A contract is a legal instrument that binds the promisors to their original promise. To some, it may appear that signing a contract is the act of setting in stone the agreement to the effect that it becomes inflexible and unchangeable. In other words, what is done is done.
But the Futures Contract is different. It wrestles with the weather, wars and world trade. It lives in the promisors' future; a future not yet materialized. The price may be set today - but the sale only occurs tomorrow. It evolves; it is elastic. The transferability of the futures contract reminds me of a nomad: it doesn't quite know where it'll end up but it will end up somewhere.
Eventually, however, this great journey through time comes to an abrupt end. We all know that at some point, the present - now past? - catches up with the future. And so does the futures contract, as it dies in the sea of trades in the futures exchange floor. Eventually, the commodity is sold and consumed. What is done is done.
In Towne v. Eisner 245 U.S. 418 at 425. (1918) Hobhouse J stated:
"A word is not a crystal, transparent and unchanged; it is the skin of living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used."
In similar fashion, the futures contract is not set in crystal like other contracts. It is the skin of living international commerce and although it may vary greatly in colour(?), content and value, it will invariably remain subordinate to its internal explosive device: Time.
1 comment:
This is why you MUST always ask for a collateral........per contract!
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