Overview
An executed contract is a legal agreement in which all parties involved have met their legal obligations. This means that the contract has been fully performed, with all the terms and conditions accomplished. Executed contracts are contrasted with executory contracts, where some terms have yet to be completed.
Examples
- Real Estate Purchase: When a buyer and seller complete a real estate transaction — meaning the buyer has paid in full and the seller has transferred the deed — the sale contract is considered executed.
- Service Agreement: A graphic designer agrees to create a logo for a client for a fixed fee. Once the designer delivers the logo and the client pays the agreed fee, the contract becomes executed.
- Supply Contract: A supplier agrees to deliver a batch of goods to a retailer by a certain date. Once the goods are delivered and payment is received, the contract is executed.
Frequently Asked Questions (FAQs)
What is the difference between an executed contract and an executory contract?
- An executed contract is one where all the obligations have been met. An executory contract, on the other hand, still has pending obligations that need to be fulfilled.
Can an executed contract be amended?
- Yes, parties to an executed contract can agree to amend the terms, such as by creating a contract modification or an addendum.
Is an executed contract enforceable?
- Yes, since both parties have fulfilled their obligations, it is considered fully binding and enforceable.
What happens if one party claims they did not receive what was promised in an executed contract?
- Disputes over whether all terms were met may lead to legal action, where courts will examine the contract and the evidence of fulfillment.
Are executed contracts found in all types of law?
- Yes, executed contracts are a concept found in various branches of law, including real estate, employment, and business law.
Related Terms
- Executory Contract: A contract in which some future obligations by one or more parties remain unfulfilled.
- Bilateral Contract: A mutual agreement between two parties who both have specific obligations.
- Unilateral Contract: A contract in which only one party makes a promise or commitment.
- Contract Modification: An agreed change to the terms of an existing contract.
- Addendum: An addition or supplement to a completed contract, typically dealing with changes or further details.
Online References
Suggested Books for Further Studies
- “Contract Law: An Introduction to Dominant Contemporary Issues” by M.R. Levy
- “Principles of Contract Law” by R. Stone and J. Devenney
- “Business and Legal Forms for Contract” by S.G. Laube
Fundamentals of Executed Contracts: Business Law Basics Quiz
### What is an executed contract?
- [ ] A contract that has been signed but not yet fulfilled.
- [ ] A contract only for short-term projects.
- [x] A contract whose terms have been completely fulfilled.
- [ ] A verbal agreement between two parties.
> **Explanation:** An executed contract is one where all terms and conditions have been met and fulfilled by the parties involved, indicating the conclusion of the contractual obligations.
### Which of the following represents an executed real estate contract?
- [x] The buyer has paid in full and the seller has transferred the deed.
- [ ] The buyer has made an offer, but no payment has been made.
- [ ] The buyer and seller agreed, but the property inspection is pending.
- [ ] An agreement to purchase property that will be finalized next month.
> **Explanation:** In an executed real estate contract, the buyer has paid in full and the seller has transferred the deed, meaning all the terms of the contract have been met.
### What is a major characteristic of an executory contract compared to an executed contract?
- [x] Some future obligations remain unfulfilled.
- [ ] It has higher legal standing.
- [ ] It requires court approval.
- [ ] It is more informal.
> **Explanation:** An executory contract is characterized by having some obligations that are yet to be fulfilled by one or more parties.
### Can parties amend an executed contract?
- [x] Yes, through contract modification or addendum.
- [ ] No, an executed contract is final and cannot be changed.
- [ ] Only if it is a government contract.
- [ ] Yes, but only during the first month after execution.
> **Explanation:** Parties can amend an executed contract through contract modification or addendum, if both agree to the changes.
### In which scenario is a contract considered executed?
- [x] All agreed terms are fulfilled by all parties.
- [ ] Only one party has completed their obligations.
- [ ] The contract is signed but delivery of goods is pending.
- [ ] The parties are negotiating the final price.
> **Explanation:** A contract is considered executed when all agreed terms are fulfilled by all parties.
### Do executed contracts still require legal scrutiny?
- [ ] No, once executed they are beyond legal examination.
- [x] Yes, they might still be subject to legal scrutiny if disputes arise.
- [ ] Only for international transactions.
- [ ] Only if they have special clauses.
> **Explanation:** Executed contracts may still require legal scrutiny if disputes regarding the fulfillment of terms arise.
### Is an executed contract always enforceable?
- [x] Yes, since terms have been fulfilled, it is binding.
- [ ] No, they can be challenged in court.
- [ ] Only if notarized.
- [ ] Only if involving large sums of money.
> **Explanation:** An executed contract is generally considered binding and enforceable as all terms have been fulfilled.
### What is the difference between a bilateral and a unilateral contract in execution?
- [x] Bilateral requires mutual agreement and actions by both parties, while unilateral involves only one party's action.
- [ ] Bilateral contracts are only verbal agreements.
- [ ] Bilateral contracts cannot be executed.
- [ ] They involve different types of payment methods.
> **Explanation:** A bilateral contract requires mutual agreement and actions by both parties to execute, whereas a unilateral contract involves one party’s offer needing performance by another party.
### When resolving disputes over an executed contract, what primary document is examined?
- [x] The original contract agreement.
- [ ] Verbal agreements between parties.
- [ ] Emails exchanged during negotiation.
- [ ] Witness testimonies.
> **Explanation:** The original contract agreement is the primary document examined to resolve disputes over an executed contract.
### What happens if new obligations arise after a contract is executed?
- [ ] The contract is voided.
- [x] Amendments or addenda are added to modify the terms.
- [ ] A new contract must be created.
- [ ] The executed contract remains unchanged.
> **Explanation:** Any new obligations that arise after execution would typically be handled by creating amendments or addenda to modify the existing terms.
Thank you for exploring the fundamentals and practical aspects of executed contracts in business law. Your understanding of contract law is vital for navigating and crafting legally sound agreements!
