Which of the following statements is true about a unilateral contract?

In a unilateral contract, only one party makes a promise and is obligated to act. This type of contract is characterized by the fact that one party, the offeror, promises something in exchange for the action or forbearance of the other party, the offeree, who is not required to make any promise in return. The classic example of a unilateral contract is a reward offer, where one party promises to pay a certain amount if someone performs a specific act, like finding a lost pet. The contract is only formed when the other party fulfills the condition outlined by the offeror, which demonstrates the essence of a unilateral arrangement.

In contrast to unilateral contracts, in bilateral contracts, both parties exchange promises and are equally obligated to each other. Therefore, while unilateral contracts involve only one party’s commitment, bilateral contracts require mutual promises. Additionally, while unilateral contracts can be modified in certain situations after acceptance, such modifications typically need to be mutually agreed upon. Furthermore, consideration – something of value exchanged between parties – is a fundamental element in nearly all contracts, including unilateral contracts, as it ensures that there is a reason for one party to accept the offer.