Fully Executed Contract

The term “fully executed” can be tricky as it can apply to two different stages of the contract lifecycle.

First, when a contract is said to be “fully executed,” it means that all parties to the agreement have fully performed their obligations, or that all the terms and conditions of the contract have been fulfilled in their entirety.

For example, consider a transaction in which an owner of real estate agrees to sell a commercial building. The parties enter into a real estate sales agreement. At the closing, the parties sign all the necessary paperwork. The buyer transfers the agreed amount of money to the seller, and the seller transfers ownership and possession of the property to the buyer. The contract is now deemed to be fully executed.

“Fully executed” can also be used to reference the fact that all parties to the contract have signed it. By contrast, after only one party had signed the contract, it would not yet be fully executed. While each party certainly must sign the contract, sometimes more is required. For example, any handwritten changes must be initiated.

This procedure prevents a party from later making a handwritten change and claiming that the parties acknowledged it with their signatures at the end of the document. Some contracts call for page by page initialing to signify that each page has been acknowledged, read, and understood.

Either way, once a contract is fully executed, it becomes enforceable by law and serves as a formal record of the agreement reached between the parties.

How to manage fully executed contracts

It’s important to maintain a single source of truth for your fully executed contracts as well as your contracts in the pipeline. Get on the same page with your team and make sure you’re all using the same definition.

If your team defines a fully executed contract as one that has been signed, but not necessarily fulfilled, a contract management system can help everyone on your team keep track of key dates and obligations.

If your team uses the second definition and only considers a contract “fully executed” when all the terms are fulfilled, you’ll still want to make sure you can easily find and reference those “retired” contracts.

Not all contract management systems offer this, but ContractSafe offers unlimited archives and attachments in our contract repository, so you can still keep track of all your fully executed contracts.