bilateral contract
Definition Bilateral Contract
A bilateral contract is a legal agreement formed between two parties where both parties involved give mutual promises that they both are legally obligated to perform an act in exchange for the other party's act in future. It means the promise of one party is consideration supporting the promise of the other party. Each party is both promisor and promisee. A bilateral contract specifies a duty to act in exchange for another party's duty to act. It is also called "reciprocal" contracts.
Both parties to a bilateral contract make promises. With respect to the promise in issue, the party making the promise is the promisor and the other party is the promisee. Consideration is an essential component of a contract. Bilateral contracts were said to bind both parties the minute the parties exchange promises, as each promise is deemed sufficient consideration in itself.
Most of the contracts that exist in Islamic commercial law can be categorized as bilateral contracts. In other words, bilateral contracts are the default for most contracting situations.
A bilateral contract requires the consent of both parties and covers the remaining transactions in Islamic law which can be further divided into different classifications according to the purpose and reason of the deal and agreement. This classification is not meant to be exhaustive because in the future many new contracts with different features would possibly come to exist.
The scholars have classified bilateral contracts into six classifications which are as follows:
1. Contracts of exchange ('uqud al-mu’awadat)
Contract of exchange will primarily concern trading as well as selling and buying activities. The main contract of exchange is the contract of sale. Sale involves an exchange of a commodity for another commodity or of a commodity for money or of money for money. The contracts of exchange include a variety of contracts which differ from one another on terms of specific legal
A bilateral contract is a legal agreement formed between two parties where both parties involved give mutual promises that they both are legally obligated to perform an act in exchange for the other party's act in future. It means the promise of one party is consideration supporting the promise of the other party. Each party is both promisor and promisee. A bilateral contract specifies a duty to act in exchange for another party's duty to act. It is also called "reciprocal" contracts.
Both parties to a bilateral contract make promises. With respect to the promise in issue, the party making the promise is the promisor and the other party is the promisee. Consideration is an essential component of a contract. Bilateral contracts were said to bind both parties the minute the parties exchange promises, as each promise is deemed sufficient consideration in itself.
Most of the contracts that exist in Islamic commercial law can be categorized as bilateral contracts. In other words, bilateral contracts are the default for most contracting situations.
A bilateral contract requires the consent of both parties and covers the remaining transactions in Islamic law which can be further divided into different classifications according to the purpose and reason of the deal and agreement. This classification is not meant to be exhaustive because in the future many new contracts with different features would possibly come to exist.
The scholars have classified bilateral contracts into six classifications which are as follows:
1. Contracts of exchange ('uqud al-mu’awadat)
Contract of exchange will primarily concern trading as well as selling and buying activities. The main contract of exchange is the contract of sale. Sale involves an exchange of a commodity for another commodity or of a commodity for money or of money for money. The contracts of exchange include a variety of contracts which differ from one another on terms of specific legal