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A contract in which one party makes an obligation to perform without receiving in return any express promise of performance from the other party. One party gives a promise in exchange for an act; that party is not obligated to perform on that promise unless the other party decides to act. An example is an open listing contract, where the seller agrees to pay a commission to the first broker who brings a ready, willing, and able buyer. The contract actually is created by the performance of the act requested of the promisee, not by the mere promise to perform. Note that a unilateral contract contains a promise on one side, whereas a bilateral contract contains promises on two sides.

Before the act is performed, the promise of the promisor is a mere unilateral offer. When the act is performed, this unilateral offer and the performed act give rise to a unilateral contract. The broker makes no promise to perform or to do any acts such as advertising. He or she can accept the contract and thus bind the seller only by actual performance, that is, by producing a buyer. (Many standard exclusive-right-to-sell listings are now written as bilateral contracts wherein the broker agrees to use reasonable efforts to locate a buyer and the seller agrees to pay a commission if the property is sold by the broker, the seller, or anyone else.)

The classic example of a unilateral contract is a newspaper notice offering a reward for the return of a lost dog. The offeree is under no obligation to look for the dog, but if he or she does in fact return the dog, then the offeror owes him or her reward money. Another example is a brokerage company that promises to pay a $1,000 bonus to the salesperson who sells the most units in a specific condominium project. An option, in which the seller agrees to sell for a certain period of time at set terms, provided the buyer performs by paying the specified option price, is also a unilateral contract.
Dearborn Real Estate Education
This "Word of the day" is excerpted from The Language of Real Estate, 6th Edition by John Reilly (published by Dearborn Real Estate Education, 2006 copyright). To purchase the complete book, with over 2800 key terms and definitions, or to browse through Dearborn's hundreds of other professional real estate titles, including Real Estate Technology Guide by Klein, Barnett, Reilly, click here.