Oregon 30-Hour Real Estate Law Practice Test

What type of contract is classified as executory?

1. Voice agreement

2. One where terms are fully completed

3. One where terms still need to be completed

4. One that is verbal only

The correct answer is: One where terms still need to be completed

An executory contract is one in which some or all of the terms remain to be completed by the parties involved. This type of contract indicates that there are obligations that have yet to be fulfilled. For example, in a real estate transaction, if the buyer has made an offer and the seller has accepted, but the transaction has not yet closed, the contract remains executory until all conditions are met, such as payment and transfer of the property title. In contrast, contracts that are fully completed would not be classified as executory because all obligations have been fulfilled. Similarly, while a voice agreement or a verbal-only contract might be valid, they don't inherently reflect the executory nature of a contract where actions or terms are still pending completion. This distinction is crucial for understanding the status of obligations in real estate transactions and can affect legal rights and responsibilities.