contracts
bilateral contract
A bilateral contract is an agreement in which both parties exchange promises and each is legally obligated to perform. A real estate purchase agreement is the classic example: the seller promises to transfer title and the buyer promises to pay the price. Most exclusive listing agreements are also bilateral. If either party fails to perform as promised, the other may have remedies for breach.
- Exam tip
- Bilateral means a promise for a promise. Unilateral means a promise for an act, such as an open listing or an option before it is exercised.
- Example
- A buyer promises to pay $350,000 and the seller promises to convey the house on June 30. Both are bound, forming a bilateral contract.
Related terms & state variants
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Last verified: 2026-10-23