Exchange

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Exchange

 

Q: What is the meaning of exchange according to the transfer of property Act?

 

Ans: Section 118 of the transfer of property Act defines exchange as follows: When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, such a transaction is called an ''exchange''.

 

The definition of exchange is not limited to immovable property. Exchange is therefore not only exchanging of lands but also barter of goods. If one of the items transferred is money, the transaction is not an exchange but a sale; because the price is money only. But money in one form may be exchanged for money in another form. So also an exchange of one stamp for another is not a sale. A sale should always be for a price, but in the case of an exchange, the transfer of ownership of one thing is not one for price paid or promised, but for transfer of another thing in return. So, a transaction in which the considerations for the transfer of certain properties are shares in a limited company is an exchange.

 

The ownership of the one party must be exclusive of the ownership of the other, so that a partition is not an exchange. A transfer by a husband to a wife in discharge of her claim to maintenance is not an exchange, as the wife transfers no ownership in anything.

 

If the lessee surrenders a lease and the landlord grants him the lease of another property, the transaction is not an exchange. If both parties are not the same, there can not be an exchange.

 

Illustration:

A transfers to B a house worth RS. 1,500 and B transfers to A a field worth RS. 1,000 and RS. 500 cash. The transaction is an exchange.