Either party’s unperformed obligations can be considered a material breach — a failure of performance under the contract. This is cause for one party to claim breach of contract, which means the party that failed to perform will be forced to pay penalties to the other party to make up for the broken contract.
When to use executory contracts.
Executed contracts versus executory contracts.
Both parties fulfill executed contracts immediately after signing, which makes them different from executory contracts. An example of an executed contract is the purchase of a vehicle in one lump payment. The contract is immediately complete after the sale is over.
On the other hand, both parties have to carry out their duties before they fulfill executory contracts. An example of an executory contract is an apartment lease. The lessee is expected to continue to pay and the lessor is expected to continue to care for the property until the end date in the contract.