A Brief Introduction About the Executed Contract
An executed contract is an agreement that has been signed by the parties who have created it. Once the agreement has been signed, and the duties that the parties have under the agreement has been performed successfully, it is said to be a fully executed contract. Hence, this contract is one that has been fully performed. This applies to every agreement that is created, no matter what type of agreement it is or for what reason it has been created.
An executed contract definition is an agreement that has been validated by the signatures of the parties who have entered into it. A question that arises is, what does execute mean in law? The legal definition of execute is to complete and give effect to a document or an agreement.
Contract execution is achieved through the signing of the agreement. Once this is done, the parties will be legally bound by the contract, and they will have a legal obligation to perform the contract. Through the act of signing the agreement, the parties have accepted their responsibility under it and have signified that they shall perform their end of the contract.
Who Takes the Executed Contract? – People Involved
An executed agreement can be entered into by any competent parties. A contract can be created between two or more people, a person and an entity, or between two or more entities. The only requirement is that the person is competent to contract, which means that he is an adult, and he is of sound mind.
Purpose of the Executed Contract – Why Do You Need It?
An agreement is always created for a particular purpose. It could be for the performance of certain obligations or the sale of a particular good or any other lawful reason that the parties may desire. Hence a written agreement is essential to lay down all the terms that are important to make sure that the agreement is performed and all the obligations under it are fulfilled.
If the agreement has been drafted but has not been signed by the concerned parties, then such an agreement cannot be legally enforceable as it is an unexecuted contract. Hence execution of the contract is critical to make it valid and legally binding upon the parties. A contract that has not been correctly executed will be of no use to the parties.
There is a difference between an executed and an executory contract. A contract whose terms shall be performed at a later date is referred to as an executory contract. An example of this is an agreement for the construction of a house. Even though the agreement may be signed on a particular date, the construction may not begin until a later date that is laid down in the agreement. However, whether a contract is executed or executory, the agreement will become legally binding from the date on which it is signed.
Contents of the Executed Contract – Inclusions
The contents of the agreement will depend upon the type of agreement that is being created. The terms of the contract shall lay down what duties shall be performed by each party to make sure it is executed. The contract should mention the names of the parties who are entering into it and the reason for which the agreement is being created.
An executed contract example is an executed contract for real estate. Such a contract will be considered to be executed when both parties fulfill their obligations. For example, in a contract to purchase a particular property, the contract will be executed when the buyer pays the purchase price, and the title of the property is transferred to him. Where real estate is concerned, the property in question must be identified.
In an executed lease, the agreement must mention the lease amount that is to be paid by the lessee and any other obligations on his part. In a sales contract, the purchase price or any other consideration must be specified. A timeline must be provided for the performance of the terms of the contract to make sure that it is completed within the period agreed to by the parties. The rights and obligations of both parties should be laid down along with their representations and warranties. This is done to protect the interests of both parties.
One of the most important parts of an executed document is the date of execution. This is the date when all the parties sign the agreement, and the agreement comes into force from that day onward.
How to Draft the Executed Contract?
The following are the steps to follow while drafting this contract:
- The agreement will be drafted depending upon the purpose for which it is created. It must include all the details and terms that fully explain the transaction at hand.
- The rights and obligations of all the concerned parties must be laid, and their duties must be clearly defined. This will help to avoid any confusion in the future.
- The agreement must also make sure that there is a dispute resolution mechanism in place to solve any disputes that may arise under the contract.
- Once the agreement has been drafted, the parties must go through all the clauses and make sure that they understand all the provisions under it. It is essential for the parties to be fully aware of what they are signing.
- The agreement must then be signed by the parties.
- All the parties must keep an executed copy of the contract with themselves so that they can refer to it at any time.
- The negotiation process in any contract will depend upon the intention of the parties behind the creation of the agreement.
- The main goal of the parties should be to make sure that the agreement is such that it is extremely balanced. It should be such that it protects the interests of one party if the other party breaches any term or obligation under it.
Benefits and Drawbacks of the Executed Contract
The following are the benefits and drawbacks of having an executed contract:
- Once the parties sign the agreement, they have confirmed their willingness to perform their obligations under the agreement. Hence the benefit is that the parties are under a legal obligation to perform the contract.
- If the parties fail to do so, there will be a method through which the breaching party will be made to complete his duties under the contract.
- If such an agreement is not in place, there might not be an adequate remedy available to a party if the opposing party refuses to carry out his obligations under the contract.
What Happens in Case of Violation?
This contract should ideally have a clause that provides for the method through which any violation or breach of the terms of the contract shall be dealt with. The termination clause should have a dispute resolution mechanism in place.
The parties can agree that if there is a breach of the agreement, the breaching party shall be given 30 days to remedy the breach. These 30 days shall commence from the day the breaching party receives notice of the breach from the non-breaching party.
If the breach is not cured within the period so provided, the parties can choose to submit the dispute to arbitration, mediation, or negotiation as agreed by them. Most parties prefer these alternate methods to institute a case in court as it saves the time of all the concerned parties and also ensures that a mutually satisfactory solution is reached.
It has been noticed that arbitration is the most popular form of alternative dispute resolution(1). The arbitration clause will state that all disputes arising under the agreement shall be mandatorily submitted to arbitration. The clause will provide how the arbitration tribunal will be selected by the parties. The tribunal usually consists of three arbitrators – two selected by the parties themselves and one further selected by the two appointed arbitrators. The clause shall also mention the venue where the arbitration proceedings shall be held and the language in which such proceedings shall be conducted.
In conclusion, an executed contract is one that has been signed and sealed by the concerned parties. This is important to make sure that the parties will be bound by the agreement. It ensures that the purpose for which the agreement was created is achieved seamlessly. This contract can be created for any lawful purpose and for any reason, as the parties may desire. Creating a written agreement is always better than an oral agreement, as it is tough to enforce an oral agreement.