Executed Contract

An executed contract is a legal document that has been signed off by the people necessary for it to become effective. The contract is often made between two or more people, but it can also be between a person and an entity, or two or more entities. Contracts often specify that one party will provide a service or goods to the other, and are not fully effective until all parties involved have signed. Some contracts even require the signatures be witnessed. To explore this concept, consider the following executed contract definition.

Definition of Execute

Noun

  1. To complete, and give effect or validity to, a legal document, decree, law, or judicial sentence.
  2. Fulfilling legal requirements of a contract or other instrument by signing or sealing.

Origin

1350-1400     Late Middle English executen

Types of Contracts

Many types of documents and legal forms may be executed to ensure they become effective and binding. The most common documents that require execution include contracts between two or more parties, such as lease agreements, contracts for services, and sales contracts. Such documents bind the parties to carry out the terms of the agreement.

Execution Date

The “execution date” is the date on which a contract has been signed by all the necessary parties. This may or may not be the “effective date” of the contract, which may be specified in the body of the document. For example, Susan signs a lease agreement on April 3rd, with a move-in date of May 1st. The execution date of the lease is April 3rd, but the effective date is May 1st.

Executed vs. Executory Contracts

While any type of contract must be “executed” by the parties by adding their signatures to it, some people and entities refer to a contract for which the terms are to be carried out at a later date by the specific name of “executory contract.” This may create some confusion for the layperson when hearing the term “executed contract,” which may simply refer to the fact that the contract has been signed by all parties, or may refer to a signed contract for which the terms were immediately carried out.

One example of this type of “executed contract” would be a contract for purchase of a major appliance. This contract is entered into, and the appliance is immediately delivered. An example of an “executory contract” may be a contract with a general contractor for the construction of a house, for which the work is to begin in four months time. The important thing to understand is that, in either case, once a contract has been signed by all the parties, it becomes legal and binding.

Example of Executed Contract

John has been looking at a car he wants at a car lot, debating whether to buy it. Finally deciding to make the purchase, John walks into the dealership, signs a purchase contract, pays for the car in cash, and walks out with the keys to the car.

Example of Executory Contract

John has been looking at a car he wants at a car lot, debating whether to buy it. Finally deciding to make the purchase, John walks into the dealership, signs a lease contract agreeing to pay a specified amount each month until the car is paid off, or he returns the car at the end of the lease. Until the car is either paid off or returned, the terms of the contract have not been fulfilled.

Basics of Executing a Contract

The basics of executing a contract begin with reading and understanding all of the contract’s provisions, including any fine print, and portions of the contract stated to be on another document. If the contract binds the individual or entity to a significant expense or service, it is often worth the time and expense to have an attorney review the contract before signing.

Understanding Contract Terms

Understanding contract terms includes understanding the difference between the contract’s execution date and effective date, if applicable, to prevent confusion in the future. Any changes to a contract agreement must be made in writing and signed by all parties before the changes take place. Because an executed contract is a legal document, each party should keep a copy and refer to it, if necessary, to fulfill their obligations completely. If one party fails to fulfill his obligations, the other party may be able to file a civil lawsuit. For example, if John fails to make the agreed lease payments on his car, the dealership could not only repossess the car, but could sue John in civil court for the remaining amount owed under the lease.

Related Legal Terms and Issues

  • Entity – something with distinct and independent existence, such as a company, agency, or organization.
  • Civil Lawsuit – a case in which a person who feels he been wronged brings legal action against another person or entity to collect damages from the person who wronged them.
  • Legal Jargon – unnecessarily complicated or technical language used in contracts or detailed documents.

2 comments

  • I’m a construction worker & I would like to kno if your job is for 2 months but another job comes up with that company is it legal to send me to the new job @ when the job I took is not complete …when I only been on the job a month??? HELP

  • My husband recently died. His mother made a deed of trust on her house to him with and effective date of 2003 but it was signed 2011. She told us it is your house now 2011. We assumed all financial responsibility for it investing 27000 since 2011. In 2014 she informed me she had a 50000 Lien on it which I did not know existed. Now that he has died and deeded it to me not only does she want me to satisfy the lien she wants back interest my husband never paid her. He paid her 450 rent from 2003 foward. Should that not be payment on the lien since effective date on deed is 2003?.

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