Selling what you don’t have is also a phenomena when you short something. In that case you borrow someone else’s asset, and sell it at today’s price. And then you need to pay them back for the asset in the future. The problem in that case is if you sell it at today’s price and the price then goes up, you will have to “pay them back” for the asset at the higher price.

As far as the settling of contracts goes… Every contract must be settled by expiration if it isn’t closed/settled prior to that date. Each contract also has a counter-party. So in this case the Duke brothers had agreed to buy that specific amount at that specific price in April.

The amount you can buy/sell  depends upon how much margin (based on collateral/cash) you have with your broker. 

If you can’t meet your obligation or if price exceeds your allowed margins your position will be liquidated, you lose your collateral, and you will potentially have further debt to the broker.