Final answer:
In a bilateral contract, starting performance by one party obligates the other to fulfill their part of the agreement, while in a unilateral contract, the contract is not formed until the act is completed by the other party.
Step-by-step explanation:
The effect of starting performance in a bilateral contract and a unilateral contract refers to the obligations and the formation of the contract. In a bilateral contract, both parties make promises to each other, and the starting performance by one party typically obligates the other party to fulfill their part of the agreement. In essence, the start of performance serves as a trigger for the reciprocal performance. Conversely, in a unilateral contract, one party makes a promise that is not dependent on a reciprocal promise but rather on the performance of a specific act by the other party. Thus, starting performance is crucial since the contract is not formed until the act is completed. In such a contract, only the performance completes the offer and forms the agreement.
In a bilateral contract, the starting performance has a significant effect on the obligations and responsibilities of both parties involved. In this type of contract, both parties promise to perform specific actions or provide something of value in exchange for each other's promises. The performance of one party is contingent on the performance of the other party. For example, if a person agrees to pay for a service only after the service has been completed, the starting performance would be the completion of the service by the service provider.