CPCU 530 Practice Exam 2026 – Complete Study Resource

Mutual promises define a bilateral contract. In a bilateral contract, both parties promise to perform, so each side is obligated to act—the contract is formed by the exchange of promises, with consideration on both sides. For example, one party promises to pay money, and the other promises to deliver goods; both promises create binding duties.

This differs from a unilateral contract, where only one party makes a promise and the other party’s performance (not a promise) constitutes acceptance. Here the roles are clear: the promisor is the one who makes the promise, and the promisee is the one to whom the promise is made. Since both sides promise to perform, the scenario described fits a bilateral contract.