National Real Estate Practice Exam

In a unilateral contract, only one party makes a promise or commitment, while the other party is not obligated to perform any action in return. This means that only one side is bound to fulfill their promise, typically contingent upon the occurrence of a specific event or condition.

For instance, a common example of a unilateral contract is a reward offer — if someone promises to pay a reward to anyone who finds and returns their lost dog, only the person making the offer (the owner of the dog) is making a promise. The finder of the dog is not obligated to search for the dog but will receive the reward only if they successfully return it. This emphasizes the essence of unilateral contracts: one-sided commitments where the obligation to fulfill the promise is based on the actions of another party.

In contrast, a bilateral contract requires mutual promises from both parties, creating obligations for each involved. Similarly, while not always in written form, a unilateral contract can exist without the need for it to be documented, so this characteristic is not uniquely defining to unilateral contracts.