A _______ is also known as an option contract where only one party is obligated to perform.

A unilateral contract is characterized by an agreement in which only one party is required to fulfill an obligation, while the other party has not made a promise in return. This type of contract often arises in situations where one party offers a reward or a performance contingent on the actions of another party. For example, if someone promises to pay $500 to anyone who finds and returns their lost dog, only the person offering the reward is obligated to pay upon the completion of the specified act (the return of the dog). The person searching for the dog is not obligated to look for it; they can choose to do so or not.

This nature of unilateral contracts differentiates them from bilateral contracts, where both parties have obligations to perform, thus forming mutual agreements. In contrast, binding agreements are not exclusive to one party's performance; they involve reciprocal commitments. The statement about being illegal in Texas does not accurately reflect the status of unilateral contracts and focuses on a specific jurisdictional issue that does not apply to the concept itself. Therefore, understanding unilateral contracts is crucial in contract law, particularly in recognizing the obligations and expectations set forth by one party's promise.