How does an executed contract differ from an executory contract?

An executed contract is one that has been fully performed by all parties involved, meaning that the obligations and terms outlined in the contract have been completed. This type of contract is finalized, and each party has fulfilled their commitments, whether that involves payment, delivery of goods, or the completion of services.

In contrast, an executory contract is still in progress, with some terms yet to be fulfilled. It indicates that there are remaining obligations awaiting completion by one or both parties. Understanding the difference between these two types of contracts is essential in real estate and legal contexts, as it has implications for enforcement, liability, and further actions that may be taken if terms are not met.

The other choices do not accurately represent the distinctions between executed and executory contracts. For example, the nature of the contract—whether it is verbal or written—does not determine its status as executed or executory. Also, the number of parties involved is not a defining characteristic of either type of contract, and it’s incorrect to claim that there is no difference between the two. Recognizing and distinguishing these terms is crucial for effective contract management in any business scenario.