Agreement of two people for the PURCHASE and DELIVERY of an asset at an agreed FIXED PRICE at a FUTURE DATE.

Like a farmer protecting himself from price drop of wheat TO THE BUYER (bakery) who protects himself from price increase of wheat. No matter the prices changes of the marketplace, the agreed price remains. However, the BUYER (bakery) can sell the contract if he no longer needs wheat before the expiration.

Basically Forward Contract is like Future Contract but done on over the counter (OTC) which means that it didn't happen through public marketplace but instead is a private deal. It is highly customizable than the Future Contract

However since it is private, there's no guarantee that the deal happens and requires trust between the two.

It's basically a trade of "financial terms" such as interest rates, payment schedules or cash flows.

Example could be "interest rate swap" where a switch between FIXED interest rate to a VARIABLE interest rate as to make loan payments PREDICTABLE or take ADVANTAGE of changing interest rates, respectively.