Ohio Surety Bail Agent Practice Exam

A unilateral contract is characterized by a situation where only one party makes a promise that can be accepted by the other party's performance. This means that the obligation is created solely by the action of the second party, rather than by a mutual exchange of promises. For example, a classic instance of a unilateral contract occurs when someone offers a reward for the return of a lost item. The person offering the reward is making a promise, but that promise is not binding until someone performs the act of finding and returning the lost item.

In contrast, other types of contracts involve two parties exchanging promises, which is not the case with unilateral contracts. Additionally, while some contracts may require written documentation to be enforceable, a unilateral contract can be valid and enforceable based solely on the completion of the specified action. Lastly, the nature of a unilateral contract does not imply that it is automatically terminated upon a breach; rather, it focuses on the fulfillment of the performance as a means of acceptance.