Contracts exam concept
Executed vs. executory contracts
A signed purchase agreement can still await payment and conveyance. In that setting, the document has been executed, but the contract remains executory by performance status. Read which meaning the question uses, then identify the promises that still need to be performed.
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The short answer
For the usual performance classification, an executed contract has been fully performed; an executory contract still has required performance outstanding by one or both parties. Executed can also mean signed when describing a document. A signed sale awaiting closing is therefore usually executory by performance status. An ongoing lease and an installment contract can remain executory. Classify the agreement and duties described; do not mistake signing, breach, cancellation or a scheduled closing for completed performance.
Reviewed October 25, 2026. This comparison supports National V.A, General Contract Law, including execution and the parties' rights and obligations, in the June 24, 2026 PSI broker outline. The entire Contracts domain has 19 of 100 scored national questions; no individual executed-versus-executory quota is published. General exam vocabulary and specialized statutory definitions are kept separate.
Identify the meaning, then list the remaining promises
- Name the agreement and the time being classified. A purchase contract, ongoing lease, inspection-services agreement and installment sale can have different performance schedules. Do not use the fact that one related document was signed to classify all of them.
- Read executed in context. A request for an executed copy commonly asks for a signed document. A question contrasting executed with executory generally asks whether the required performance has been completed.
- List each party's required promises. Mark what was actually performed and what remains: payment, conveyance, possession, rent, service, repair or another stated duty. One side's completed work does not supply the other side's missing performance.
- Keep conditions and partial steps separate from completion. A deposit, inspection, approval or satisfied financing condition can move a transaction forward without completing payment and conveyance. Read any remaining conditions and duties in the facts.
- Distinguish performance from another reason duties ended. Breach, expiration, mutual cancellation, waiver and discharge are not synonyms for full performance. Identify what happened rather than marking an unperformed promise as completed.
- Read any surviving obligation and special legal context. A conveyance can be complete while a stated repair or adjustment promise remains. A specialized receivership or bankruptcy question requires its own governing law rather than automatic use of the elementary performance chart.
| Status | Performance position | Real estate example | Key evidence |
|---|---|---|---|
| Executory | Material duties remain for both parties | Signed purchase contract before closing | Contract and open contingency log |
| Partially executed | Some performance complete, some material duty remains | Buyer paid deposit, seller still owes deed | Payment proof and outstanding obligation |
| Executed | Material exchange complete | Price paid and deed delivered at closing | Settlement record and delivered deed |
| Executed document | Instrument has been signed | Purchase agreement signed by all parties | Signatures and effective delivery |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Executed vs. executory | Executed means the material performance being classified is complete. Executory means material performance remains due. | Finished exchange versus future obligation. |
| Executed document vs. executed contract | An executed document can mean a signed instrument. An executed contract in the exam's performance classification means the parties completed their duties. | Signed paper versus completed performance. |
| Executory vs. unenforceable | Executory describes unfinished performance. Unenforceable describes a legal defense that blocks a judicial remedy. | Work remains versus court remedy blocked. |
| Executory vs. voidable | Executory concerns performance stage. Voidable concerns a protected party's power to avoid an agreement because of a qualifying defect. | Timeline status versus avoidance power. |
| Executed vs. valid | Executed addresses performance. Valid addresses legal sufficiency. A valid contract can be executory, and completed conduct can still be challenged for fraud or illegality. | Did parties perform versus did law recognize the bargain. |
| Partial performance vs. full performance | Partial performance satisfies some duties. Full performance satisfies all material duties within the classification being asked. | Some boxes checked versus no material box left. |
| Contract to sell vs. completed sale | A contract to sell promises a future transfer and can create equitable consequences. A completed sale includes the actual transfer of legal title. | Promise to convey versus conveyance accomplished. |
| Breach vs. execution | Breach is failure to perform a duty. Execution in the performance sense is completion of the duty. | Promise broken versus promise completed. |
| Termination vs. full performance | Termination ends specified future obligations under contract or law. Full performance ends them because the promised work was completed. | Duties ended versus duties fulfilled. |
Work through the facts
Signed purchase agreement before closing
A seller accepts the buyer's written offer. Earnest money has been delivered, but inspection, financing, title review, final payment, and deed delivery remain ahead.
