Bilateral Contracts: A Promissory Exchange

Pamela says to Clemente, "I will buy your kayak from you provided that it is watertight. I will give you a check for $600 immediately." Clemente replies, " It is watertight. I accept. Give me the check and take the kayak."

Though the parties immediately exchange the check and kayak, the delivery doe snot end their duty of performance. Clemente has made a promise concerning the kayak's condition, which will allow Pamela recourse if it doe snot meet the agreed standard of "watertight." Similarly, Pamela's check is not an immediate payment, but it is a commitment that her bank will pay the money upon presentation of the check.Thus, promises exist on both sides after the moment of agreement, and a bilateral contract exists.

Note that market usually impose on the seller, the obligation to warrant the fitness of what he sells. Here, without Clemente disavowing a presumption of fitness, i.e. selling the kayak "as is", his sale of the kayak gives rise to an implied promise that the kayak is watertight.