When does a unilateral contract become binding?

A unilateral contract becomes binding when the second party performs their part of the agreement. In a unilateral contract, one party makes a promise in exchange for an act by the other party. This means that the first party's commitment is contingent upon the performance of the other party.

For example, if someone offers a reward for the return of a lost item, the contract is only formed when the person finds and returns the item. Until that performance occurs, the offering party is simply waiting for an act that will fulfill their promise. This distinguishing feature highlights that the obligation of the one party crystallizes only after the performance is completed by the other party involved in the contract.

The other choices do not accurately reflect the mechanics of unilateral contracts. They do not account for the fact that it is the performance of the second party that triggers the binding nature of the agreement. A signature or legal review does not create the binding effect of the contract in isolation; it is the execution of the stipulated action that confirms the contract.