Unilateral vs Bilateral Contract: What You Need to Know

What is the difference between a unilateral and bilateral contract?

Which of the following contracts is considered a unilateral contract?

Choose the correct option:

A. Unlawful contract

B. Bilateral contract

C. Unilateral contract

D. Obligation to buy the house

Final answer:

Answer:

The granting of an option to purchase a house creates a unilateral contract between Ellen and Jay.

A unilateral contract is a type of contract where one party makes a promise in exchange for the performance of an act by another party. In this case, Ellen is the party making the promise to sell the house if Jay decides to exercise his option to buy it. Jay, on the other hand, is not obligated to purchase the house but has the option to do so.

On the other hand, a bilateral contract involves promises being exchanged between two parties. Both parties are obligated to perform their promises under a bilateral contract. If Jay were to make a promise to buy Ellen's house in return for something else, it would constitute a bilateral contract.

In summary, a unilateral contract involves one party making a promise in exchange for an action by the other party, while a bilateral contract involves promises being exchanged between both parties.