Executory Contract
A contract that has been signed by all parties but where some or all of the agreed-upon obligations have not yet been performed or completed. Both parties still have duties to fulfill under the terms of the agreement.
Example
“The signed purchase agreement remained an executory contract until closing day when all conditions would be fulfilled.”
Memory Tip
Think 'executory = to be executed later' - signed but still has work to do.
Why It Matters
Most real estate transactions involve executory contracts from signing until closing, meaning both buyers and sellers have ongoing legal obligations that must be fulfilled for successful completion. Understanding these continuing duties helps parties avoid breach of contract situations.
Common Misconception
Some people think a signed contract means all obligations are complete, but executory contracts require ongoing performance until all terms are fulfilled.
In Practice
After signing a purchase agreement, the contract remains executory while the buyer obtains financing and completes inspections, and the seller maintains the property and prepares necessary documents. The contract becomes executed only when the deed is delivered and payment is received at closing.
Etymology
From Latin 'executorius,' meaning 'pertaining to carrying out,' indicating a contract that still needs to be carried out or completed.
Common Misspellings
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