Forward Contract

What is Forward Contract?

Forward Contract meaning A cash transaction common in many industries, including commodity merchandising, in which a commercial buyer and seller agree upon delivery of a specified quality and quantity of goods at a specified future date. Terms may be more ‘personalized’ than is the case with standardized futures contracts (i.e., delivery time and amount are as determined between seller and buyer). A price may be agreed upon in advance, or there may be agreement that the price will be determined at the time of delivery.

 

reference: U.S. COMMODITY FUTURES TRADING COMMISSION – CFTC Glossary