24 BULLETIN 558, U. S. DEPARTMENT OF AGRICULTURE. 



modified so that the understanding refers only to the grain produced 

 on a certain number of acres, which is known as " contracting by the 

 acre." In another form of agreement the seller undertakes to deliver 

 to the purchaser a definite number of bushels, a proceeding commonly 

 alluded to as " contracting by the bushel.'' As a rule, contracts for 

 future delivery are mere verbal agreements, although written forms 

 are not unusual. Rarely are any margins deposited by either party 

 to insure actual fulfillment of the contract. 



HAZARDS OF CONTRACTING FOR FUTURE DELIVERY. 



The country grain dealers, as well as the farmers, are seldom in 

 accord regarding the advisability of contracting for future delivery 

 of grain. Many dealers condemn the practice because of the liability 

 of misunderstanding between the dealer and the farmer. From the 

 biryers' standpoint, most unpleasant experiences have resulted from 

 contracting by the acre. It is alleged that some farmers seek to de- 

 liver more than the stipulated amount of grain in event of a drop in 

 price, but withhold it, on the other hand, upon a rising market. 

 Then, too, the farmers contend that a material drop in price evokes a 

 disinclination upon the part of the dealers to accept the grain, or finds 

 expression in an attempted discount from the contract price by.claim- 

 ing that the grain delivered does not meet the standard stipulated in 

 the agreement. It would seem that some form of business practice 

 could be devised that would reduce to a minimum the number of such 

 cases. 



Many difficulties are encountered in attempting to fulfill the terms 

 of a contract, particularly when an interval has elapsed between the 

 date of the contract and the time of delivery. Often a delayed 

 harvest, accompanied by a prolonged rainy season, renders delivery 

 at contract time an impossibility. When this condition exists it 

 results in much confusion, for the country dealer in many instances 

 has resold the grain by contract, the last purchaser disposing of it 

 perhaps to an exporter desiring to fill a cargo. The failure, for what- 

 ever reason, on the part of the farmer to deliver the grain to the 

 country elevator at the specified time interferes seriously with the 

 proper fulfillment of the country grain dealer's previously incurred 

 obligation with other grain merchants. Also, if delivery is not 

 effected upon schedule time the buyer who is dependent upon grain 

 bought for future delivery for the filling of his requirements must 

 purchase the shortage in the open market, often at a marked advance 

 in price. In this case, however, relief is afforded from financial loss 

 by the infliction of a penalty upon the contracting party at fault. 

 The latter, having purchased the grain for future delivery from a 

 country dealer who has been unable to supply it when desired, there- 



