What is the meaning of “Futures Contract”?
A futures contract is a type of “forward contract”. FCRA defines forward contract as “a contract for the delivery of goods and which is not a ready delivery contract”. Under the Act, a ready delivery contract is one, which provides for the delivery of goods and the payment of price therefore, either immediately or within such period not exceeding 11 days after the date of the contract, subject to such conditions as may be prescribed by the central government. A ready delivery contract is required by law to be fulfilled by giving and taking the physical delivery of goods. In market parlance, the ready delivery contracts are commonly known as “spot” or “cash” contracts. All contracts in commodities providing for delivery of goods and/or payment of price after 11 days from the date of the contract are “forward” contracts. Forward contracts are of two types – “Specific Delivery Contracts” and “Futures Contracts”. Specific delivery contracts provide for the actual delivery of specific quant
