Cash Contract

A cash contract is an agreement between two parties where goods are delivered at a predetermined price and date. Typically, large buyers such as corporations enter into cash contracts based on the spot price of a commodity. These buyers are not engaged in speculation; instead, they require the actual delivery of goods to fulfill their operational needs. Unlike futures contracts, where settlement can be made in cash without physical delivery, cash contracts always involve the delivery of the underlying asset. This makes cash contracts more suited for those who need the actual goods rather than merely the financial benefit from price changes.