What characterizes an executory contract?

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An executory contract is characterized by the presence of one or more terms that are still incomplete or unfulfilled. This means that at least one party has obligations that have not yet been performed, indicating that the contract is still in the process of being carried out. For instance, in real estate transactions, an executory contract might involve the buyer agreeing to purchase property, with the purchase price and closing date yet to be finalized.

In contrast, a contract that has been completely executed would imply that all terms have been met and there are no remaining obligations, which does not align with the definition of an executory contract. A definition stating a contract cannot be canceled does not pertain to the ongoing obligations aspect, as executory contracts can often be canceled under certain circumstances. Lastly, while contracts concerning employment services can indeed be executory, this characteristic is not exclusive to that type of contract, making it too narrow to define an executory contract itself. Thus, the essence of an executory contract lies in its unfinished obligations, confirming that the correct choice is indeed the one that highlights the existence of incomplete terms.

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