Bava Metzia 63 - When Forward Contracts are Permitted


A forward contract is an agreement where the buyer, wanting to guarantee his price, pays for the produce now, but plans to take delivery later.
The prepayment has the character of a loan. Should the price of the produce increase, the buyer will get more than he paid for, similar to taking interest. Forward contracts are therefore prohibited by the Sages. The two cases where it is permitted are:
(1) If the seller has the produce in stock, it is considered as if the buyer already had it at the time of price increase; (2) If the price is established, the seller can easily acquire the goods, thus it is as if he has them.