Certified Supply Chain Professional (CSCP) Practice Exam

What type of contract involves promises made by both parties?

1. Unilateral contract

2. Bilateral contract

3. Verbal contract

4. Implied contract

The correct answer is: Bilateral contract

A bilateral contract is characterized by promises exchanged between two parties, with each party fulfilling its obligations to the other. In this type of contract, both the offeror and the offeree enter into a mutual agreement where one party promises to do something in return for the other party's promise to do something else. This mutuality is key to the formation of a bilateral contract, making it a legally binding agreement. For example, if one party agrees to deliver goods and the other party agrees to pay for those goods, both sides have made commitments that must be fulfilled. This is distinct from a unilateral contract, where only one party makes a promise that the other party accepts by performing a specific action, such as a reward offer. The distinction between verbal and implied contracts lies in their formation and the presence of clear agreement. A verbal contract involves spoken agreements between parties, while an implied contract derives its terms from the conduct of the parties rather than from explicit promises. However, neither of these forms guarantees the mutual promises found in bilateral contracts.