How does a unilateral contract differ from a bilateral contract?

A unilateral contract is characterized by a scenario where one party makes a promise that is contingent upon the performance of an action by another party. This means that in a unilateral contract, only one party is bound to fulfill their promise, and the other party is not required to do anything unless they choose to accept the offer through their actions. For example, if someone offers a reward for the return of a lost pet, the person offering the reward is the only one making a promise; the person who finds the pet is not obligated to act but can choose to perform the action in order to receive the reward.

In contrast, a bilateral contract involves mutual promises exchanged by both parties, meaning that each party is bound to perform their respective obligations. This mutual assent is what distinguishes it from a unilateral contract, where the promise is unidirectional.

The other choices reflect characteristics that do not pertain to the essence of what defines a unilateral contract. The requirement of mutual assent signifies a bilateral contract, while both parties being bound conflates the definitions of unilateral and bilateral contracts. Lastly, the assertion that a unilateral contract can be voided at any time does not specifically relate to its nature, as that depends on various legal considerations. Thus, understanding that only one party