Alabama Insurance Adjuster Practice Exam

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Prepare for the Alabama Insurance Adjuster Test. Enhance your readiness with flashcards and multiple choice questions, complete with hints and explanations. Gear up for your exam!

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In a contract where only one party is legally obligated to perform, this type of contract is known as?

Bilateral Contract
Unilateral Contract
Conditional Contract
Constructive Contract

The correct answer is: Unilateral Contract

A contract where only one party is legally obligated to perform is categorized as a unilateral contract. In such an agreement, one party makes a promise in exchange for an act by the other party. The essence of this type of contract lies in the idea that only one side has a duty to fulfill while the other party's obligation is contingent on the action taken, making the promise or offer conditional upon the performance of the requested act. For example, if someone offers a reward for the return of a lost item, they are making a unilateral promise. The person who finds and returns the item is not obligated to act, but upon fulfilling the specified condition, they gain the right to receive the reward. This distinct characteristic sets unilateral contracts apart from bilateral contracts, where both parties make mutual promises to each other. Understanding unilateral contracts is essential for grasping contractual obligations and rights, particularly in contexts like insurance adjusters, where promises may be made in response to actions such as filing claims or returning property.