What best describes 'executory' consideration in contract law?

Executory consideration refers to a promise made in a contract to perform a certain action in the future. In contract law, when one party agrees to provide a benefit or fulfill an obligation at a later date, that is classified as executory consideration. This concept is crucial because it underlines the nature of mutual promises in a contract, where the exchange is not immediate but is contingent on future actions.

For instance, if one party promises to deliver goods at a future date and the other party agrees to make payment at that time, both promises form executory consideration. The essence of this arrangement lies in the mutual commitment to perform these duties in the future, establishing the binding nature of the agreement.

In contrast, options that speak to benefits being exchanged at the time of the agreement or provided after a promise has been made relate to different types of consideration. The concept of consideration being irrelevant misrepresents the fundamental principle of contract formation, which requires consideration for a contract to be enforceable. Understanding executory consideration is key in grasping how contracts can be structured and enforced based on future promises and obligations.