Question

A bilateral contract is created when?

1) one party gives a promise in exchange for another party's promise
2) one party gives a promise in exchange for another party's performance of a particular act
3) both a and b
4) none

Answer 1

A bilateral contract is formed when one party's promise is exchanged for another party's promise, involving mutual obligations between the two parties.

Step-by-step explanation:

A bilateral contract is created when one party gives a promise in exchange for another party's promise. In practice, this means that both parties to the contract have mutual obligations they have agreed upon. For example, when you sign a cell phone contract, you promise to pay a certain amount of money each month in exchange for the cell phone company's promise to provide service. This is distinct from a unilateral contract, where one party makes a promise in exchange for the performance of a particular act by another party, often without the expectation of a reciprocal promise beforehand.