National Real Estate Practice Exam

What type of contract contains one promise given in exchange for completing an act?

1. Unilateral Contract

2. Bilateral Contract

3. Management-Level License

4. Novation

The correct answer is: Unilateral Contract

A unilateral contract is defined as an agreement in which one party makes a promise in exchange for the performance of a specific act by another party. In this context, the offeror commits to fulfilling their side of the agreement only if the offeree executes the requested action. This type of contract is commonly seen in scenarios such as reward offers, where one party promises to pay a reward once another party has performed a certain action, like finding a lost pet. The distinguishing feature of a unilateral contract is that only one party is bound to perform an obligation, while the other party’s action is voluntary. This contrasts with bilateral contracts, where both parties exchange promises to perform certain acts, making it a mutual agreement with obligations on both sides. Understanding this distinction is crucial in real estate transactions, where different types of contracts can impact the enforcement of promises and the responsibilities of the parties involved. The other options, like management-level license and novation, do not pertain to contract types that involve promises exchanged for acts, thus reinforcing the unique nature of a unilateral contract.