According to the Transfer of the Property Act,Section 118-121 defines the term "Exchanges".
Section 118 of the Act defines the definition of Exchange and Section 119-121 defines the Rules of the Exchange.
When two persons mutually transfer the ownership of one thing for the ownership of another,neither one thing nor both things being money only,the transaction is called an "Exchange".
A transfer of property in completion of an exchange can be made only in manner provided for the transfer of such property by sale.It is a transfer of a thing for another thing and both or either of these things are movable or immovable property.
Eg:- "A" transfers a house to "B"."B" transfers a land to "A".This is exchange,otherwise called "Barter".
Rules of Exchange :
Section 119-121 of the Transfer of the Property Act defines the Rules of Exchange.
They are:
1. Right of party deprived of exchanged thing [Sec.119]
2. Rights and Liabilities of parties to Exchange [sec.120] and
3. Exchange of Money [sec.121]
1. Right of party deprived of exchanged thing :
Section 119,if any party to an Exchange due to any defect in the title of the other party is deprived of the thing received in Exchange,then the other party is liable to compensate the loss caused to the first party.This is done by return of the exchanged thing to the original owner provided it is still in his possession or in the possession of his legal representatives or transfer without consideration.
2. Rights and Liabilities of parties to Exchange :
Section 120 of the act,the rights and libilities of each party to the exchange ,if that of a seller and buyer for the thing exchanged.hance,all essentials of sale must be fullfilled for exchange.
3. Exchange of Money :
Section 121 of the act,on an exchange of money each party thereby warrants the genuineness of the money given by him.
Eg:- "A" gives a currency note of Rs.500 to "B" and "B" in exchange gives Rs.500 in coins.