Unilateral contracts

How BC law treats it

In a bilateral contract, both parties exchange promises. In a unilateral contract, the offeror promises something in return for performance, and the offeree is not bound to do anything. The classic example is Carlill v Carbolic Smoke Ball Co, where a promise to pay anyone who used the product and still caught influenza was enforced. The better view, drawn mainly from English authority that Canadian courts tend to follow, is that once the offeree has started performing, the offeror cannot revoke the offer without giving the offeree a reasonable chance to finish. Tendering is the most important business setting. In R v Ron Engineering & Construction (Eastern) Ltd, the Supreme Court of Canada held that submitting a compliant bid in response to a call for tenders can create 'Contract A' between the owner and each bidder, separate from 'Contract B', the construction contract with the winning bidder. M.J.B. Enterprises Ltd v Defence Construction (1951) Ltd confirmed that whether Contract A arises depends on the tender documents, and that an owner can owe an implied duty to accept only compliant bids. Incentive programs can also be unilateral contracts: a sales bonus offered to staff who hit a target, or a referral fee promised to anyone who introduces a buyer. A conditional contract of purchase and sale is not a unilateral contract; it is a bilateral contract with conditions precedent, and an option to purchase is an irrevocable offer.

What it means for your business

Contractors bidding on BC public and private projects rely on Contract A to hold owners to the tender rules, and owners need careful tender documents to control their obligations. Businesses offering rewards, bonuses or referral fees may create binding promises they did not intend. Clear written terms on eligibility, deadlines and the right to withdraw the offer prevent most disputes. Example: A Fraser Valley municipality calls for tenders on a road project and awards the work to a bidder whose bid did not meet a mandatory requirement. A compliant bidder sues for breach of Contract A, claiming the profit it would have earned.

Risks and common mistakes

Describing a conditional purchase agreement as a unilateral contract. Issuing tender documents without a clear privilege clause and evaluation criteria. Withdrawing a reward or incentive offer after someone has substantially performed. Announcing a staff bonus scheme without written eligibility rules and a right to amend. Assuming no contract exists until the construction contract is signed in a tender process.