Of the following types of contracts, which one is a unilateral contract?

• A. Option; only one party is obligated to act.
• B. Bilateral contract requires both sides
• C. Open listing agreement
• D. Void contract

Answer: (A)

A unilateral contract is one in which only one party makes a promise and is bound to act, while the other party isn’t obligated to perform unless they choose to exercise a specified option or action. An option to purchase is the classic example: the seller (optionor) promises to keep the offer open for a set time in exchange for consideration, but the buyer is not bound to do anything unless they decide to exercise the option. When the option is exercised, a binding contract to sell is created.

The other choices don’t fit this pattern. A bilateral contract involves promises from both sides. An open listing is a listing agreement with a broker, not a unilateral contract to perform a specific act. A void contract is invalid from the start and has no legal effect.