Which term describes a contract where one party's promise is conditional on the action of the other party?

A contract where one party's promise is conditional on the action of the other party is defined as a unilateral contract. In this type of agreement, one party makes a promise that is contingent upon the occurrence of a specific action or event performed by another party. The key characteristic of a unilateral contract is that only one party is obligated to fulfill their promise, while the other party is not required to act unless they choose to fulfill the condition in the contract.

For example, a common situation of a unilateral contract is when one party offers a reward for a lost item. In this case, the promise of the reward is dependent on the action of the other party, who must find and return the lost item to receive the reward. Until the item is returned, the party making the offer has no obligation to pay.

In contrast, a bilateral contract involves mutual promises made by both parties, where each party is both obligated and entitled to receive something from the other. Implied contracts are not explicitly stated but are inferred from actions or circumstances, while contractual obligation refers to the legal duties defined within any contract, regardless of its nature.