A Forward contract is an agreement between two parties
to buy or sell an asset (which can be of any kind) at a pre-agreed
future point in time. One party agrees to buy, the other to sell,
for a forward price agreed in advance.
In a forward transaction, no actual cash changes hands. If the transaction is collaterised, exchange of margin will take place according to an pre-agreed rule or schedule. Otherwise no asset of any kind actually changes hands, until the maturity of the contract.
The forward price of such a contract is commonly contrasted with
the spot price, which is the price at which the asset changes hands
(on the spot date, usually next business day).