In nearly all areas of life, we have contracts, and in fact, a contract is so common that there are even people who do not realize that they have entered into a contract. Every contract must have two parties, but the contract does not require both parties actually performing specific acts. In the real estate industry, there is a bilateral contract real estate agreement between two parties where they both agree to fulfill their side of the bargain. It is a transaction between a seller and the buyer with the purchase of property where the buyer and seller both agree on certain obligations to fulfill a promise. 


In the real estate industry, there are many contracts and if you are buying or selling a house it will become important to understand what happens with a bilateral contract real estate agreement, and what the role is with those entering these bilateral contract real estate agreements. 

In the world of real estate, there are different kinds of real estate contracts –

  • Purchase agreement contracts
  • Lease agreements
  • Contracts for deed
  • Power of attorney contracts. 
  • Bilateral contract real estate a reciprocal agreement

As a real estate investor, you will find yourself coming across this kind of bilateral contract real estate arrangement. It is also sometimes referred to as a ‘reciprocal contract’ as both parties have to reciprocate so as to fulfill the agreement. 

A lease agreement is a bilateral contract real estate arrangement because typically one party will agree to pay rent every month and the other party agrees to occupy the premises. 

The lease is a bilateral contract real estate legal agreement that will further lay out when the rent is due each month, the date that the lease begins and ends, and other stipulations. Both the tenant and the landlord will have obligations that the lease states that each will have to fulfill and this makes it a bilateral contract real estate deal as two parties have obligations. 

What is a bilateral agreement real estate?

Agreement and contract are two concepts that have similar meanings. Contracts, in principle, are always in writing, unlike agreements that can be both oral and written. When it comes to the real estate market, however, more often than not agreements are also mostly written. 

Of course, a bilateral contract real estate agreement can also be a contract between a company and one person or a group of people. A bilateral agreement is essentially the same as a bilateral contract. 

What is a bilateral contract?

As the most commonly used type of contract, a bilateral contract real estate agreement contains a promise by each of the parties to fulfill certain obligations so as to complete a deal. A typical example of a bilateral contract real estate is when a seller offers their house for sale, and a buyer agrees to pay the amount stipulated by the seller. 

In the bilateral contract real estate arrangement,  each party is required to do what they promised to do. The buyer must pay the sale price given by the seller and the seller must transfer ownership of the house to the buyer. That is the deal. 

What is a bilateral contract example?

A typical example of a bilateral contract real estate agreement is when a seller is obligated to hand over the house and put it in the buyer’s name. This takes place if the buyer sticks to their side of the bargain and pays for the amount that appears in the bilateral contract. 

When it comes to the seller and the real estate agent, it becomes a unilateral contract as the seller has to pay the agent a commission for selling the house. 

Is a real estate contract bilateral or unilateral?

You need to first understand what a unilateral contract is. They involve action by just one person or a group. So in other words, unilateral contracts are where only one person makes an agreement. In real estate, an example of a unilateral contract is an open listing contract and an option to purchase agreement. 

With an open listing agreement, the homeowner can contract with multiple brokers. With this document, the seller is able to sell their property on their own or execute open listings with more than one broker. The seller will pay a commission to the first broker who comes with a buyer. Such a contract is a unilateral contract. 

When just one party is obligated to perform

A unilateral contract, different from the bilateral contract real estate agreement, is a contract where just one party makes a promise without first making sure of a reciprocal or mutual agreement from the other party. With the unilateral contract, the party that is the offeror makes a commitment in exchange for an act by the other party, who is the offeree.

Unilateral doesn’t mean one-sided in the regard that only one party does something. It means that even though both parties gave their consideration, only one made a promise as consideration. 

On the other hand, as suggested, a bilateral contract real estate requires both parties having to conform to their obligations. It does seem amazing that unilateral contracts even exist. And yet a good example of a unilateral contract is with something we are all familiar with – insurance contracts.

 The insurer will pay the insured person a certain amount in the event of an accident and if the accident does not happen, the insurance company does not payout. 

What is the difference between a bilateral contract and a unilateral contract?

As suggested, with a unilateral contract, only one party performs an obligation without any reciprocal assurance from the other party. With a bilateral contract real estate, both parties agree to the terms and conditions.

It is important for you to know the type of contract you are entering into and how it will affect you. 

