An executory contract is a contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

 which has not yet been performed or executed. Although material, an obligation to pay money does not usually make a contract executory. An obligation is material if a breach of contract

Breach of contract

Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....

 would result from the failure to satisfy the obligation. A contract that has been fully performed by one party but not by the other party is not classified as an executory contract.

In bankruptcy law

The term executory contract assumes a specialized meaning in some areas of law. In bankruptcy law

Bankruptcy

Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....

, an executory contract is a contract in which continuing obligations exist on both sides of the contract. In this context, a trustee may assume or reject any executory contract or unexpired lease subject to court approval. See e.g. .

Installment contracts

Many installment contracts are commonly executory, for example, installment credit

Installment credit

Installment credit is a type of credit that has a fixed number of payments, in contrast to revolving credit.-Examples:* Land loan* Home construction loan* Home mortgage* Some equity loans* Home improvement loan* Automobile loan...

 loans, period loan payments, mortgages

Mortgage loan

A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...

, paychecks, and similar contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

s.

See also

• Bankruptcy in the United States
  Bankruptcy in the United States
  Bankruptcy in the United States is governed under the United States Constitution which authorizes Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States." Congress has exercised this authority several times since 1801, most recently by adopting the Bankruptcy...
  
  
• Chapter 11, Title 11, United States Code
  Chapter 11, Title 11, United States Code
  Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most...
  
  
• Charging order
  Charging order
  A charging order, in English law, is an order obtained from a court or judge by a judgment creditor, by which the property of the judgment debtor in any stocks or funds or land stands charged with the payment of the amount for which judgment shall have been recovered, with interest and...
  
  
• Executory interest
• Future interest
  Future interest
  In property law and real estate, a future interest is a legal right to property ownership that does not include the right to present possession or enjoyment of the property. Future interests are created on the formation of a defeasible estate; that is, an estate with a condition or event...
  
  
• Rule against perpetuities
  Rule against perpetuities
  The common law rule against perpetuities forbids some future interests that may not vest within the time permitted; the rule "limit[s] the testator's power to earmark gifts for remote descendants"...
  
  
• Paid in full