Some derivative contracts specify the exact product that the seller must deliver.
However, some may have a broader specification, in which case the seller has the right to deliver any product that fulfills the requirements of the contract.
In such a case, a rational seller will always choose to deliver the cheapest option, "the CTD". This may be a product of lower quality, and the price of a futures contract will reflect the fact that the seller will do this.
For example, in a US 30-year Treasury bond future traded in Chicago*, the seller (short position) must deliver a Treasury bond with at least 15 years to maturity. Because these bonds have different values, the bond future contract is standardised by computing a conversion factor that normalises the price of a bond to a theoretical bond with a coupon of 6%.
On expiry, if the contract is delivered, the seller will deliver the cheapest possible bond that meets the criteria.
I hope this helps
Simon
PS this sort of detail is beyond the CT2 syllabus
*If interested, the precise definition from the CME is:
U.S. Treasury bonds that, if callable, are not callable for at least 15 years from the first day of the delivery month or, if not callable, have a remaining term to maturity of at least 15 years from the first day of the delivery month. Note: Beginning with the March 2011 expiry, the deliverable grade for T-Bond futures will be bonds with remaining maturity of at least 15 years, but less than 25 years, from the first day of the delivery month. The invoice price equals the futures settlement price times a conversion factor, plus accrued interest. The conversion factor is the price of the delivered bond ($1 par value) to yield 6 percent.