What type of contract requires that both Party A and Party B carry out their obligations?

A bilateral contract is characterized by the mutual exchange of promises between two parties, where both Party A and Party B are obligated to fulfill their respective commitments. In this type of contract, each party's promise serves as consideration for the other party's promise, creating a binding agreement that ensures both parties are engaged in the transaction.

For instance, when a seller offers to sell a house for a specified price, and the buyer agrees to pay that price, both parties have established a bilateral contract. Each party has promised to perform certain actions: the seller promises to transfer ownership of the property, and the buyer promises to pay the agreed amount. This mutual obligation is what distinguishes bilateral contracts from other types.

In contrast, a unilateral contract involves only one party making a promise in exchange for the other party's performance, meaning only one party is obligated to act. A voidable contract may be valid but can be annulled by one party under certain conditions, and an express contract is one that clearly outlines terms verbally or in writing but does not necessarily specify the mutual obligations of both parties. Thus, a bilateral contract is the only type that explicitly requires both parties to perform their duties.