Ohio Surety Bail Agent Practice Exam

A bilateral contract is defined by the presence of mutual obligations between two parties, where each party makes a promise to the other. This type of contract generates a scenario where the actions or promises of one party serve as a consideration for the actions or promises of the other party.

The first characteristic of a bilateral contract is that both parties make promises; this establishes the foundation of the agreement. The mutual exchange is also crucial, as it indicates that something is being traded between the two parties, fulfilling their respective obligations.

Additionally, bilateral contracts can be either written or oral, which allows flexibility in how these agreements are formed, as long as both parties clearly understand their obligations.

In contrast, the notion that only one party is obligated does not align with the definition of a bilateral contract. Such a scenario would better describe a unilateral contract, where one party makes a promise that binds them, while the other party's acceptance may not require any exchange of promises in return. Thus, the correct answer clearly identifies the statement that does not correspond to the characteristics of a bilateral contract.