forward contract

A method of selling crops before harvest by which the buyer agrees to pay a specified price to a grower for a portion, or all, of the grower’s crops. A cash transaction common in many industries, including agricultural 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. A price may be agreed upon in advance, or there may be agreement that the price will be determined at the time of delivery. Forward contracts, in contrast to futures contracts, are privately negotiated and are not standardized.

Authorization Path: 2.5.7.2.27.0