Texas Real Estate State Practice Exam

Which type of contract binds only one party, such as an option?

1. Court prevents the principal from denying that agency, agency by estoppel

2. Prohibits monopolies

3. Broker exclusive agent but owner can sell

4. Unilateral Contract

The correct answer is: Unilateral Contract

A unilateral contract is defined as a type of contract that binds only one party to fulfill their obligations. In the context of real estate, this applies to agreements such as options to purchase, where only one party—the option holder—has the right to execute the contract, while the other party, the option giver, is bound to uphold the terms if the option is exercised. In a unilateral contract, the person who has made the offer is the only one who is obligated to perform; the other party is not required to perform any action. This is distinct from bilateral contracts, where both parties have responsibilities and are bound to fulfill their terms. The nature of unilateral contracts makes them particularly suitable for scenarios where one party wishes to maintain the right to make a choice without obligating themselves until a later time, thus providing the option holder with flexibility. Options in real estate allow potential buyers to secure the right to purchase a property at a certain price within a specified time frame, demonstrating the characteristics of unilateral contracts effectively.