A unilateral agreement or contract is where a document is drafted by one party. As an example, an offer can be made but the other party is not obligated to act upon the offer. With unilateral contracts, acting upon an offer is not considered as acceptance of the offer.

It is only when the offeree completes the task laid out in the agreement that the contract is accepted. This obliges the offeror to return the promise according to the contract. 

These contracts are used in cases where the offeror is willing to pay for the specified act.

Revocation of unilateral contracts can take place before the promise begins with their obligation. 

The bilateral contract as stated is an agreement between two parties and they are the most common contract type. Most business contracts are bilateral.

The difference between a unilateral and bilateral contract real estate is the reciprocal obligation from the parties. 

Even though there are many differences between the two contracts, there are also some similarities in that they are both legally binding and there is also a promise and consideration in both of the contract types. 

What criteria are needed to enforce a bilateral or unilateral contract in court?

When a dispute comes up because of a party suffering losses, parties to the contract can have an intermediary settle the dispute. There are many written contracts that define the acceptable process within the agreement.

 A party suffering because of the breach or something else that is wrong can seek a remedy to compensate the injured party.

When a dispute arises and settlement is not defined in the contract, and if other kinds of resolution have not worked, the most commonly used way to sort out disputes or enforce contracts is by means of a lawsuit in court. 

Cases with lower amounts are argued in small claims courts.  

For bilateral contract real estate- and unilateral agreements to be enforceable legally in court there are certain criteria required. There has to be some kind of record showing that all parties involved have consented to the terms. These records take the form of a written & signed contract.

Both contracting parties with a bilateral contract are required to enter into a legally binding agreement so as to perform a certain action. With both unilateral and bilateral contracts, they must include each of the parties’ legal capacities, the promisor’s offer, and the promisee’s acceptance of the offer as well as other lawful terms. 

Why do courts prefer bilateral contracts?

bilateral contract real estate
bilateral contract real estate

Contract law is very complicated, especially when it comes to things such as offers and considerations. If you have legal issues regarding a contract, whether a bilateral contract real estate or unilateral, it is always better to talk to an experienced contract lawyer. 

Maybe the courts prefer bilateral law as it is more common, more familiar. Maybe they need to refer to their law books to see how unilateral law works whereas with bilateral contract real estate they do not. 

A lawyer can explain your obligations under any contract that has been entered into and even help you draft a contract for entering into an agreement with another party. This way your intentions will be clear to all those involved.

Also, when it comes to a breach of contract, there are penalties for breaching contracts. Real estate contracts can be breached so an apprehension of the law of contracts is important with real estate transactions. 

There are different rules relating to everything involved with real estate. A real estate contract is a binding agreement – an exchange of acts or promises that creates a legal duty that the law will enforce.

Is a bilateral contract an offer?

A bilateral contract real estate is very similar to an offer and in fact, they are closely linked. To create a valid contract, one party has to make an offer. The other party accepts the offer, and between the two, consideration must be exchanged.

As already mentioned, the one who makes the offer is referred to as the offerer, while the other person who receives the offer is known as the offeree. Both parties can benefit from a detailed description of the offer and its terms.

A contract is essentially a promise between two people and an offer is referring to a promise that is dependent on a certain promise. 

Determining whether one party has made the offer can be a bit of a challenge in a contract case. The offer has to be definite and also reasonable enough for the other party to believe that it is in fact an offer. 

In the world of real estate, a verbal offer is not enforceable against the offeror for contracts where real estate is involved. When a bilateral contract real estate is in writing, the moment the contract is signed, bilateral contract real estate parties are obligated to deliver their consideration. Unlike the bilateral contract real estate agreement, with the unilateral contract, the promisor is not obligated to provide their consideration until the promise delivers their consideration.

If the person receiving the offer accepts it and makes a partial payment, the offeror will be bound to the terms and conditions of the offer. Once the offeror takes the payment, an agreement is formed. The person will be legally obligated to perform their part of the contract. If the offeror does not fulfill their contractual duties, the offeree can take legal action. 

Whether bilateral contract real estate or unilateral contract in real estate, the very term contract means a promise made by one person to another. These contracts are an important part of real estate where it is a requirement of law that contracts be written to be binding. 

A bilateral contract real estate has a number of elements such as offer, consideration, legal intent, acceptance, and others and each of these elements has to be present for a contract to be binding. 

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