Leasing License Practice Exam

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In a unilateral contract, who is typically obligated to perform?

Both parties must perform
Only one party
Neither party is obligated
Both parties are optional

The correct answer is: Only one party

In a unilateral contract, only one party is obligated to perform. This structure defines a unilateral contract, where one party makes a promise in exchange for a performance from another party. For example, if one person offers a reward for the return of a lost item, only the person offering the reward has the obligation to fulfill their promise once the item is returned. The other party is not obligated to do anything but may choose to perform the action (returning the lost item) to earn the reward. In this scenario, the party that is not obligated can decide whether to take the action or not, and their performance is contingent upon their choice. As such, the nature of a unilateral contract clearly establishes a one-sided obligation, providing clarity on how each party's responsibility is defined.