Which type of contract involves both parties making promises?

A bilateral contract is characterized by both parties making mutual promises to each other. In this type of agreement, one party promises to do something, and in return, the other party also promises to fulfill a specific obligation. For example, in a sales agreement, the seller promises to deliver goods, while the buyer promises to pay a certain amount. This mutual exchange of promises creates a binding agreement, as each party has a duty to perform their obligations.

Bilateral contracts are the most common in everyday transactions, as they provide a clear structure for the responsibilities of each party involved. This contrasts with other types of contracts, such as unilateral contracts, where only one party makes a promise in exchange for an act by the other party. In unilateral contracts, the other party is not obligated to act, making it fundamentally different from the mutual exchanges seen in bilateral contracts.