Your question might sound silly to a bunch, but it is a serious issue..
When you trade through an exchange, the role of the exchange is to ensure that it guarantees settlement.. What you need to understand though is that, when you buy potato contract and someone sells potato contract, the potato may not really exist at that point... When you buy a future contract, you are saying that you will buy potato on the last day of the contract and the guy who sells has to deliver it then.. As long as you exit the contract before the expiry , you don't really have to take delivery of physical potatoes or sell the potatoes.. But if you intend to take delivery, exchange will guarantee you the potatoes, as it will assign this commitment to the person who shorted the contract..
In equity futures(India), all contracts are cash settled, whereas in MCX you actually have a physical settlement of the contract.. I remember a friend who had to take delivery of a few quintals of pepper long back because he forgot to square off the contract... Majority of MCX brokers(including us), don't let you hold position to take physical delivery of the contract.. Taking physical delivery is a big hassle for both you and the broker. Firstly, the delivery has to be done or taken from the warehouse, secondly as soon as the delivery is assigned, margin required suddenly shoots up and so on and forth...
What you can be assured is, trading through a regulated exchange guarantees you a settlement and that there is no scam happening. That said, the person who sells a potato contract or someone who is buying doesn't really require to have the potato or buy the potato..
// Do you specify this during order placement whether a delivery is required or not ? If so what you specify ? what is default ?
The important thing though is to ensure that you trade only on regulated exchanges. A rampant practice today is trade with the so called forex guys or guys letting you trade on multiple exchanges using a MT4 platform or something similar.. Guys, this is probably the most illegal thing happening in the capital markets.. Most of the cases there is counterparty.. The guy who is running the platform is giving you an artificial price to buy or sell, he being the counterparty to your trades.. For him to make money, he needs to ensure that you loose.. He gives you such a high leverage that you invariable loose and if you still don't, they create artificial scenarios to take you out of your money.. You would have transferred this money to mauritius, middle east , UK or portugal.. These guys would not even have to pay taxes on the money they have received, because it would be done through phonie companies...
So ensure you trade with brokers who are members of exchanges....
, there are people who will offer at lower margins.. Do understand Leverage is WMD(Weapons of mass destruction).. 