- A binding contract may have formed and the document is signed.
- Both buyer and seller still owe material performance.
- The signature does not complete the purchase transaction.
Answer: The purchase contract is executory in the performance sense.
Completed purchase closing
The buyer delivers the required funds, the seller delivers the deed, the settlement documents are completed, and possession is transferred as the contract requires. No material sale duty survives.
- The price and conveyance exchange occurred.
- The required possession and closing documents were delivered.
- The facts identify no material outstanding obligation.
Answer: The purchase contract is executed under the exam's completed-performance classification.
One party finished, the other owes payment
An inspection company completes the agreed property inspection and delivers its promised report. The client still owes the agreed inspection fee. No further work remains for the company.
- The company has performed its stated promises.
- The client's payment promise remains outstanding.
- The general performance classification asks about both sides, not only the service provider.
Answer: The agreement remains executory as to the unpaid obligation under the general exam vocabulary. A specialized statutory definition may require a different analysis.
Five-year lease in year two
A landlord and tenant signed a five-year lease, the tenant took possession, and three years of rent, occupancy, repair, and surrender duties remain.
- The lease document was executed in the signature sense.
- The parties performed some obligations during the first two years.
- Material continuing duties remain for the balance of the term.
Answer: The lease is executory during the ongoing term.
Installment contract before final deed
A contract buyer has made 84 of 120 scheduled payments and occupies the home. The seller retains legal title and must deliver a deed after the final qualifying payment.
- Substantial performance has occurred, but installments remain.
- The seller's final conveyance duty also remains.
- Possession and equitable rights do not equal completed legal-title transfer.
Answer: The installment contract remains executory.
Closing with a surviving repair escrow
The deed and purchase money are exchanged, but the seller must complete roof work within 20 days and money is held in escrow to secure that promise.
- The core conveyance and payment exchange is complete.
- A material repair obligation expressly survives closing.
- The question may require a qualified answer rather than treating every duty as finished.
Answer: The sale closed, but the contract remains executory as to the surviving repair and escrow duties.
Canceled without completing the exchange
Before conveyance, the buyer and seller validly agree to release their remaining purchase obligations. They do not complete the contemplated sale.
- The future duties ended by the stated release.
- They did not end because the buyer paid and the seller conveyed as originally promised.
Answer: Describe the stated cancellation or discharge; do not call the unperformed sale fully performed.
An executed copy before closing
A transaction coordinator asks for the fully executed purchase agreement after the parties sign. Payment and conveyance will occur later.
- In this document request, executed refers to the signatures.
- The future sale obligations remain.
Answer: Provide the signed agreement as required. The sale contract remains executory by performance status.
Mistakes to avoid
- Signed means fully performed Executed document can mean signed while its contract remains executory.
- Executory means invalid or optional Performance stage does not decide validity, enforceability or a right to walk away.
- A deposit or inspection completes the sale Check the remaining payment, conveyance and other required promises.
- One party's finished work completes both sides An unpaid required obligation can remain under general performance vocabulary.
- Closing makes every surviving promise disappear Identify the completed conveyance and any expressly continuing duty separately.
- Breach or cancellation is full performance They describe different events and can have different consequences.
- Equitable conversion means clear legal title has passed Equitable interests, legal conveyance and third-party priority are separate questions.
- Every statute uses the simple exam definition Apply the actual specialized definition when the question invokes it.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. A buyer and seller have signed a valid purchase agreement, but closing will occur in 30 days. How is the contract classified by performance status?
- Unenforceable
- Executory
- Executed
- Void
Show answer and explanation
Answer: B. Executory
The buyer's payment and the seller's conveyance remain material future obligations.
2. Which facts most strongly support classifying a purchase contract as executed?
- The lender ordered an appraisal
- The buyer paid and the seller delivered the deed as required
- The parties scheduled an inspection
- The buyer submitted an offer
Show answer and explanation
Answer: B. The buyer paid and the seller delivered the deed as required
Completed payment and conveyance establish the core performed exchange rather than a preliminary step.
