Which of the following is an example of an executory contract?

Which of the following is an example of an executory contract?

• A. A lease agreement after termination
• B. A sales contract prior to closing
• C. An offer that has been rejected
• D. A bilateral agreement that has been fulfilled

Answer: (B)

An example of an executory contract is a sales contract prior to closing because it represents a binding agreement between the buyer and seller where certain obligations remain unfulfilled. In this scenario, the buyer is obligated to pay the agreed-upon price, and the seller is obligated to transfer ownership of the property. Since neither party has completely satisfied their obligations at the time the contract is signed, it is considered executory. An executory contract is characterized by the fact that future performances are still to be completed. The other choices represent situations where obligations are either fulfilled, terminated, or ended, which does not fit the definition of an executory contract.

An example of an executory contract is a sales contract prior to closing because it represents a binding agreement between the buyer and seller where certain obligations remain unfulfilled. In this scenario, the buyer is obligated to pay the agreed-upon price, and the seller is obligated to transfer ownership of the property. Since neither party has completely satisfied their obligations at the time the contract is signed, it is considered executory.

An executory contract is characterized by the fact that future performances are still to be completed. The other choices represent situations where obligations are either fulfilled, terminated, or ended, which does not fit the definition of an executory contract.