Unilateral Contract
A contract in which only one party makes an enforceable promise. Only the insurer is legally bound to pay; the insured can simply stop paying premium and let the policy lapse.
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Practice This Concept
A health insurance policy is considered a unilateral contract because:
Only the insurer makes a legally enforceable promise — In a unilateral contract, only one party makes an enforceable promise. The insurer promises to pay covered losses; the insured does not promise to stay healthy or to file claims — the insured merely performs a condition (paying premium) to keep the promise alive. This one-sided promise structure distinguishes insurance from bilateral contracts where both sides exchange enforceable promises.
National insurance concept
An insurance contract is called a unilateral contract because:
Only the insurer makes an enforceable promise; the insured's premium payments are conditions that keep the promise alive — In a unilateral contract, only one party makes a legally enforceable promise. The insurer promises to pay covered benefits; the insured's premium payments are generally treated as conditions to be performed rather than enforceable promises. If the insured stops paying, the policy lapses - the insurer does not sue for breach; the condition simply is not fulfilled. This distinguishes insurance from bilateral contracts, where both parties exchange promises.
National insurance concept
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