Price versus amount

The basic principles of contract →Go uptown Formation: capacity and authority · representation · misrepresentation · offer · acceptance · consideration · intention to create legal relations · agreement to agree · privity of contract oral vs written contract · principal · agent Interpretation and change: governing law · mistake · implied term · amendment · assignment · novation Performance: force majeure · promise · waiver · warranty · covenant · sovereign immunity · illegality · severability · good faith · commercially reasonable manner · commercial imperative · indemnity · guarantee Breach: breach · repudiation · causation · remoteness of damage · direct loss · consequential loss · foreseeability · damages · contractual negligence · process agent Remedies: damages · adequacy of damages ·equitable remedies · injunction · specific performance · limited recourse · rescission · estoppel · concurrent liability Not contracts: Restitution — quasi-contract — quasi-agency Index: Click ᐅ to expand: Contract Tort Restitution Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Quick primer for legal eagle types, who tend not to differentiate between them, that there is a useful distinction between “price” and “amount” in, say concepts like “purchase price” and “purchase amount”.

Price is a value per unit.

Amount is the total value of all units.

Mixing them up, can of course make for absurdities. This is particularly painful when documenting swap confirmations which might refer to notional amounts, or “lots”, which themselves may comprise multiple underliers. One ICE Endex EUA future is an entitlement to be delivered 1000 EU emission allowances, each of which entitles you to discharge one metric tonne of carbon dioxide.

So the price per allowance may be EUR90. But the price per future may be EUR90,000. And if you are trading 10,000 futures, the purchase amount may be EUR900,000,000.

Why does it matter? Well the price for one apple maybe 20 pence. If you buy one, the purchase amount is the same: 20 pence. But if you buy 1,000, the price may be 14 pence.