Forward Contract

A private agreement to buy or sell an asset at a set price on a future date.

A forward contract is a customized, over-the-counter agreement to exchange an asset at a fixed price on a future date. Unlike futures, forwards are not standardized or exchange-traded, so they carry counterparty risk. Businesses use them to lock in currency or commodity prices.

The exporter signed a forward contract to fix the euro exchange rate for a payment due in spring.