What is the contractual unit?

The contract is a legal term that refers to the amount of the subject of the contract. This term is usually used with a reference to a pre -set standardized amount of futures contracts. These standard amounts differ, usually based on commodities. Like soda or beer cans, beer is often sold in groups of six or 12, gold is usually sold in 100 ounces of groups. The contract unit for corn is, on the other hand, 5,000 pounds and the coffee contract is £ 37,500 (17 metric tons).

Although the term "contractual unit" is usually used in relation to trading with futures, it can also be generally used to cover the amount of the subject of most contracts. For example, in a contract that exchanges money for 50 printed T -shirts, you could refer to 50 T -shirts as contractual units. However, the term is primarily used in connection with future contracts. These agreements are a common type of derivative, which means they themselves are not assets,But their value is based on the rights that they can perform in the future regarding basic asset, such as shares, bond, currency or commodity. With regard to this last item - commodities - the concept of "contractual units" is usually used.

futures contract and contractual units are standardized to a large extent to facilitate involvement in these types of agreements. Contracts can have many aspects such as quantity, price, currency that the buyer can pay, and the date of delivery stored on the seller. The more elements to negotiate, the more debates the parties can close and the longer it can take to conclude an agreement. However, by having a standard amount of subject of the contract, the parties may reduce the amount of negotiations related to the agreement.

The term "contractual unit" can also be used with reference to the handover contract. Like the futures contract, the forward contract also grants the right to the pendUP or selling asset in future . However, they are not standardized forward. Rather, the transaction parties create contractual conditions adapted to their specific needs. However, the amount of this non -standard contract can still be referred to as a contractual unit.