What does a bilateral contract involve?

A bilateral contract involves the exchange of a promise for a promise, which establishes a mutual agreement between two parties. In this type of contract, both parties commit to fulfilling their respective promises, creating an obligation for each side. For example, in a sales agreement, one party agrees to deliver a product while the other party agrees to pay for it. This mutual exchange is fundamental to the concept of a bilateral contract, distinguishing it from unilateral contracts where only one party makes a promise in exchange for an act by the other party.

The other options do not accurately reflect the nature of a bilateral contract. While services can be provided in the context of such a contract, they do not define the contract type itself. The notion of one party performing an action is more characteristic of unilateral contracts, where the focus is on a single promise responding to an action. Conditional offerings refer to arrangements that are contingent upon certain conditions being met, which does not inherently describe the mutual promises typical of bilateral contracts. Thus, the correct understanding of a bilateral contract centers on the exchange of promises between two parties.