What is the meaning of ‘Forward Contract’

Forward Contracts (Regulation) Act, LXXIV of 1952, a ‘Forward ContractContract An agreement enforceable by law is a contract. All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Indian Contract Act.’ means a contract for the delivery of goods at a future date and which is not a ready delivery contract.

A ‘Ready Delivery Contract’ for the purpose of the Act means a contract which provides for the delivery of goods and the payment of a price therefore, either immediately or within such period not exceeding eleven days after the date of the contract and sublet to such conditions as the Central Government may, by notification in the Official Gazette specify in respect of any goods, the period under such contract not being capable of extension by the mutual consent of the parties thereto or otherwise.

By Section 2(m) ‘specific delivery contract’ means a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned.

A ‘non-transferable specific delivery contract’ means a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable. u/s 17(1) of the Act the Central Government may, by notification in the Official Gazette, declare that no person shall save with the permission of the Central Government, enter into any forward contract for the sale or purchase of any goods or class of goods specified in the notification and to which the provisions of Section 15 have not been made applicable, except to the extent and in the manner if any, as may be specified in the notification. Under Sub-section (2) of Section 17 all forward contracts in contravention of the provisions of Sub-section (1) entered into after the date of publication of the notification thereunder shall be illegal.