What type of contract requires both parties to perform their duties?

A bilateral contract is an agreement where both parties make mutual promises to perform specific duties or obligations. This type of contract is foundational in many real estate transactions, as it typically involves one party agreeing to sell a property while the other agrees to pay a predetermined price. Each party's promise serves as a consideration that binds them legally to fulfill their respective responsibilities.

In contrast, a unilateral contract involves only one party making a promise, expecting a certain act in return; the most common example is a reward offer. An implied contract is formed through the actions or circumstances of the parties rather than explicit words, making it harder to enforce in the same manner as a bilateral contract. A verbal agreement, while it can signify mutual understanding, does not always establish enforceable duties without supporting evidence or the required formalities, particularly in real estate transactions that often require written agreements. Thus, the requirement for both parties to actively perform distinguishes the bilateral contract as the correct choice.