Derivatives Contracts – Futures Derivatives Contracts for Futures are agreements to buy or sell assets at a future date at a predetermined price, often used in commodities and financial markets for hedging and speculation.
For the purposes of this Contract, the following terms shall have the following meanings:
"Buyer" means the party obligated to purchase the Wheat under this Contract.
"Chicago Board of Trade (CBOT)" means the commodity derivatives exchange where Wheat Futures Contracts are traded.
"Contract Size" means the quantity of Wheat subject to this Contract, which shall be 5,000 bushels of Grade A Wheat.
"Contract Terms" means the specific terms and conditions agreed upon by the Parties in this Contract, including the Contract Size, delivery date, and the predetermined price.
"Delivery Date" means the specific date on which the Wheat will be delivered to the Buyer or its agent.
"Grade A Wheat" means Wheat produced in the United States that meets the quality specifications as defined by the CBOT.
"Margin" means the amount required to be deposited by the Buyer and the Seller to secure the performance of their respective obligations under this Contract, as defined by the CBOT.
"Seller" means the party obligated to sell the Wheat under this Contract.
"United States laws" means the legal and regulatory framework applicable to this Contract in the United States.
"Wheat" means the commodity subject to this Contract.
The Buyer agrees to purchase, and the Seller agrees to sell, 5,000 bushels of Grade A Wheat at a predetermined price and on the Delivery Date, subject to the terms and conditions of this Contract and in accordance with United States laws and CBOT regulations.
The Contract Size for this Wheat Futures Derivatives Contract shall be 5,000 bushels of Grade A Wheat. The Contract Size shall be the same for both the Buyer and Seller.
The Delivery Date shall be mutually agreed upon by the Buyer and the Seller and shall be specified in this Contract. Upon the Delivery Date, the Buyer shall take delivery of the Wheat at the delivery point specified by the CBOT and in accordance with the applicable terms and conditions set out in this Contract and by the CBOT.
Both the Buyer and Seller shall deposit with a licensed and registered futures commission merchant an initial Margin to cover their respective potential obligations under this Contract. The amount of Margin required shall be determined by the CBOT and shall be subject to change in accordance with CBOT rules and regulations.
Settlement of this Contract shall be made as follows:
(a) If the Buyer and Seller agree to offset their respective positions prior to the Delivery Date, they shall provide written notice to each other and their futures commission merchant, specifying the date and terms of the offsetting transaction.
(b) If the Buyer and the Seller proceed with delivery, the final settlement price shall be the predetermined price of Wheat as specified in this Contract. The Buyer shall pay the Seller such final settlement price in accordance with CBOT regulations and United States laws, and the Seller shall deliver the Wheat in accordance with the terms of this Contract and the applicable CBOT regulations.
6.1. Governing Law
This Contract shall be governed by and construed in accordance with United States laws, including the Commodity Exchange Act and rules and regulations promulgated thereunder, as well as CBOT rules and regulations.
6.2. Dispute Resolution
Any dispute, claim, or controversy arising out of or relating to this Contract or the breach, termination, enforcement, interpretation, or validity thereof, shall be resolved in accordance with the dispute resolution procedures specified by the CBOT and under United States laws.
Each party represents and warrants that it has the legal capacity and authority to enter into and perform its obligations under this Contract, and that all necessary consents and approvals have been obtained.
This Contract may only be amended by a written agreement signed by both Parties.
All notices given under this Contract shall be in writing and shall be deemed to have been properly given if delivered personally or sent by e-mail, registered mail, or recognized courier service to the address of the other party as specified in this Contract or such other address as may be specified in writing by such party.
This Contract may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.
8.4. Binding Effect
This Contract shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
IN WITNESS WHEREOF, Buyer and Seller have executed this Contract under seal as of the date first above written.
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In this Standardized Wheat Futures Derivatives Contract, you will see the following sections:
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