Difference between revisions of "Forward contracts"

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A forward contract is a private, cash-market agreement between a [[buyer]] and [[seller]] for the future [[delivery]] of a commodity at an agreed upon price. Unlike [[futures]] [[contract]]s, forward contracts are not standardized and not transferable. A [[clearing house]] does not stand between[[ buyer]] and [[seller]] to guarantee performance of the forward contract.
A forward contract is a private, cash-market agreement between a [[buyer]] and [[seller]] for the future [[delivery]] of a commodity at an agreed upon price. Unlike [[futures]] [[contract]]s, forward contracts are not standardized and not transferable.<ref>{{cite web|url=http://www.cme.com/glossary/F.html|name=Glossary of Terms - Forward contract|org=CME|date=July 10, 2008}}</ref>  A [[clearing house]] does not stand between[[ buyer]] and [[seller]] to guarantee performance of the forward contract.

Revision as of 13:43, 10 July 2008

A forward contract is a private, cash-market agreement between a buyer and seller for the future delivery of a commodity at an agreed upon price. Unlike futures contracts, forward contracts are not standardized and not transferable.[1] A clearing house does not stand betweenbuyer and seller to guarantee performance of the forward contract.