JD Next Practice Exam

What defines a unilateral contract?

1. It requires both parties to make promises

2. It seeks acceptance by a return performance

3. It involves an exchange of money only

4. It has no obligations for the promisor

The correct answer is: It seeks acceptance by a return performance

A unilateral contract is defined primarily by its structure, where only one party makes a promise in exchange for a specific act or performance from another party. The distinguishing feature is that the contract is formed when the second party completes the requested act, which constitutes acceptance. In essence, the offeror is bound by their promise only when the offeree performs the requested action, demonstrating that acceptance is achieved through performance rather than a mutual exchange of promises. For instance, in a unilateral contract like a reward offer, the promise of payment is made, and the contract is fulfilled only when someone performs the act of returning a lost item. This highlights that the second party's completion of the act serves as acceptance and enforces the initial promise. Therefore, option B accurately describes this feature of a unilateral contract.