Arizona Adjuster Practice Exam

What aspect does a unilateral contract have regarding promises made?

1. Both parties make enforceable promises

2. Only one party makes a legally enforceable promise

3. It does not require payment

4. It is revisable by either party at any time

The correct answer is: Only one party makes a legally enforceable promise

A unilateral contract is characterized by the presence of a legally enforceable promise made by only one party. In this type of agreement, one party makes a promise to perform a certain act, while the other party does not make any promise in return. For instance, when someone offers a reward for finding a lost item, the person offering the reward is committing to pay the reward if the other party successfully locates the item, but the individual seeking the reward is under no obligation to search for it. This nature of unilateral contracts distinguishes them from bilateral contracts, where both parties make binding promises to each other. In a unilateral contract, the obligation to perform arises only after the second party completes the specified act in response to the offer. Thus, recognizing that only one party holds the enforceable promise is fundamental to understanding how unilateral contracts function legally.