What characterizes a unilateral contract?

A unilateral contract is characterized by the involvement of one party making a promise that must be fulfilled only upon the performance of a specific act by the second party. In essence, this means that the second party does not need to make a promise in return; their performance of the act constitutes acceptance of the offer and, therefore, binds the first party to fulfill their promise.

For example, in a unilateral contract, if someone offers a reward for the return of a lost item, only the person making the reward promise is initially bound to perform once the item is returned. This aspect of the contract distinguishes it from bilateral contracts, where both parties make mutual promises.

Moreover, while it's true that unilateral contracts can sometimes be verbal or informal, the requirement for the act to be performed remains essential for the agreement's validity. The key takeaway is that in a unilateral contract, only one party's obligation is in effect until the condition of performance is met. This structure emphasizes the reliance on the action taken by the second party as acceptance of the contract.