Which of the following describes a bilateral contract?

A bilateral contract is defined as an agreement in which both parties involved make mutual promises to each other. This means that each party has specific obligations that they are required to fulfill. In the context of insurance, such as life and health insurance contracts, this is very relevant, as the insurer agrees to provide coverage (the promise) in exchange for the premium payment from the insured (another promise). This mutual exchange creates a binding agreement where the duties of each party are clearly defined.

In contrast, other types of contracts may involve only one party bearing responsibilities, lack enforceability due to the absence of promises or consideration, or might be informal agreements that may not meet the legal criteria to be recognized as a contract. Thus, the essential characteristic of a bilateral contract is that it encompasses commitments from both parties, making it the correct description in this scenario.