What type of contract involves an exchange of promises?

A bilateral contract is characterized by an exchange of promises between two parties, where each party makes a commitment to fulfill their obligations. This mutuality of promises creates a binding agreement, requiring each party to perform their respective duties as outlined in the contract. For example, in a sales contract, one party promises to deliver a product while the other promises to pay a specified price.

In contrast, a unilateral contract involves a promise made by one party in exchange for an act by another party, rather than a promise. Express contracts consist of terms that are clearly stated, either orally or in writing, while implied contracts are formed through the behavior and circumstances of the parties involved, without explicit promises being made. The defining feature of a bilateral contract is this two-way exchange of commitments, which is why it is the correct answer in this context.