Mutuality of Contract Law and Legal Definition

Mutuality of contract refers to the reciprocal understanding or agreement between parties. This is an essential ingredient in the creation of a legally enforceable contract. An important part of a contract is mutuality, which states that both parties should be bound or neither should be. However, this principle does not apply to unilateral contracts where there is only one party who is bound. It shall also be inapplicable where both parties make promises but only one is bound, as in a fraud. A lack of mutuality means a lack of common understanding or meeting of the minds.