A bilateral contract occurs when a promise to perform is made by one party and what occurs?

• A. but an equal promise to perform is not required of the party.
• B. and a second party makes an equal promise to perform.
• C. and it carries the same effect as a unilateral contract.
• D. and typically few contracts are bilateral.

Answer: (B)

In contract law, a bilateral contract is formed by mutual promises—the parties each promise to perform. When one party promises to do something and the other party promises to do something in return, both are bound from the outset.

This item correctly states that a bilateral contract arises when a promise to perform is paired with a second party’s equal promise to perform, creating reciprocal obligations.

The other descriptions don’t fit: one suggests no promise in return (that’s a unilateral contract), another says it has the same effect as a unilateral contract (they’re structurally different), and the last implies bilateral contracts are rare (they’re common).