Question

Sheila tells Ed that if Ed fixes her air conditioner by the end of the day, Sheila will pay Ed $500. Which of the following is true?

1) There is no contract because there is no consideration.
2) If Ed fixes the air conditioner by the end of the day, Sheila does not have to pay him.
3) Ed and Sheila have entered into a valid unilateral contract.
4) Ed and Sheila have entered into a valid bilateral contract.

Answer 1

Ed and Sheila have entered into a valid unilateral contract.

Step-by-step explanation:

Ed and Sheila have entered into a valid unilateral contract.

In this scenario, Ed has agreed to fix Sheila's air conditioner by the end of the day in exchange for a payment of $500. Sheila's promise to pay Ed serves as consideration, which is an essential element for a valid contract. A unilateral contract is formed when one party makes a promise in exchange for the other party's performance. In this case, Ed's fixing of the air conditioner is the required performance, and once he completes it, Sheila is obligated to pay him the agreed amount. This situation does not fall under a bilateral contract where both parties promise to perform or provide something to each other. Therefore, the correct answer is that Ed and Sheila have entered into a valid unilateral contract.