What type of contract is regularly used in a mutual exchange of goods or services?

A bilateral contract is characterized by the mutual exchange of promises between two parties, where each party agrees to fulfill their part of the arrangement. This type of contract establishes a clear reciprocal obligation, meaning that one party's promise is contingent upon the other party's promise as well. For example, in a typical bilateral contract for a sale, one party agrees to deliver goods or services, and the other party agrees to pay for them.

This clarity and mutuality are crucial for many commercial transactions, where both parties have something to gain and are expected to uphold their commitments. In contrast, unilateral contracts involve one party making a promise in exchange for a specific act performed by another, while implied contracts are formed by the behavior of the parties rather than explicit agreements. A legally binding agreement could refer to any valid contract, but it doesn't specifically highlight the mutual exchange aspect that is central to bilateral contracts.