Bilateral Contract


DEFINITION of 'Bilateral Contract'

A bilateral contract is a reciprocal arrangement between two parties where each promises to perform an act in exchange for the other party's act. Each party is an (a person who is bound to another) to its own promise, and an obligee (a person to whom another is obligated or bound) on the other party's promise. A bilateral contract specifies a duty to act in exchange for another party's duty to act.

BREAKING DOWN 'Bilateral Contract'

A bilateral contract, as opposed to a unilateral contract, is the type of contract that frequently comes to mind when contemplating contracts. It is a contract between two people or parties. An example of a bilateral contract would be the contract for the sale of a home. A home buyer agrees to pay the seller a certain amount of money in exchange for the title to the home; the home seller agrees to deliver the title in exchange for the specified sale price. When the contract is not fulfilled there is a breach in contract.

  1. Invitation For Bid - IFB

    When a company or organization provides detailed project specifications ...
  2. Breach Of Contract

    Violation of any of the agreed-upon terms and conditions of a ...
  3. Obligation

    The legal responsibility to meet the terms of a contract. If ...
  4. Land Contract

    An agreement between a buyer and seller of property in which ...
  5. Deed

    A legal document that grants the bearer a right or privilege, ...
  6. Title

    The right to the ownership and possession of any item that may ...
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Term

    What are Mutually Exclusive Events?

    In statistics, mutually exclusive situations involve the occurrence of one event that does not influence or cause another event.
  3. Entrepreneurship

    Risks Associated With Government Contracts

    Government contracts can be rewarding, but they also come with a variety of risks.
  4. Entrepreneurship

    10 Public Companies That Rely On Govt. Contracts

    We look at 10 of the top public companies whose businesses rely on U.S. government contracts.
  5. Economics

    How Does an Operating Lease Work?

    Operating lease is a term used mostly in accounting to denote a lease that gives the lessee rights to use and operate an asset without ownership.
  6. Entrepreneurship

    Lockheed Martin Is Tight With The US Government

    The relationship between Lockheed Martin and the U.S. government is long-standing and the company's biggest revenue source, but it may be deteriorating.
  7. Home & Auto

    ‘Turnkey’ Properties: A Sensible Investment?

    Turnkey properties can make sense - for people who want a real estate investment without truly being in the real estate business.
  8. Economics

    Understanding Covenants

    A covenant is a term placed in a loan that requires the borrower to either maintain or refrain from certain business activities.
  9. Economics

    What is Earnest Money?

    An earnest money deposit shows the seller that a buyer is serious about purchasing a property.
  10. Retirement

    Time To Hire A Senior Move Manager?

    Watch for these signs that you or an elderly family member may need to downsize and move somewhere easier to manange. A senior move manager can help.
  1. How risky is a syndicated loan for the lender?

    Syndicated loans are specifically designed to spread risk exposure among different lenders in a joint liability venture. ... Read Full Answer >>
  2. Are waivers of subrogation clauses ever ineffective in preventing a third-party lawsuit?

    Sometimes waiver of subrogation clauses are ineffective at preventing a third-party lawsuits. In determining who is responsible ... Read Full Answer >>
  3. What is an alienation clause?

    Whether used in reference to insurance policies, mortgages or commercial loans, an alienation clause stipulates that should ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!