Figures: tax year 2026
Common law governs service and real estate contracts. The Uniform Commercial Code (UCC) Sales Article governs contracts for goods, meaning movable personal property. For a mixed transaction, the stated governing rule controls; many jurisdictions examine its predominant purpose.
An executed contract has been fully performed by both parties. An executory contract still contains an outstanding performance obligation. In this context, signing a document does not make the contract executed, although execution can mean signing in other legal contexts.
Contract terms explain the required fulfillment of each performance obligation, including timing, quality, quantity, and conditions governing the exchange. Separate findings identify whether both parties have completed performance or whether one party still owes a responsive obligation.
A tender is an offer of present performance that satisfies applicable requirements, supported by readiness and ability to perform. A statement that performance might occur later is insufficient.
The performance analysis separates these questions:
- Required act: The agreement specifies the service, goods, quantity, quality, documents, payment method, and place of performance.
- Timing: The agreed deadline or governing reasonable-time rule controls. A common-law delay becomes more significant when timely performance is essential.
Common mistakes
- Signed means fully performed. A signed purchase agreement can remain executory while delivery, payment, or another obligation remains outstanding.
- Approval failure always excuses closing. A missing financing approval does not eliminate liability for breached reasonable-efforts promises or wrongful prevention.
- Minor defect permits every rejection. Initial single-delivery rejection, accepted goods, installments, and common-law performance each require the applicable standard.
Bottom line
- An executed contract reflects completed performance by both parties; each remaining duty requires separate evaluation.
- Conditions control when duties arise or end, while prevention, waiver, and accompanying promises can change the consequences of nonoccurrence.
- Common-law substantial performance generally leaves payment due with a defect adjustment; goods law separately regulates perfect tender, cure, acceptance, and revocation.
- Title and risk of loss can pass at different times, according to the agreement and the applicable delivery rules.
Exam shortcut
Identify goods or services first. Then mark each party's promised act, due date, condition, tender, and completed performance separately. For a defect, locate the procedural stage: initial delivery, cure period, acceptance, proposed revocation, or installment performance. For an alleged discharge, isolate the event and the exact remaining duty. Check prevention, waiver, breach, notice, alternatives, and assumed risk before choosing a conclusion.
The full lesson (about 8,445 words, 56 min read) adds 9 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- II.B2
Browse all free CPA REG lessons or jump into free CPA REG practice questions.