Common Contracts
1 similar Forward Contract contracts
Forward contract pdfForward Contract • July 20th, 2023
Forward Contract is a binding agreement between parties to exchange a set of amount of goods at a set future date at a price agreed today. This is the contract which allowed to set a price of a commodity in advance. In a Forward Contract, both parties will agree to abide the terms and conditions and to make the settlement in a future as today’s pre- agreed price as mentioned in the agreement. The importer and exporter considered it as one of the safest hedging methods for their transactions because it may help to protect them from future adverse price movements. Forward exchange contracts allow importer or exporter to hedge their commodity price by sell or buy a quantity of foreign currency at a future date, at a rate when the forward contract is made. Here bank plays the main role in this contract.
