What defines a unilateral contract?

A unilateral contract is characterized by a situation where one party makes a promise that is contingent upon the performance of an act by another party. In this type of contract, only one party is legally bound to fulfill their promise, while the other party is not required to do anything but may choose to act to benefit from the promise.

For example, when someone offers a reward for finding a lost pet, they are making a unilateral contract. The person who finds the pet is not obligated to look for it, but if they do and succeed, they are entitled to the reward. This clearly illustrates how the promise is unilateral because the promise is dependent solely on the other party's action.

In contrast, contracts involving two parties' mutual obligations require both sides to make commitments that are enforceable. A contract that requires payment in exchange for a promise typically outlines reciprocal duties from both sides rather than just one. Lastly, vague agreements do not define a unilateral contract since clear and specific terms are essential for the enforceability of any contract.