An agreement is considered an executed contract when it is signed off by all parties of the contract. It is in effect until this occurs. Regardless of how many people make up the contract, the contract is executed when the parties agree by signing off on the contract. Most contracts are required to be witnessed by a notary to verify that it is executed.
The term execute in the context of an executed contract refers to giving validity to something, in this case giving validity to a contract. Validity requires the contract to be signed and verified.
The contract begins on the date stated on the document. It does not necessarily begin on the date the contract was signed, although this is possible as well if it states that it will begin effective immediately.
Contracts that Must be Executed
Similarities and Differences Between Executed and Executory Contracts
The terms executed and executory contract sound very familiar however they are different. Executed contracts, as explained above are simply contracts that have been signed and are in effect based on the date indicated on the agreement.
A contract is considered an executory contract when certain contractual obligations have yet to be performed by parties. An example of this is the sale of a home. In this scenario the purchase agreement is valid only if the buyer obtains the financing required or has met other conditions, thereby making the purchase agreement possible. Upon contractual obligations being met, the contract becomes an executed contract.
If all of the components of a valid contract are met, a contract is considered valid.
The components of a valid contract are:
Goals of contract are legal
A contract must have all of these components in order to be enforceable. If a component is missing, the contract is incomplete and therefore, void.
An executed contract means that all parties have met their obligations and the terms of the agreement have been ratified.