enforceable under the Indian Contract Act, 1872, provided they meet standard legal requirements — such as lawful consideration, intention to create legal relations, and clear communication of the offer. Once the offeree performs the act as required, the contract becomes valid and binding, and the offeror must fulfill their promise.

In conclusion, a unilateral contract emphasizes performance over promises. It’s an important concept for individuals and businesses to understand, ensuring clarity in obligations and avoiding disputes arising from one-sided agreements.