ContractsIntermediateAlaska Exam

When a buyer and seller have signed a purchase agreement, the contract is classified as:

AExecuted, because both parties have signed
BExecutory, because performance obligations remain outstandingCorrect
CBilateral and void until earnest money is deposited
DUnilateral until the seller performs by delivering the deed, in general

Why Executory, because performance obligations remain outstanding Is Correct

Answer B: Executory, because performance obligations remain outstanding

A purchase agreement is an executory contract — both parties have signed (executed the document), but the primary performance obligations (delivering clear title, paying the purchase price, closing) have not yet been fulfilled. Once all obligations are performed at closing, the contract becomes fully executed.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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