Exchange in Transfer of Property Act

Exchange is de ned in section 118 of the Transfer of Property Act, 1882. The
exchange of property in this act relates to immovable property** only. The
exchange of moveable property is governed by the Sale of Goods Act. The literal
meaning of exchange is giving and taking of something.

In the early decades, the concept of exchange was known as barter system. The
people used to exchange their things and commodities with others who are in
need of them. And in return, they used to get something which is useful for
themselves.

Essentials of Exchange

1. There must be two persons for the purpose of exchange.

2. Their intention to transfer the things must be with mutual consent. If either of
them has not given consent, then it is not exchange.

3. There must be a transfer of ownership of a thing from one person to another and
vice-versa.

4. Any of the thing which is getting exchanged can be any immoveable property
but not money. Money can’t be a property in exchange. (If money is involved, it
becomes sale and not exchange.) (But money can be exchanged if both parties
exchange money. Like A gives 71 rupees to B, and receives 1 dollar from A. See
next to next heading.)

5. The exchange takes place between the parties like the process of sale. One
person transfers his ownership to the other person, and likewise, other person
does.

Rights and Liabilities of Parties in Exchange

Both the parties in exchange have equal rights over one another. When the person
is transferring the ownership to the other, he is considered to be at the position of
a seller, and he holds all the rights which a seller has while selling property. The
person who receives the property is considered a buyer, and he has all the rights
which a buyer possesses by virtue of being a buyer.
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 The rights are gained after considering the position a person is holding. If a person
is at the receiving side, then he has the rights of a buyer like getting property in a
t condition and, if not in a t state, may claim for damages. He has the right to
possess all rights over that property after getting transferred.

Can There Be Exchange of Money

It is a written rule that money can’t be a thing in exchange. But section 121 of the
Transfer of Property Act says that if money is exchanged between the parties, then
the parties must assure the other party regarding the genuineness of money he has
given to the other. The proving of the genuineness of money is essential, if
exchanged.

There are many events where money can get exchanged. For example, a person
visiting the U.K requires the currency of that country only. So when he exchanges
his money in rupee to get money in pounds, it is an exchange of money.

Valuation of Things in Exchange

The de nition of exchange nowhere provides any provision or statement relating to

the valuation of things transferred in exchange. The parties exchanging things may
transfer any value of a thing with the other person. It is immaterial that both the
things do not have equal valuation. So the parties exchanging things must transfer
it voluntarily and mutually.

Finally:
If any person receives anything damaged or destroyed, then he may claim for
damages or may seek permission from the court to return it to the transferor.

** Note: The Transfer of Property Act speci cally deals with the transfer of
immovable property except for a few provisions like where a thing’s price is less
than Rs 100; it can be made by delivery of goods. Here no registration is required.

Likewise, it is not expressly provided in Section 118 of TPA (‘Exchange’ de ned) as

to what property it includes and excludes.

The matter of transfer of property under the act has always been debatable. Some
researchers say it includes, and some say it does not include. Therefore we
interpret it with the help of interpretation clause.
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 Speci cally, the Transfer of Property Act deals with immovable property, and where
the subject matter of transfer is movable property, it is dealt under the Sale of
Goods Act.
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