Nature of Futures Clause Samples
The "Nature of Futures" clause defines the fundamental characteristics and legal status of futures contracts within an agreement. It typically clarifies that futures are standardized contracts to buy or sell a specific asset at a predetermined price and date, and may specify whether these contracts are for physical delivery or cash settlement. By outlining these details, the clause ensures all parties understand the obligations and risks associated with entering into futures contracts, thereby promoting transparency and reducing the potential for disputes over contract interpretation.
Nature of Futures. Futures is a contract in which parties are bound to perform their obligations thereunder. Unless a party is able to offset its position before the settlement date, the seller of futures is obliged to make and the buyer is obliged to take delivery of the underlying asset of the contract (physical delivery), or a party may make cash settlement where the cash difference between the exercise price and the market value or price of the underlying asset or variable at a time or a period of time in the future as set out in the contract is paid to the other party.