The execution stage of a contract is vital, marking the final step before a contract becomes legally binding.
This blog is part of the “Contract Law” series.
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 | What is an executed contract? |
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| Executed contract vs. executory contract vs. effective date |
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Carefully crafted contract agreements are an important part of many legal and business relationships. They often require a great deal of negotiation, revision, and review before being executed, which is the final stage before the contract lifecycle management process turns over. As such, the execution stage of a contract can require a little extra attention, and understating its nuances is a great way to help avoid unwanted headaches down the road.
Below, we will consider some of the key attributes of an effectively executed contract and parse through some of the ways business and legal pros work toward crafting and managing those contract agreements. We will also go over some important terms and definitions related to executed contracts and explore some ways these contracts can be effectively managed.
An executed contract is the final product of a legally binding, enforceable agreement between parties. This contract “can be in the form of a written document or a verbal agreement. Once all parties have fulfilled their obligations, the contract is considered executed. This means that the terms of the contract have been completed and the parties are no longer obligated to each other.”
An executed contract does not rely simply on a signature on a piece of paper. A fully executed contract necessitates all parties have fulfilled their legal duties and the promises made to one another during the negotiation and agreement stage of the contract.
In written form, an effective contract should be clear and concise so as to ensure all parties understand the terms and conditions. Executed contracts must be signed by all parties involved and must contain the essential elements of a contract: offer, acceptance, consideration, and mutual assent.
Executing a contract is a crucial step in formalizing agreements between parties, ensuring clarity and enforceability of obligations. Whether it’s a business deal, employment agreement, or lease arrangement, understanding how to properly execute a contract is essential for safeguarding the interests of all parties involved. This section will provide a guide on the key considerations involved in executing a contract.
Leading up to the signing and execution of a contract, there are some important items that first need to be checked off. A close reading of the contract, including important clauses like warranties and disclaimers, is advisable.
Once reviewed, it may also be helpful to keep a copy of the document on hand for quick reference. As is the case with many legal considerations, it is also advisable to make sure all parties involved in the contract agreement have the capacity to enter into such an arrangement. Individuals compromised by, for example, illegal drugs or excessive alcohol consumption, may be found to lack capacity with respect to contract law. In such a case, that contract agreement may be considered breached.
If a promise is breached, the law provides remedies to the harmed party, often in the form of monetary damages, or in limited circumstances, in the form of specific performance of the promise made.
Additionally, is it advisable to ensure the contract is signed by the proper individuals on both sides of a pending deal and that all the conditions needed to execute the contract can be satisfied.
Once signed by all relevant parties, it can be helpful to review the contract one more time to look for any glaring errors or inconsistencies. That signed and reviewed copy can then be stored in a secure location and made accessible to all parties involved. There are lots of great options for some safe, accessible, and automated solutions for contract storage.
