A forward contract is known for risk management strategy. A forward contract is simply an agreement between the buyer and seller.
Here both party agrees mutualy between the counterparties to transact the asset at a set price at a future date to the buyer.
Investors can look forward to entering a foreign contract on commodities such as oil and currencies.
In the forward contract, the actual price of the asset at the time of final settlement may show a difference from the agreed price.

How does the contract affect the party?
A forward contract may put a buyer in the loss but at times in profit too as it all depends upon the market volatility.
Suppose the market price during the time of settlement is of the contract is higher than the agreed upon price then the buyer would be at a gaining side. However, it happens that the market price falls, then the buyer loses but the seller is at gaining side.