Executed agreement
Executed agreement - it is a contract that has already been signed and can be performed. Between the executed agreement and signed agreement there is one very significant difference. In the case of the former, the contract may be enforceable at the earliest upon signature of the contract. In the latter respect, the contract becomes only binding, but not necessarily enforceable. It is assumed that the agreement becomes an executed agreement on the basis of separate contractual provisions. This means that only when this point is reached will it be possible to determine the feasibility date of the contract. Nevertheless, it is assumed that in the absence of separate provisions, the agreement becomes executed agreement on the date of signing. It is worth noting that such agreements are difficult to evade and are usually difficult to undermine.
Executing agreements in face of global pluralism of law
Globalization has made a large number of legal systems intertwine. Different legal regulations and theoretical approaches to concluding and performing contracts require that states create their regulations in such a way that they are as transparent as possible for international business. The global law that arises in this respect should not be understood as a set of written laws that have been agreed upon by the states concerned (international commercial law would then be mentioned). These are all kinds of customs and rules of conduct adopted by the community [1].
Bearing in mind the above, also shaping the moment in which the agreement becomes executed, the agreement is strictly defined. As a rule, it is assumed in the global law that it will be enforceable at the earliest upon signing and upon direct expression of the fact that the parties to the legal relationship will approach the execution of contractual provisions immediately after signing the contract.
Executed agreements in laws of companies
Contracts are not only an instrument used to conclude commercial transactions. They can also be used to set up joint ventures, such as organizing an event or temporarily refraining from competing. However, there are specific types of agreements in trade that form the basis of the free market economy.
The above are agreements on the conclusion of a commercial company. According to the adopted rules, the articles of association become enforceable at the moment when the parties to the legal relationship make appropriate contributions to a given project and start running a business. Therefore, as it can be seen, the fact of recognizing the contract as execution is not a specified time period, but the fulfillment of a specific event (in this case, each of the partners has made appropriate expenditures on a given project)[2].
In addition, in legal doctrine there is such a concept that in the case of companies with a proven track record of cooperation, a contract may be concluded by delivering goods to the registered office of the other entrepreneur when the other entrepreneur does not directly oppose the delivery of such goods. Then it is considered that the contract became executed at the moment of accepting the delivery of these goods [3].
As a result of the above, there are three moments when a contract is executed, the agreement is executed:
- supply of goods
- making cash or in-kind contributions
- implicit acceptance of the offer and automatic conclusion of the contract
Examples of Executed agreement
- Lease Agreement: A lease agreement is an executed agreement when the tenant and landlord sign the document and move into the rental property.
- Employment Contract: An employment contract is an executed agreement when both the employer and employee have signed the document and agreed to the terms of the contract.
- Business Purchase Agreement: A business purchase agreement is an executed agreement when both parties have signed the document and the sale has been completed.
- Loan Agreement: A loan agreement is an executed agreement when both the lender and the borrower have signed the document and agreed to the terms of the loan.
- Settlement Agreement: A settlement agreement is an executed agreement when both parties have signed the document and the dispute has been settled.
- Divorce Agreement: A divorce agreement is an executed agreement when both parties have signed the document and the divorce is finalized.
Advantages of Executed agreement
An executed agreement has a range of advantages, including:
- Reduced risk of misunderstandings: An executed agreement clearly outlines the rights, obligations, and responsibilities of each party in the contract, making it easier to avoid any misunderstandings or disputes in the future.
- Increased security: By signing an executed agreement, the parties are legally bound to the terms and conditions of the contract and are therefore more secure.
- Clear expectations: Executing an agreement ensures that all parties involved in the contract understand what is expected of them, as well as the consequences for any breach of the agreement.
- Legal protection: Executing an agreement legally obliges all parties to perform their duties as outlined in the contract. This offers protection to all parties in the event of any breach of contract.
- Increased trust: By signing an executed agreement, both parties are held to a certain standard of trust and are more likely to fulfill their commitments.
Limitations of Executed agreement
The limitations of an executed agreement include:
- The enforcement of the agreement is often difficult, as it is usually difficult to prove what the parties agreed to in the contract.
- The agreement is not necessarily binding on all parties, as the agreement may not have been signed by all parties involved.
- If a dispute arises, the agreement may not necessarily provide a clear resolution, as the agreement does not always provide formal, legally binding solutions.
- The agreement is often not easily changed or modified, as all parties must agree to any changes or amendments.
- The agreement may not be enforceable in all jurisdictions, as the laws of each jurisdiction may vary.
- The agreement may not be legally binding in all cases, as it may not meet all the requirements of a legally binding contract.
Here are some other approaches to consider when looking at an executed agreement.
- The parties involved in the agreement may agree to consider the agreement to be legally binding and enforceable upon the exchange of signatures, even if the agreement is not yet fully executed.
- The parties may agree to the terms and conditions of the agreement without signing, but the agreement would not be legally binding until signatures are exchanged.
- The parties may choose to enter into a "memorandum of understanding", which is a non-binding agreement that sets out the terms and conditions of the agreement but does not require signatures.
- The parties may choose to enter into a "letter of intent", which is a non-binding agreement that expresses the parties’ intention to enter into an agreement, but does not require signatures.
In summary, there are a number of approaches to consider when looking at an executed agreement. Depending on the parties’ needs, they may choose to enter into a legally binding agreement, a non-binding memorandum of understanding, or a non-binding letter of intent.
Footnotes
| Executed agreement — recommended articles |
| Binding contract — Mutual agreement — Contractual relationship — Executed consideration — Vesting order — Inchoate instrument — Executory consideration — Assignment of claims — Consideration clause |
References
- Bradford, B., Hough, M., Jackson, J., Myhill, A., Quinton, P., Tyler, T.R. (2012) Why do people comply with the law? Legitimacy and the influence of legal institutions British Journal of Criminology 52 (6)
- McLeod-Heminway, J.(2015) The Ties That Bind: LLC Operating Agreements as Binding Commitments SMU Law Review, Volume 68, Issue 3, Article 20
- Zelek, M., (2014) The Governance Of Mutual Rights And Obligations Of Icann And The Registries For Cctlds On The Example Of The .Pl (Poland), .Lt (Lithuania) And Other Selected Domain Names Jurisprudence 21(2)
Author: Melania Mazur
