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

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

    The right to the ownership and possession of any item that may ...
  4. Deed

    A legal document that grants the bearer a right or privilege, ...
  5. Obligation

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

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