Which of the following indicates that both parties have an obligation in a contract?

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A bilateral contract is characterized by the mutual exchange of promises between two parties, whereby each party is bound to fulfill their respective obligations. In this type of contract, one party's promise serves as consideration for the other party's promise. For instance, if one person agrees to sell their car in exchange for a certain amount of money, both the seller and the buyer have obligations: the seller must deliver the car, and the buyer must pay the agreed amount.

In contrast, a unilateral contract involves only one party making a promise that is contingent upon the performance of a specific act by another party. Therefore, only the party making the promise has an obligation. A void contract lacks legal enforceability from the beginning, meaning that neither party has obligations under it since it is treated as though it never existed. A provisional agreement typically refers to a preliminary understanding that may or may not lead to a finalized contract, thus not establishing binding obligations until further agreements are reached.

The distinction of obligations in a bilateral contract is what makes it the correct choice, as both parties are legally bound to perform their agreed-upon terms.

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