What are the two types of contract modifications?

The correct answer identifies the two types of contract modifications as bilateral and unilateral.

A bilateral contract modification occurs when both parties to the contract agree to change the terms. This mutual agreement can involve adjustments to the scope, price, or other elements of the contract, ensuring that both parties consent to the new terms. This type of modification is often preferable as it fosters cooperation and maintains a positive working relationship between the contracting parties.

On the other hand, a unilateral contract modification is made by one party without the need for agreement from the other party. This can happen if the contract allows for such changes, such as in certain government contracts where one party—usually the party that issued the contract—has the authority to make modifications based on their needs or circumstances.

The other options listed contain terms that do not accurately describe the standard categorizations of contract modifications. For example, "mutual" and "unilateral" may cause confusion since they essentially describe the same concept as "bilateral"—both imply agreement between two parties, while "unilateral" specifies a modification made by only one party. "Supplemental" typically refers to additions or enhancements rather than the broader classifications of how modifications are made.

Understanding these distinctions is essential in contract law and management,