Unilateral Contract

In a unilateral contract, only one party is legally bound to perform. The second party is not obligated to act, but if they choose to do so, the first party must fulfill their promise (e.g., “I will pay you if you perform, but you don’t have to”).

Texas-Specific Nuance & Citation

In Texas transactions, a primary example of a unilateral contract is an Option Contract, such as the option period outlined in the TREC promulgated contracts. The seller is legally bound to keep the property off the market and sell if the buyer proceeds, but the buyer has no obligation to purchase.

The Trap

Candidates often assume that a contract cannot be valid unless both parties are bound from the very beginning. However, unilateral contracts are fully enforceable under Texas contract law once the specified action is performed or the required option fee is paid.

Worked Example

A seller signs a TREC contract with a 10-day option period. The buyer pays the seller a $200 option fee. The seller is unilaterally bound: they must sell the property to this buyer if the buyer decides to proceed. The buyer, however, can choose to terminate the contract at any time during those 10 days.