Derivative Contract
/ˈdɛrɪvətɪv ˈkɒntrækt/
Definitions
- (n.) A financial agreement whose value is based on an underlying asset, index, or rate, used to hedge risk or speculate.
The parties entered into a derivative contract to hedge against currency fluctuations.
- (n.) A legally binding agreement creating rights and obligations contingent on the performance or value of another contract or asset.
The derivative contract specified payment terms linked to commodity prices.
Forms
- derivative contract
- derivative contracts
Related terms
See also
Commentary
Derivative contracts often require precise definitions of triggering events and valuation methods to avoid disputes.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.