The contract will state how settlement will occur. Image source: Getty Images. A futures contract is a binding agreement between two parties wherein they agree to buy or sell certain assets or commodities at a specified time in the future. Most futures contracts don't work that way; most are cash settled.

They are standardized agreements that typically trade on … Futures Contract – How do they Work ... Futures Contract, quite simply, is an agreement to buy or sell an asset at a future date at an agreed-upon price.