Explain the distinction between a bilateral contract and a unilateral contract. Give an example of each.

In contract law, the distinction between a bilateral contract and a unilateral contract lies in the nature of the promises made by the parties involved. These two types of contracts differ in how they create legal obligations and the manner in which they are formed. Let's examine each type in detail and provide examples for better understanding:

1. Bilateral Contract:
A bilateral contract is a type of contract where both parties exchange mutual promises and are bound to perform their respective obligations. In this type of contract, each party makes a promise to the other party, creating a reciprocal obligation. The promises made by both parties are enforceable, and a breach of these promises can lead to legal action.

Example: Suppose John agrees to sell his laptop to Sarah for $500, and in return, Sarah promises to pay John the agreed amount. In this scenario, both parties have made mutual promises—John promises to sell the laptop, and Sarah promises to pay $500. If either party fails to fulfill their promise, the other party can seek legal remedies for the breach of contract.

2. Unilateral Contract:
A unilateral contract is a type of contract in which one party makes a promise or an offer to the other party, and the other party can accept the offer by performing a specific act. Unlike a bilateral contract, where promises are exchanged, a unilateral contract is formed when the offeree performs the requested act. The offeror is obligated to fulfill their promise only if the offeree completes the specified act.

Example: Let's say Mary places an advertisement offering a reward of $1,000 to anyone who finds her lost dog. Here, Mary has made a unilateral offer, and the person who finds the dog can accept the offer by performing the requested act—returning the dog to Mary. Once the act is completed, Mary becomes obligated to pay the reward. Until the act is performed, there is no binding contract.

The key distinction between the two types of contracts is the nature of the acceptance. In bilateral contracts, acceptance is typically communicated through a promise, while in unilateral contracts, acceptance is demonstrated through the performance of a specified act. Bilateral contracts involve reciprocal promises and obligations, while unilateral contracts rely on the completion of the requested act to create the contract.

It's important to note that the distinction between bilateral and unilateral contracts can sometimes be blurred, and a contract may contain elements of both types. The determination of the type of contract depends on the nature of the promises made and the manner in which acceptance is communicated.