Which statement best describes an executory contract?

Which statement best describes an executory contract?

• A. All terms have been performed and the contract is completed.
• B. Some duties remain to be performed.
• C. The contract has not been formalized.
• D. The contract is voidable at any time.

Answer: (B)

An executory contract is one in which some duties remain to be performed. In real estate, this means the agreement is not finished until all obligations are fulfilled—such as the buyer delivering the purchase price and the seller delivering clear title at closing. Until that happens, the contract is still in force and partially unperformed. This differs from a contract where all terms have already been completed, which is fully executed. A document that hasn’t been formalized isn’t yet a binding contract in many cases, so it isn’t the right description of executory. And a contract that’s voidable at any time refers to a party’s right to cancel under certain circumstances, which is about remedy rather than the ongoing state of performance.

An executory contract is one in which some duties remain to be performed. In real estate, this means the agreement is not finished until all obligations are fulfilled—such as the buyer delivering the purchase price and the seller delivering clear title at closing. Until that happens, the contract is still in force and partially unperformed.

This differs from a contract where all terms have already been completed, which is fully executed. A document that hasn’t been formalized isn’t yet a binding contract in many cases, so it isn’t the right description of executory. And a contract that’s voidable at any time refers to a party’s right to cancel under certain circumstances, which is about remedy rather than the ongoing state of performance.