9.2 Bilateral or Unilateral Contract G. S. Adams, Jr., vice president of the Was
ID: 407059 • Letter: 9
Question
9.2 Bilateral or Unilateral Contract G. S. Adams, Jr., vice president of the Washington Bank & Trust Co., met with Bruce Bickham. An agreement was reached whereby Bickham agreed to do his personal and corporate banking business with the bank, and the bank agreed to loan Bickham money at 7.5 percent interest per annum. Bickham would have ten years to repay the loans. For the next two years, the bank made several loans to Bickham at 7.5 percent interest. Adams then resigned from the bank. The bank notified Bickham that general economic changes made it necessary to charge a higher rate of interest on both outstanding and new loans. Bickham sued the bank for breach of contract. Was the contract a bilateral or a unilateral contract? Does Bickham win? Bickham v. Washington Bank & Trust Company, 515 So.2d 457, Web 1987 La.App. Lexis 10442 (Court of Appeal of Louisiana)
*Please I would appreciate a thorough solution with references. Thanks in advance!
Explanation / Answer
Answer:
1. It was a bilateral contract, where the bank agreed to loan Bickham money at 7.5% interest per annum in exchange of Bickham doing his personal and corporate banking business with the bank. It was an agreement formed by an exchange of a promise in which the promise of Bickham is consideration supporting the promise of the bank (represented by Adam).
2. Yes, Bickham will win. This is because, the relationship of the litigants is governed bybilateral contracts. The first such contract is represented by the oral agreement struck between Mr. Bickham and the Bank on January 23, 1974. Each promissory note subsequently executed by Mr. Bickham also represents a bilateral contract between Bickham and the Bank, but as such note or agreement might be modified or governed by the terms and conditions of the January 23, 1974, agreement. Elementary contract law dictates that bilateral contracts can be altered only with the consent of both parties.Unilateral changes are not acceptable or enforceable. At no time did Mr. Bickham consent to any change in the interest rates; therefore, the changes were unilaterally madeby the Bank. The Bank made an agreement with Mr. Bickham, and should have lived up to its obligations, despite the changing economic conditions. The unilateral action by the Bank was unprofessional and legally wrong.
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