12 May What is an Executory Contract?
Schedule G to a bankruptcy petition requires the listing of executory contracts (and unexpired leases) to which the debtor is a party. An executory contract is a contract under which performance is due by both parties. The remaining duties to be performed under the contract must be material and substantial in the context of the contract so that if either party failed to perform as called for, the contract would be materially breached. Therefore, if one party has fully performed under a contract, it is not executory.
For example, when a person contracts for services and pays for them in advance, that person has fully performed their part of the bargain and the contract is not executory. However, if payment for the yet-unperformed services remained deferred, the contract would be executory and would have to be listed on Schedule G if either one of the contracting parties filed bankruptcy.
Nicholas Ortiz, Boston Bankruptcy Attorney
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