Understanding Bilateral Contracts: Randy and Stewart's Agreement

How was the bilateral contract between Randy and Stewart created?

a. Stewart promised to pay Randy $50. b. Randy offered to sell her iPod to Stewart. c. Stewart became aware that Randy was willing to sell her iPod. d. Randy decided to sell her iPod.

Answer:

The bilateral contract between Randy and Stewart was created when Stewart promised to pay Randy $50.

Exploring the Bilateral Contract Formation:

A bilateral contract is an agreement between two parties where both promise to perform an act. In the case of Randy and Stewart, the contract was established when Stewart made the commitment to pay $50 to Randy in exchange for Randy's iPod.

This mutual promise to exchange valuable consideration forms the basis of a valid bilateral contract. Randy's offer to sell her iPod initiated the negotiation, but the actual creation of the contract occurred when Stewart accepted the offer by promising to pay the specified amount.

It's important to understand that mere awareness of one party's willingness to sell or their decision to sell an item does not constitute a bilateral contract. The essential elements are offer, acceptance, and the exchange of consideration, as seen in Randy and Stewart's agreement.

By fulfilling their respective promises, Randy and Stewart have established a legally binding contract. This agreement demonstrates the importance of clear offers, unambiguous acceptance, and the exchange of valuable consideration in the formation of bilateral contracts.