A bilateral contract is one in which:
Question & Answer
Review the question and all answer choices
Only one party makes a promise
A contract in which only one party makes a promise (Answer A) describes a unilateral contract, not a bilateral one — a classic real estate example of a unilateral contract is an option agreement, where the seller promises to sell but the buyer is not obligated to buy.
Both parties make promises to each other
The contract must be in writing
The requirement that a contract be in writing (Answer C) describes the Statute of Frauds requirement applicable to real estate contracts, which is a separate legal concept entirely unrelated to whether a contract is bilateral or unilateral — both bilateral and unilateral contracts can be required to be in writing.
Performance is optional
A contract where performance is optional (Answer D) would not be a valid, enforceable contract at all, as it would lack the element of consideration and mutual obligation — no contract, bilateral or otherwise, allows a party to simply opt out of performance without legal consequence.
Why is this correct?
A bilateral contract (Answer B) is defined as one in which both parties exchange binding promises, creating mutual obligations that are enforceable against each party. In a standard real estate purchase agreement, the seller promises to convey marketable title and deliver possession, while the buyer promises to pay the agreed purchase price — these reciprocal promises form the bilateral structure. This mutual enforceability is what distinguishes a purchase agreement from a unilateral contract such as an open listing, where only the broker's performance (finding a buyer) triggers the seller's obligation to pay a commission.
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