Who has the obligation to perform in a unilateral contract?

Who has the obligation to perform in a unilateral contract?

• A. Both parties
• B. The insured only
• C. The insurer only
• D. No obligations exist until a claim.

Answer: (C)

In a unilateral contract, one party makes a promise that is contingent on the other party performing a specific act. The obligation to perform rests with the party who makes the promise—the promise is not invoked until the other party completes the required act. Applied to insurance, the insurer is the party offering the promise to pay benefits if a covered loss occurs and the insured completes the needed act (filing a claim, providing proof, and meeting policy conditions). Once the insured performs that act, the insurer is obligated to pay according to the policy. The insured does not carry a similar obligation to trigger the insurer’s promise; their main duties are to pay premiums and cooperate with the claim process, not to perform the insurer’s promise. Therefore, the obligation to perform lies with the insurer in this unilateral-context sense.

In a unilateral contract, one party makes a promise that is contingent on the other party performing a specific act. The obligation to perform rests with the party who makes the promise—the promise is not invoked until the other party completes the required act.

Applied to insurance, the insurer is the party offering the promise to pay benefits if a covered loss occurs and the insured completes the needed act (filing a claim, providing proof, and meeting policy conditions). Once the insured performs that act, the insurer is obligated to pay according to the policy. The insured does not carry a similar obligation to trigger the insurer’s promise; their main duties are to pay premiums and cooperate with the claim process, not to perform the insurer’s promise. Therefore, the obligation to perform lies with the insurer in this unilateral-context sense.