3. A landlord and tenant signed a three-year lease yesterday. Which statement is best?
- The document is signed, but the lease is executory because future duties remain
- The tenant already owns legal title
- The lease is fully executed because signatures end every obligation
- The lease is void until the final month
Show answer and explanation
Answer: A. The document is signed, but the lease is executory because future duties remain
Future rent, possession, and other covenants keep the lease executory during its term.
4. The buyer has fully paid, but the seller still owes the deed. What is the contract's performance status?
- Executory as to the outstanding conveyance
- Fully executed
- Automatically void
- Unilateral only
Show answer and explanation
Answer: A. Executory as to the outstanding conveyance
One party's completion does not erase the other party's material unperformed promise.
5. Which statement correctly distinguishes executed from valid?
- Executed and valid always mean the same thing
- Executed concerns performance, while valid concerns legal sufficiency
- Only an oral contract can be executed
- A valid contract can never be executory
Show answer and explanation
Answer: B. Executed concerns performance, while valid concerns legal sufficiency
Performance stage and legal status are independent classifications.
6. Both parties sign a valid release and cancel the sale before payment and conveyance. Does that establish full performance of the original sale?
- Yes, signatures prove the sale occurred
- Yes, any ended contract is executed by performance
- No, because a canceled contract must always have been void
- No; discharge by release differs from completing the sale promises
Show answer and explanation
Answer: D. No; discharge by release differs from completing the sale promises
Use the stated cause: the remaining duties ended by release, not by full performance. That does not itself establish that the original contract was void.
7. For the Illinois Receivership Act's own definition in 765 ILCS 1090/2(8), which point differs from the elementary one-or-both-parties performance chart?
- The statute says no lease can be executory
- The statute applies only after every party fully performs
- The statute defines every signed document as fully performed
- The statute requires an unperformed obligation on each side and its stated material-breach condition
Show answer and explanation
Answer: D. The statute requires an unperformed obligation on each side and its stated material-breach condition
Read the specialized definition. It includes a lease and requires each party's unperformed obligation and the stated material-breach condition. Do not use a basic exam label alone to decide receivership treatment.
8. The deed and price have been exchanged, but an expressly stated seller repair obligation remains secured by a holdback. Which description is most precise?
- The holdback proves that legal title could not transfer
- Every obligation necessarily ended at closing
- The contract was automatically void
- The core sale closed, while the stated repair and holdback obligations remain to be performed
Show answer and explanation
Answer: D. The core sale closed, while the stated repair and holdback obligations remain to be performed
Identify the particular completed and surviving duties. Do not treat the calendar label closing as proof that every expressly continuing promise has been performed.
Common questions
What is an executed contract in real estate?
For the standard real estate exam classification, an executed contract is one whose required performance has been completed. In a purchase transaction, that usually means the buyer paid as required, the seller delivered the deed, title transferred, and the closing obligations were performed. A surviving warranty or indemnity can require a more precise answer about which duties are complete.
What is an executory contract?
An executory contract is a formed contract with material performance still due by one or both parties. A signed purchase agreement awaiting inspection, financing, closing, payment, or deed delivery is executory. So are an ongoing lease with future rent and possession duties and an installment land contract awaiting final payment and conveyance.
Is a signed purchase contract executed or executory?
It is normally executory when the exam is asking about performance status because closing duties remain. The word executed can also mean signed in document practice, so a lawyer may call it an executed purchase agreement. Read the question's contrast: executed versus unsigned concerns signing, while executed versus executory usually concerns completion of performance.
When does a real estate purchase contract become executed?
Under the exam model, it becomes executed when the parties complete the obligations that make up the transaction, ordinarily at or through closing. Do not rely on the calendar label alone. Confirm payment, deed delivery, possession if due, document delivery, and any condition that the question identifies as essential.
Is a contract executory if only one party still owes performance?
Yes. If one party has fully performed but the other still owes a material duty, the contract remains executory as to the outstanding performance. It may also be described as partially executed. The clean exam question is whether any material promised performance remains due. This answer uses the general performance classification; it is not a finding under the Receivership Act's separate definition.
Does signing a real estate purchase contract transfer legal title?
