A 'non-deliverable' refers to a contract or agreement that, for various reasons, fails to reach its intended finalization or completion. This can occur in financial markets, where it often describes a currency forward contract that is settled in cash, based on the difference between the agreed-upon exchange rate and the spot rate, instead of exchanging actual currencies. Beyond finance, the term suggests a product, service, or promise that cannot be provided or fulfilled as originally intended, often due to unforeseen circumstances or failures in the process. The core concept is a broken promise of completion.
Non-deliverable meaning with examples
- The company faced significant challenges, and their initial plan for a new product launch ended up being completely non-deliverable, resulting in heavy losses. Market changes and supply chain disruptions proved too difficult to overcome, forcing them to adjust their strategy and scrap the original concept. They had to make a public announcement regarding the non-deliverable outcome. Their investors were disappointed but understood the reasons.
- In the volatile currency market, some foreign exchange derivatives are classified as non-deliverable forwards (NDFs). These contracts allow hedging against currency risk, where physical exchange of the currencies isn't possible or practical. The final cash settlement hinges on the difference between the contracted forward rate and the prevailing spot rate at the maturity date. A NDF prevents direct currency exchange.
- Despite promising significant efficiency gains, the software project experienced persistent development delays. After a year of efforts, the final product was assessed to be non-deliverable in its original form. The budget was overrun, and key features were not fully functional or integrated. The company needed to make a decision about its non-deliverable product, which proved difficult to implement.
- The initial agreement for a large construction project faced numerous hurdles, and ultimately the timeline and scope of work became entirely non-deliverable. The project could not be completed as planned, and legal disputes ensued. This left clients unhappy, and the company's reputation suffered. The company was forced to offer alternatives in response to the non-deliverable construction.