New York Automobile Adjuster Practice Exam: Study Guide & Practice Test

An Unilateral Contract is unique in that it involves only one party being bound to perform their obligations. In this type of contract, one party makes a promise in exchange for a performance from another party, who is not obligated to make a promise in return. The classic example is a reward contract, where one person offers a reward for the return of lost property; the person who finds the property accepts the offer by performing the act of returning it, while the one offering the reward is the only party obligated to fulfill their promise upon that performance.

This characteristic differentiates unilateral contracts from bilateral contracts, where both parties exchange promises and are mutually bound to perform their duties. In other words, in a unilateral contract, the performance by the second party creates an obligation for the first party, while the second party retains the option to accept or decline the offer without a corresponding promise.

The other aspects mentioned—mutual agreements, the ability for both parties to void the agreement, and the stipulation of being verbal—do not apply uniquely to unilateral contracts. In fact, mutual agreement is a characteristic of both unilateral and bilateral contracts, both parties usually cannot unilaterally void the agreement once it has been accepted, and contracts can be either verbal or written, depending