What type of contract involves both the seller and buyer making promises to each other?

A bilateral contract is characterized by the mutual exchange of promises between the parties involved. This means that both the seller and the buyer commit to fulfilling their obligations as laid out in the agreement. For example, in a real estate transaction, the seller promises to transfer ownership of the property, while the buyer promises to pay a specified amount for it. Both parties are bound by these promises, creating a reciprocal agreement that defines their respective rights and responsibilities.

In contrast, a unilateral contract involves only one party making a promise, typically in exchange for a performance by the other party, which is not required to make a promise in return. Voidable contracts refer to agreements that can be legally voided by one of the parties under certain circumstances, such as fraud or misrepresentation. An option contract provides one party the right, but not the obligation, to enter into a future contract, which does not constitute a mutual exchange of promises as seen in a bilateral contract.