A contract in which both parties promise to perform is called?

• A. Unilateral contract
• B. Void contract
• C. Bilateral contract
• D. Executed contract

Answer: (C)

A bilateral contract is formed when both parties promise to do something in the future. Each side commits to a promise in exchange for the other’s promise, creating mutual obligations that bind both performers. This is why the contract is enforceable for both parties: both have promised to act, and breach by one allows the other to seek enforcement or damages.

Think of a simple example: one person agrees to paint another’s house for a set price, and the other person agrees to pay that price once the work is completed. Each side has a promise, so the contract is bilateral.

This differs from a unilateral contract, where only one party makes a promise and the other performs to accept the offer (the contract is formed when that performance occurs). It also differs from an executed contract, which means the promises have already been fully performed, and from a void contract, which is not legally enforceable from the outset for various reasons.