What type of contract requires both parties to perform in an exchange of promises?

A bilateral contract is characterized by the mutual exchange of promises between two parties, where each party commits to fulfilling certain obligations. In this type of contract, one party makes a promise to perform a certain action, and in return, the other party makes a corresponding promise. This framework creates a binding agreement that obligates both parties to uphold their end of the deal.

For example, in a real estate context, when a seller agrees to sell a property and the buyer agrees to pay a specific amount for that property, both parties have created a bilateral contract. Each promise (the seller's promise to convey ownership and the buyer's promise to pay the agreed-upon price) requires action from both sides.

The other types of contracts mentioned differ in nature. A unilateral contract involves only one party making a promise in exchange for an action from another party, while an implied contract is formed through the circumstances and actions of the parties rather than explicit promises. An executed contract refers to a contract where all terms have been fulfilled and obligations discharged, which does not fit the requirement of ongoing performance through promises.