What are the two types of contract modifications?

The two types of contract modifications are indeed bilateral and unilateral. A bilateral modification occurs when both parties to the contract mutually agree to change the terms of the agreement. This often involves negotiation and may result from the need to address issues that arise during the contract's performance or to add new provisions based on mutual consent. Since both parties are involved, bilateral modifications typically lead to a more stable and agreeable contractual relationship.

On the other hand, a unilateral modification is initiated by one party without the need for the other party's agreement. This usually happens when one party has specific rights to make changes, such as in government contracts where authority is often granted to one party to unilaterally modify certain terms, like scope or price, under prescribed conditions.

Understanding the distinction between these types of modifications is crucial for effective contract management, as it informs the appropriate process for executing changes and the level of agreement required from the involved parties. In contrast, the other options do not accurately reflect the standard classifications of contract modifications and might lead to confusion regarding the rights and obligations of the parties involved in a contract.