Introductory Business Law CLEP Prep Practice Exam

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What type of contract requires both parties to honestly disclose all known information?

  1. Bilateral Contract

  2. Unilateral Contract

  3. Executory Contract

  4. Executed Contract

The correct answer is: Unilateral Contract

While all contracts require honesty and good faith, only a unilateral contract requires both parties to disclose all known information. A bilateral contract is formed when both parties exchange promises, not disclosure of information. An executory contract is one that is still to be performed by both parties, so disclosure is not relevant. An executed contract has already been completed, so disclosure is not necessary before formation.

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