What is the meaning of “executory contract”?

An executory contract is an agreement between two parties in which one or both parties still owe performance. It is a binding contract in which each party must fulfill its obligations for the agreement to be completed. In California, executory contracts are usually related to debts and creditors’ rights law. In California, creditors’ rights law states that a lender and debtor enter into an executory contract when the parties exchange a promise of performance that must be fulfilled in the future. This includes contracts for the sale of goods, services, or real estate on credit. In this arrangement, the debtor promises to pay the creditor in return for the promise of the creditor to deliver the goods, services, or property. It is an important part of creditors’ rights law because it establishes the rights of creditors to collect payment on their debts through judicial enforcement. The California Supreme Court defines an executory contract as “an obligation requiring some future act to be performed by one of the contracting parties or by a third party, the performance of which is within the control of the party to whom the performance is due.” Executory contracts are enforceable through the court system. The court may order the debtor to pay the amount owed or order the creditor to deliver the goods, services, or property that were promised.

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What is the meaning of “executory contract”?

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