ACCA Corporate and Business Law (F4) 2025 – 400 Free Practice Questions to Pass the Exam

A unilateral contract is formed when one party makes a promise in exchange for the performance of a specific act by another party. In this type of contract, only one party is obligated to fulfill their promise, while the other party is not required to take any action until the promised act is completed. The classic example is a reward contract, where one person offers a reward for the return of a lost item; the promise is contingent upon someone else performing the act of returning the item.

In contrast, a mutual contract typically involves a promise made by both parties, meaning both parties are bound to perform specific obligations. A bilateral contract, which is closely related to mutual contracts, involves a promise exchanged between two parties, where both have obligations to fulfill. An implied contract arises from the actions or conduct of the parties rather than explicit promises and can result in obligations even when they are not clearly stated.

Thus, the defining characteristic of a unilateral contract—where one party promises something in exchange for a future act—makes it the appropriate choice in this scenario.