Usually, direct transactions between buyers and sellers are mostly conducted in the form of direct negotiations, and the trading places is not fixed, which is decided by both parties. The content and form of forward contract trade are not standardized, and each business needs specific consultation or notarization of contract terms, which is complicated.
The quantity and quality of goods in forward contract trade are different, which requires the contractor to have extensive commodity knowledge and be familiar with the division of different quality grades and quality price differences of each commodity. Forward contract transactions attach great importance to the credit investigation of traders, and in some cases, the performance of forward contracts is not guaranteed.
Extended data:
Precautions:
1. Forward Contract Both parties must sign a forward contract, but spot trading is not required.
2. In the forward contract transaction, there is a long interval between the delivery or delivery time of the buyer and the seller and the time when the transaction is reached. Time difference of several months is common, and it is not uncommon to reach 1 year or above or 1 year. In spot trading, it is generally to buy and sell now, deliver immediately or deliver immediately, even if there is some time difference, it is relatively short.
3. Forward contract transactions often need to go through formal consultations and negotiations, and both parties reach an agreement to sign the contract before they are established. Spot transactions are arbitrary, convenient and flexible, and there is no strict trading procedure.
4. Forward contract transactions are usually required to be carried out in the specified place, and the transactions of both parties should be monitored by a third party, so that the transactions are in a fair, just and open state, thus effectively preventing misconduct and maintaining the market trading order.
Baidu Encyclopedia-Forward Contract
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