In a unilateral contract, which party is legally bound to fulfill obligations?

In a unilateral contract, one party makes a promise that is enforceable, while the other party does not have a corresponding obligation to perform. In the context of insurance, the insurer is the party that makes the promise to pay a benefit upon the occurrence of a specified event, such as the insured's death or the occurrence of a loss. This establishes a legal obligation on the part of the insurer to fulfill the terms of the contract, provided that the insured pays the premiums.

The insured, on the other hand, is not legally bound to perform any specific action apart from paying the premiums; they may choose to let the policy lapse or cancel it altogether. However, once premiums are paid, the insurer is obligated to provide coverage as stipulated in the policy. This characteristic of unilateral contracts is crucial in insurance law, where the insurer's promise to indemnify or pay benefits is the binding element of the contract.

Understanding this distinction helps clarify how obligations are structured within insurance agreements and is foundational for navigating contracts in the realm of life and health insurance.