Question

In Contract Law, what is the term for an agreement between two parties where both parties make promises to do something?

• A. Unilateral contract
• B. Void contract
• C. Bilateral contract
• D. Executed contract

Hint:

Remember that a bilateral contract involves mutual promises, while a unilateral contract involves a promise in exchange for an act.

Answer 1

The Correct Option is C

In contract law, a \textit{bilateral contract} refers to an agreement in which both parties make promises to do something. This is the most common type of contract, where each party assumes a responsibility to perform a certain action in exchange for something from the other party. A unilateral contract, on the other hand, involves only one party making a promise that is fulfilled upon the performance of an act by the other party.

Answer 2

In Contract Law, an agreement between two parties where both parties make promises to do something is referred to as a Bilateral Contract.

Definition:
A Bilateral Contract is a mutual agreement in which each party commits to fulfilling their respective promises. In this type of contract, a promise is exchanged for a promise, making both parties legally bound to perform their obligations.

Key Characteristics:
1. Mutual Promises: Both parties agree to perform certain actions or deliverables.
2. Enforceability: Both promises are legally enforceable.
3. Example: A agrees to deliver goods to B, and B agrees to pay a specified amount to A. This mutual exchange of commitments forms a bilateral contract.

Comparison with Unilateral Contract:
- In a Unilateral Contract, only one party makes a promise, and the contract is formed when the other party performs the required act (e.g., reward for finding a lost item).
- In a Bilateral Contract, the contract is formed as soon as the promises are exchanged.

Legal Significance:
Bilateral contracts are the most common type of contracts in business and legal transactions. They form the basis of agreements such as employment contracts, sales agreements, lease contracts, and service agreements.

Conclusion:
When two parties enter into an agreement where each promises to perform an obligation or duty, it is legally termed a Bilateral Contract.

Therefore, the correct answer is: Bilateral contract.