Knowledge Center

When two parties enter into an agreement, something must be exchanged between them for that agreement to be legally enforceable. A promise made without anything in return is, in most cases, just a promise. It may be morally binding, but the law generally does not treat it as a contract.

Every contract that is validly formed must eventually come to an end. The obligations it creates — to pay, to deliver, to perform a service, to refrain from an act — cannot continue indefinitely. At some point, the legal relationship established by the contract is extinguished, and the parties are released from their duties under it.

Most people think of a contract as a formal agreement where two parties sit across a table, negotiate terms, and both sign on the dotted line. This is the most familiar form of contract. But not all contracts follow this structure.

Every organisation, regardless of size or industry, depends on external parties to keep its operations running. Software providers, law firms, logistics partners, IT service companies, consultants — these are all vendors that businesses engage with on a regular basis.

Contracts get signed every day. Agreements are executed, financial documents go out, regulatory filings are submitted. But who actually has the legal right to do all of that on behalf of a company?

Contracts are the foundation of almost every business relationship. They set out what each party is expected to do, when they must do it, and what happens if they do not. When one party fails to meet those expectations, it gives rise to a breach of contract.

Businesses and legal professionals regularly deal with situations where performance cannot be guaranteed until a future event takes place. In such cases, parties often turn to a specific type of agreement that links obligations to conditions rather than immediate action.

When a business changes hands, a key vendor exits a project, or a company restructures its debt, one common legal question arises: what happens to the existing contracts?

Every commercial relationship rests on contracts and most of those contracts are executory by nature. Whether it's a software subscription, a long-term supply agreement, a commercial lease, or an employment contract, the obligations of both parties are still outstanding at the time of signing. These are executory contracts: agreements where the work is not yet done.