Opinion ID: 895305
Heading Depth: 3
Heading Rank: 1

Heading: Law of Unilateral Contracts

Text: Unlike a bilateral contract, in which both parties make mutual promises, Hutchings v. Slemons , 174 S.W.2d 487, 489 (Tex. 1943), a unilateral contract is created when a promisor promises a benefit if a promisee performs, Vanegas v. Am. Energy Servs. , 302 S.W.3d 299, 303 (Tex. 2009). The requirement of mutuality is not met by an exchange of promises; rather, the valuable consideration contemplated in “exchange for the promise is something other than a promise,” i.e., performance. Restatement of Contracts § 12 cmt. a (1932). A unilateral contract becomes enforceable when the promisee performs. Vanegas , 302 S.W.3d at 303. We have explained that “‘[a] unilateral contract occurs when there is only one promisor and the other accepts . . . by actual performance,’” rather than by the usual mutual promises. Id. at 302 (quoting 1 Richard A. Lord, Williston on Contracts § 1.17 (4th ed. 2007)). Although the concept of a unilateral contract has been questioned by some authorities, see, e.g. , Restatement (Second) of Contracts § 1, rptrs. note on cmt. f (1981), the concept enjoys continued recognition among many scholars of contract law, see, e.g. , 1 Williston on Contracts § 1.17, and has recently been reaffirmed as part of the common law of Texas by this Court, see Vanegas , 302 S.W.3d at 302. In Vanegas , we held that when an employer offered to share five percent of the proceeds of a sale or merger of the company with certain employees if they remained employed until the sale or merger, a unilateral contract was formed when the employees remained employed for the requested time. Id. at 303. We noted that “‘unilateral contract analysis is applicable to the employer’s promise to pay a bonus or pension to an employee in case the latter continues to serve for a stated period.’” Id. (quoting 2 Joseph M. Perillo & Helen Hadjiyannakis Bender, Corbin on Contracts § 6.2 (1995)). Thus, a unilateral employment contract is created when an employer promises an employee certain benefits in exchange for the employee’s performance, and the employee performs.