Important kinds of contracts from the point of view of the extent of execution are as follows:
1. Executed contract:
A contract is said to be executed when both the parties to a contract have, completely performed their share of obligation and nothing remains to be done by either party under the contract.
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For example, when a bookseller sells a book on cash payment it is an executed contract because both the parties have done what they were to do under the contract.
Where only one of the parties to a contract has performed his share of obligation and the other party is still to perform his share of obligation, then also the contract is called ‘executed’.
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For example, M advertises a reward of Rs 1,000 to anyone who finds his missing son. B knowing the offer finds the missing boy and brings him.
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As soon as B traces the boy, there comes into existence an executed contract because B has performed his share of obligation and it remains for M to pay the amount of reward to B.
This type of executed contracts are also called Unilateral Contracts because in such contracts only one obligation remains outstanding, the other obligation having being performed at the time of or before the formation of the contract.
2. Executory contract:
It is one in which both the obligations are outstanding, one on either party to the contract, either wholly or in part, at the time of the formation of the contract. In other words, a contract is said to be executory.
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When either both the parties to a contract have still to perform their share of obligation in toto or there remains something to be done under the contract on both sides.
For example, where T agrees to coach R, a pre-medical student, from first day of the next month and R in consideration promises to pay T Rs 3,000 per month, the contract is executory because it is yet to be carried out.
Similarly, where M promises to sell his car to N for Rs 1, 00,000 cash down, but TV pays only Rs 10,000 as earnest money and promises to pay the balance on next Sunday. On the other hand, M gives the possession of car to N and promises to execute a sale deed on receipt of the full amount.
The contract between M and N is executory because there remains something to be done on both sides. Executory contracts are also known as Bilateral Contracts.