Signing alone does not establish completed legal conveyance. A valid enforceable agreement may have equitable consequences while sale performance remains outstanding. Those consequences do not automatically eliminate third-party rights: United Community Bank v. Prairie State Bank & Trust, 2012 IL App(4 th)110973, rejected an attempt to use equitable conversion to negate a judgment creditor's interest without the relevant notice. Read the instrument, performance and priority facts separately.
Is an ongoing lease executed or executory?
An ongoing lease is generally executory because future obligations remain, including possession, rent, maintenance, access, repair, insurance, or other covenants. The lease may be signed and possession may have begun, but future performance keeps it executory under the exam classification.
Does breach turn an executory contract into an executed contract?
No. Breach means promised performance was not supplied. It can create remedies, termination rights, or a discharge of remaining duties, but it does not rewrite nonperformance as completed performance. Identify what was due, what was breached, and whether later agreement or law discharged the obligation.
Can an executed contract still lead to a lawsuit?
Yes. Completion of performance does not prove the agreement was validly induced or that every representation was true. Claims can concern fraud, defective performance, title covenants, warranties, indemnities, recording, or obligations that expressly survive closing. Executed describes performance status, not freedom from every claim.
Are these official PSI exam questions?
No. They are original questions supporting the national Contracts outline dated June 24, 2026. The Contracts domain has 19 of 100 scored national questions, not a dedicated allocation for this comparison. The cited sources distinguish general performance vocabulary, specific Illinois provisions and the published opinions' actual scope.
Does an expressly surviving repair mean the whole transaction never closed?
Not necessarily. The price and conveyance exchange can be complete while a particular repair, possession or adjustment promise remains outstanding. State which performance is complete and which remains. Do not claim that a completed closing eliminates every warranty, claim or expressly surviving obligation. An unspecified possibility of a later claim is different from an express repair duty the facts say remains unperformed.
Is cancellation the same as an executed contract?
No. A valid release, termination or other discharge can end duties without completing the promised sale. Breach likewise does not turn missing performance into completed performance. Identify the actual event and its terms rather than using executed as a synonym for no longer active.
Do receivership and bankruptcy use this same simple definition?
Do not assume that. The Illinois Receivership Act, effective January 1, 2026, defines an executory contract, including a lease, using unperformed obligations on each side and its stated material-breach condition. That differs from the elementary one-or-both-parties chart. This page does not decide assumption, rejection or federal bankruptcy treatment.
Does a party's death automatically cancel an unfinished real estate contract?
No universal cancellation follows from that fact alone. Under 755 ILCS 5/20-17, a court may, on the specified petition, direct an estate representative to perform a legally subsisting contract to convey or lease real estate. The actual contract, authority and required proceeding matter. This is not a rule that every personal-service contract survives or that any family member may sign a deed.
Can the broker wait until performance is complete to deliver the signed copy?
No. Rule 1450.775(c) requires the true original or corrected copy within 24 hours after the person signs or initials. The performance may remain executory for weeks or years. The signing-copy deadline is not postponed until closing or full performance.
How should I check an answer?
Write two lines: what has been signed, and what still must be performed. Then add any express surviving duty and identify whether a special statute is being tested. Explain the distinction before revealing the answer; a practice score is not a validated passing prediction.
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Official sources and scope
Checked October 25, 2026. The cited PSI outline, DRE definition entries, actual published Illinois opinion and specified Illinois statutory text were read in the identified scopes; the Carollo and document-copy readings were explicitly reused. The DRE glossary supports general vocabulary, not current California legal procedure. The specialized 2026 receivership definition is kept separate. No full bankruptcy, probate or title-priority opinion is supplied.
- PSI June 24, 2026: NationalV.A general contract law
- California DRE glossary: executed and executory contract meanings
- Carollo v.Irwin, 2011 IL App(1 st)102765: contract and performance distinctions
- United Community Bank v. Prairie State Bank & Trust, 2012 IL App(4 th)110973
- 765 ILCS 1090/2(8): specialized executory-contract definition
- 755 ILCS 5/20-17: completion of a legally subsisting real estate contract
- 68 Ill.Adm.Code 1450.775(c): own-signer copy deadline
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.