What characterizes an executed contract?

An executed contract is characterized by the fact that all parties involved have fulfilled their promises as outlined in the agreement. This means that the terms of the contract have been completely performed, and the obligations of each party have been satisfied. In real estate, for example, an executed contract would mean that the buyer has paid for the property and the seller has transferred ownership, thus marking the conclusion of the contract's terms.

Understanding this concept is crucial because it distinguishes between different states of contracts, such as executed and executory contracts. An executory contract is one in which some or all obligations remain unfulfilled, contrasting sharply with an executed contract where no further performance is necessary. An executed contract signifies the completion of the agreement, providing clarity and resolution to all parties involved.