Which contract involves mutual promises by both parties to perform as stated in the contract?

• A. Executory Contract
• B. Bilateral Contract
• C. Implied Contract
• D. Oral Contract

Answer: (B)

Mutual promises by both parties to perform as stated in the contract define a bilateral contract. In a bilateral contract, each side makes a promise that serves as the other side’s consideration, so both are bound to act. Acceptance is typically by promising to perform, not by just performing, which creates the reciprocal obligations—like a buyer agreeing to pay and a seller agreeing to deliver.

An executory contract describes a contract that hasn’t been fully performed yet and can be bilateral or unilateral, focusing on the stage of performance rather than the nature of the promises. An implied contract is formed by conduct rather than explicit promises. An oral contract refers to the form in which a contract is communicated (spoken) rather than to the type of reciprocal promises.