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CA Foundation · Business Laws · The Indian Contract Act, 1872

Kiran, a trader in Jaipur, agrees to supply 100 sarees to Leela Textiles, with delivery on a fixed date. Kiran has delivered 40 sarees and has been paid for them, while the remaining 60 are yet to be delivered, and Leela Textiles has not yet paid for those 60. How is this contract classified at this stage?

The contract is executory. Executed means both parties have completely performed their obligations, but here Kiran must still deliver 60 sarees and Leela Textiles must pay for them. Because performance remains pending on both sides, part performance does not make the contract executed.

  1. AExecuted contract, because part performance has taken place
  2. BExecutory contract, because something remains to be done by both parties for the unperformed partCorrect
  3. CVoid contract, because performance is incomplete
  4. DQuasi contract, because payment was made in part

Explanation

A contract is executed when both parties have fully performed, and executory when something remains to be performed by one or both. Here Kiran still has to deliver 60 sarees and Leela has to pay for them, so the contract is partly executed and partly executory, which is classified as executory. Part performance does not make it executed.

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