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In finance, a contract for difference (CFD) is a financial agreement between two parties, commonly referred to as the "buyer" and the "seller." The contract stipulates that the buyer will pay the seller the difference between the current value of an asset and its value at the time the contract was initiated. If the asset's price increases from ...
As both parties risk their counter-party reneging if the price goes against them, the contract may involve both parties lodging as security a margin of the value of the contract with a mutually trusted third party. For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market. [2]
In commercial agreements it is presumed that parties intend to be legally bound unless the parties expressly state the opposite. For example, in Rose & Frank Co v JR Crompton & Bros Ltd , an agreement between two business parties was not enforced because an "honour clause" in the document stated "this is not a commercial or legal agreement, but ...
Loan agreements are documented via a compilation of the various mutual promises made by the involved parties. [ 2 ] [ 3 ] Prior to entering into a commercial loan agreement, the "borrower" first makes representations about his affairs surrounding his character, creditworthiness, cashflow, and any collateral that he may have available to pledge ...
An agreement to exchange future cash flows between two parties where one leg is an equity-based cash flow such as the performance of a stock asset, a basket of stocks or a stock index. The other leg is typically a fixed-income cash flow such as a benchmark interest rate.
In finance, a forward contract, or simply a forward, is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on in the contract, making it a type of derivative instrument.
Contract law regulates the obligations established by agreement, whether express or implied, between private parties in the United States. The law of contracts varies from state to state; there is nationwide federal contract law in certain areas, such as contracts entered into pursuant to Federal Reclamation Law.
A legally binding contract is defined as an exchange of promises or an agreement between parties that the law will enforce, and there is an underlying presumption for commercial agreements that parties intend to be legally bound (Contracts 2007). In order to be a legally binding contract, most contracts must contain two elements: