New York | Securities Law
Legal Question
Contract Sale vs. Futures Contract
Capital Biofuel will launch an effort to fund a $10 million waste-to-fuel biodiesel plant in Schenectady County, NY. The company is selling a limited amount of “production shares” which entitle the owner to purchase a percentage of the plant’s biodiesel at a predetermined contract rate. This deal allows business and industry to hedge against rising fuel prices while recycling hundreds of thousands of tons of organic waste into clean-burning, carbon-neutral biodiesel fuel.
A one million dollar contract with Capital Biofuel allows the owner of the production shares to purchase up to 260,000 gallons (10% of plant production) of fuel a year for the next ten years at a guaranteed rate of $2.40/gallon. If diesel fuel prices return to the $5 mark the shares owner would save enough money to equal a return rate of nearly 100% per year.
Biodiesel made from waste organic materials like restaurant grease, trap grease, restaurant table scraps, waste milk and cheese, slaughterhouse scraps, deli scraps, and recalled and spoiled foods, helps reduce landfill pollution and helps establish US energy independence.
Can this be considered a business contract and not a true ''futures'' contract?
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Read More Answered By: Lawrence R. Gelber |
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