What is an Executed Contract and How to Execute One Successfully Online

An executed contract or executed agreement is a document that becomes valid or effective once it has been signed by all parties involved.
Last updated on:
March 01, 2023
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Once an executed agreement is in effect, all signatories are legally required to fulfill its terms. This is an essential stage of the contract management lifecycle; however, it can take the longest to complete.

Fortunately, SignHouse simplifies the contract management process to help you close deals faster. For instance, you can say goodbye to waiting for signatures for property ownership transfers since signatories can add their signatures to real estate documents electronically. The expedited process creates an organized and smoother buying experience that could turn one sale into multiple.

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In this article, we go in-depth about executed and executory contracts, and how to execute a contract online successfully.

What Is an Executed Contract?

An executed contract or executed agreement is a document that becomes valid or effective once it has been signed by all parties involved. The document is now legally binding. Therefore, all legal obligations outlined in the contract are enforceable. A lawsuit may be considered if the agreement is breached and informal attempts for resolution between the parties are unsuccessful.

Some may refer to an executed or fully executed contract as one that has been signed, and all obligations accomplished. Both definitions are legitimate in either context.

Execution Date vs. Effective Date

The execution date and effective date of an agreement are often mixed up. However, they are both very different. The execution date is the date all parties signed the contract, and the effective date is when the agreement within the contract is officially in effect. These dates can be the same or different. For example, when renting a property, the date you sign the contract to agree to the details may not be the effective date (the date you move in).

Examples of Executed Agreements

Executed Contract for Services

Mark wants to sell his house and plans to carry out some renovations on it first. He wants the roof fixed and the carpets and wallpaper changed, so he decides to hire individual contractors for each job. When Mark mentions his plans to his friend Bill, Bill tells him about an independent roofer, Lee, who did an excellent job on his roof. So, Mark quickly reaches out to Lee to get a quote.

After ironing out the job details, Mark and Lee sign a roofing contract to legally bind their obligations. Lee re-roofs Mark’s property and Mark pays Lee for his service.

Executed Sales Contract

James is a real motorhead and wants to upgrade his Yamaha YZF-R1 motorbike to the latest model. He heads down to the Yamaha showroom to see what’s available and falls in love with the YZF-R7. After taking it for a quick test ride, he wants to buy it outright. Patrick, a member of the dealership, draws up a sales contract detailing information such as the cost and the bike’s warranty details.

James confirms his agreeance to Yahama’s terms and conditions with his signature and pays Patrick for the bike before riding off into the sunset.

Executed vs. Executory Contract

Some people may confuse executed, and executory contracts, maybe because the wording is quite similar, but the difference is relatively straightforward:

  • An executed contract confirms that all parties have fulfilled the agreement’s obligations.
  • An executory contract is when the obligations of an agreement are not immediately performed or completed. It’s when parties still need to do something and fulfill the commitments over time.

Why Are Executed Contracts Important?

Executing a contract is an essential stage of contract management. It ensures accountability and certainty for all parties involved. If an agreement has been outlined and the contract negotiation process complete but not executed, it’s as legally binding as a verbal promise. The signatures offer legal proof so it can stand up in court if required.

Failure to execute a contract correctly may cause the following:

  • Contract uncertainty. An executed contract must use straightforward language to avoid confusion and ambiguity. Unclear contract terms may create an invalid agreement, expensive delays, and frustration among those involved.
  • An unenforceable contract. If this happens, the details outlined in the document are not legally binding and, therefore, cannot be used in court.
  • Delays. The longer a contract takes to execute, the more time and money lost. Contract management systems like SignHouse simplify the process to avoid holdups.

How to Execute a Contract?

Once an agreement is executed, obligations may be effective immediately. Therefore, it’s important to execute it the right way to avoid problems later on. Consider these steps when executing a legal document. 

Step 1: Read the Contract Thoroughly

You are assumed to know the particulars of any contract you sign, so be sure to go through it with a fine-tooth comb to ensure it covers everything. Although requirements for deeds can vary from state to state, they generally include the same details. In addition to information like dates, costs, and contingencies, for a contract to be valid, it must include the following:

  • The full names of the signatories.
  • The property is identified with an address and legal description.

