Alabama Property and Casualty Practice Exam

Which of the following types of contract is considered to have one party making a promise while the other party does not?

1. Conditional contract

2. Unilateral contract

3. Bilateral contract

4. Aleatory contract

The correct answer is: Unilateral contract

In a unilateral contract, one party makes a promise in exchange for a performance from the other party. This means that only one side is committed to fulfill their obligation, while the other side is not legally bound to make a promise. A classic example of a unilateral contract is a reward offer: if someone promises to pay a reward for the return of a lost dog, only the person making the promise is bound to act if the dog is returned; the finder is not obligated to search for or return the dog. In contrast, a bilateral contract involves a mutual exchange of promises between two parties, where both are obligated to perform their promises. A conditional contract includes specific terms that must be met for the agreement to be valid and enforced, which does not fit the description of having only one party bound. An aleatory contract is based on an uncertain event where one party's performance depends on an occurrence, but both parties may still have mutual obligations. Hence, a unilateral contract stands out in that it presents a scenario where only one party makes a promise.