Certified Residential Appraiser Practice Exam

What is the term used for promises made in a contract that are still being fulfilled?

1. Executory Contract

2. Executed Contract

3. Implied Contract

4. Conditional Contract

The correct answer is: Executory Contract

The term "executory contract" refers to a contract in which some or all of the obligations or promises within the agreement are still outstanding and have not yet been fulfilled. In such contracts, one party is typically in the process of completing their part of the deal, while the other party awaits performance, and this ongoing nature is what distinguishes executory contracts from other types. In contrast, when a contract is fully executed, it means that all parties have completed their responsibilities as outlined in the agreement, categorizing it as an "executed contract." Implied contracts are not formally written or verbally stated but are rather inferred from the actions or circumstances of the parties involved. Conditional contracts include specific conditions that must be met for the contract to be fulfilled, which does not necessarily relate to the ongoing fulfillment aspect represented by an executory contract. Thus, "executory contract" accurately captures the essence of a situation where promises remain to be fulfilled.