What is an executed contract?

An executed contract is defined as a contract that has been signed and is thus legally binding on the parties involved. When both parties have agreed to the terms and have put their signatures on the document, the contract is considered executed. At this point, the contract is enforceable in a court of law, meaning that the obligations outlined in the contract are both valid and can be demanded by either party.

Understanding the term "executed" in this context is essential, as it denotes completion of the agreement process between the parties. In contrast, a contract that is still under negotiation may involve ongoing discussions and potential changes, which means that it is not yet executed. Similarly, an unenforceable contract lacks legal validity due to various reasons such as being missing essential elements or violating public policy. Lastly, a verbal agreement, while it may be considered a contract in some contexts, typically lacks the formalities associated with an executed written contract, thus differentiating it from what is classified as executed.