An executory contract is defined as one in which:

An executory contract is characterized by the fact that essential elements of the agreement remain to be performed by one or both parties. This implies that the contract is still in effect and that actions or obligations specified in the agreement have not yet been fulfilled. For instance, in real estate, this could refer to a situation where the buyer has entered into a purchase agreement but has not yet completed the closing process.

This understanding is crucial because it identifies the status of obligations within a contract, which can have significant implications for the parties involved. When discussing contracts and their enforcement, knowing whether a contract is executory helps clarify the responsibilities and rights of each party at that moment in time. In contrast, a contract where all terms have been fully executed would not fall under this definition, as it has reached completion, and thus would not be considered executory.