Still another method of classifying contracts is in terms of the extent to which they have been performed. Accordingly, contracts may be: (i) Executed and executory or (ii) Unilateral and bilateral. An executed contract is one which has been wholly performed. Nothing remains to be done in terms of the contract.
A buys a bicycle from a dealer, A pays cash. The dealer delivers the bicycle.
An executory contract is one which remains wholly unperformed, or in which there remains something further to be done.
On June 1, A enters into a contract with a dealer to buy a bicycle. The contract is to be performed on June 15.
The executory contract becomes an executed one when it is completely performed. For instance, in the above example, if both- A and the dealer performs their obligations on June 15, the contract becomes executed. However, if in terms of the contract performance of promise by one party is to precede performance by another party, then the contract is still executory, though it has been performed by one party.
On June 1, A agrees to buy a bicycle from a dealer has to deliver the bicycle on June 15 and A has to pay price on July 1. The dealer delivers the bicycle on June15. The contract is executory as something remains to be done in terms of the contract.
A unilateral contract is one wherein at the time the contract is concluded there is an obligation to perform on the part of one party only.
A makes payment for bus fare for his journey form Mumbai to Pune. He has performed his promise. It is now for the transport company to perform its promise.
A bilateral contract is one wherein there is an obligation on the part of both to do or to refrain from doing a particular thing. In this sense, bilateral contracts are similar to executory contracts.
An important corollary can be deduced from the distinction between executed and executory contract s, and between unilateral and bilateral contracts, and between unilateral and bilateral contracts. It is that a contract is a contract form the time it is made and not form the time its performance is due. The performance of the contract can be made at the time when contract is made or it can be postponed either in full or in part.