A bilateral contract is defined as an agreement in which both parties involved have obligations to perform certain duties or fulfill specific conditions. This mutual exchange of promises or performances is a fundamental characteristic that distinguishes a bilateral contract from a unilateral contract, where only one party is required to fulfill their obligation, and the other party merely receives a benefit.
In the context of a bilateral contract, each party's promise serves as consideration, making the contract binding and enforceable. For example, in a rental agreement, the landlord promises to provide housing while the tenant promises to pay rent; both parties are bound by their respective commitments.
The requirement for performance from both parties underscores the collaborative nature of this type of contract. This makes it distinctly different from other contract types: it does not have to be written to be valid in every circumstance, as oral agreements can also qualify as bilateral contracts unless specified otherwise by relevant laws.
Moreover, a bilateral contract is enforceable in court provided that it meets all requirements of a valid contract, including offer, acceptance, consideration, and the parties' legal capacity. Thus, the essence of this definition helps in understanding why the chosen answer accurately describes a bilateral contract.