Step 2: Get Your Legal Team to Review New Terms

It’s common to use contract templates that are legally vetted and approved to create a deal. If any details need to be changed or added, your legal team or a qualified professional should approve it first. Ensure all parties involved have understood and are happy with the new terms.

* For real estate transactions, it should be made clear somewhere in the document that the contract will be executed/take effect as a deed. The execution clause should be worded so the signatory commits the document as a deed.

Step 3: Identify Signatories

Once the details have been finalized and approved, it’s time to confirm the signatories. If the document is a deed, then it should be signed by the grantor(s) (the current owner transferring the property) and the grantee (the new owner receiving the property). 

But regardless of whether the document is a contract or deed, all signatories should have the legal capacity to enter into the contract. This requirement is a must as if the signatory cannot make sound decisions, the particulars of the document will be deemed invalid.

Here are the people that cannot enter this agreement by law:

  • Persons with psychological disabilities like dementia, for example.
  • Persons intoxicated and under the influence of alcohol or drugs.
  • Persons under the age of 18.

In addition, if someone has been forced to enter a contract against their will, this is known as “duress”.Contracts made under duress are unenforceable.

Step 4: Get the Contract Signed

Once the grantee accepts the contract, both parties can sign. In theory, this should be the quickest part of the process. However, it tends to be one of the slowest.

A reason why signing the contract typically delays completion, is due to acquiring signatures in person. Signatories are sometimes located in different states or in other parts of the world. Issues like these can be overcome through e-signatures to speed up the signing phase and ensure signatures are received by the deadline.

Using e-signature software also increases security as contracts are kept electronically and don’t need to be delivered to the grantor and grantee for signing.

And speaking of signing contracts electronically…

SignHouse is a legally binding e-signature solution that allows signatories to sign contracts anytime, anywhere, using their mobile devices. The dashboard will enable you to quickly see the statuses of outstanding agreements, and you can be notified whenever progress is made. Several other features, including the signature reminder function, can assist in moving documents to completion.

SignHouse Dashboard

Use SignHouse for Smoother Contract Management

An executed agreement is not effective until all parties involved have signed it. In the realtor world, the grantor and grantee must have the legal capacity to sign the deed for the purchase to be finalized. Gathering signatures to complete contracts used to delay the process until e-signing software like SignHouse was introduced.

In addition to getting contracts signed faster, with SignHouse, you can offer your clients a property purchasing experience that they will likely rave about. Since 63% of sellers found their real estate agent through a friend referral, by delivering a positive experience, your customers will probably want to tell a friend about your impressive service.

Sign up today to dominate your sales process with streamlined contract management, fast-tracked deals, and no unnecessary holdups.


Are digitally signed payment agreements legal?

Yes, they are 100% legal if you add your signature to them with SignHouse.

Are online design contracts legally binding?

If you choose to add your electronic signature to an online design contract, it is going to be legally binding and also free.

Can a signature be typed?

Your signature 100% works and is 100% legal if it's typed, if you're using an electronic signature software!

Why? It's validity is given by other factors: 

  • As per the eSignature (2000) and UETA (2000) Acts passed by the US Government, alongside other requirements (explained in-depth by us here), one of them is this: “Attribution. The signature has to be uniquely identified to the signee and only linked to them”
  • Using an electronic signature software such as SignHouse automatically handles that, as such apps easily attribute signatures with identifiable details (e.g. account information, location, IP, etc)
  • Another requirement for a digital signature to be valid: “Retention. The documents must be stored for future reference, available to be viewed, reviewed, edited, etc. by both parties”
  • SignHouse takes care of this aspect as well.

Therefore, typing your signature makes it valid, due to the aspects that an eSignature software handles for you.

Can an NDA be digitally signed?

Yes, at SignHouse you can digitally sign a Non-Disclosure Agreement:

  1. Upload the file;
  2. Create your signature;
  3. Put it on the NDA.

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About the author

Ch Daniel is the co-founder of SignHouse and chairman of the CH Group. Daniel is leading the development of SignHouse's product, as well as strategising how else the company can reach its main mission: empowering 100M+ to use the world's most efficient document organisational tools.