Contracts & ExecutionQuestion 855 of 1605
A bilateral contract is distinguished from a unilateral contract in that a bilateral contract involves:
a.No consideration at all
b.A promise exchanged for a return promise, so both parties are obligated
c.Only one party ever being bound
d.A promise exchanged for a completed act only
Explanation
A bilateral contract is formed by exchanging a promise for a promise, so both parties are bound to perform, which describes most construction contracts (the contractor promises to build, the owner promises to pay). A unilateral contract, by contrast, is a promise exchanged for a completed act, where acceptance occurs by performance. Both types require consideration; the difference lies in whether acceptance is a return promise or a completed act.
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