a forward contract is a commitment. Each party agrees that it will fulfill its responsibility at the designated future date. Failure to do so constitutes a default and the non-defaulting party can institute legal proceedings to enforce performance. It is important to recognize that although either party could default to the other, only one party at a time can default. The party owing the greater amount could default to the other, but the party owing the lesser amount cannot default because its claim on the other party is greater. The amount owed is always based on the net owed by one party to the other.