EXCHANGE

Transfer of Property Act, 1882

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

[Advocate]

 

 

EXCHANGE [Sections 118-121 of the Transfer of Property Act, 1882]-

Tanmoy Mukherjee

[Advocate]

Section 118 to 121 of the Transfer of Property Act, 1882 lays down the provisions relating to exchange of properties. The subject matter of exchange is both immovable and movable. In other words, exchange under Section 118 is not limited/confined to immovable property, but it also extends to barter of goods.

Section 118 defines exchange. Section 119 deals with right of party deprived of thing received in exchange. Section 120 deals with rights and liabilities of parties in exchange of their properties. Finally Section 121 deals with exchange of money.

Meaning-

 Like sale, exchange is transfer of absolute interest in property, immovable or movable, by which ownership is passed from one person to another. The main difference between sale and exchange is the nature of consideration for the transfer. In sale, the consideration is price, whereas in case of exchange the consideration is property in exchange for some other property.

Example-

A transfers his property X worth Rs.5000 to B. B in return of this property transfers his property worth Rs.4000 and also gives Rs.1000 in cash to A. This is a case of exchange.

Definition-

 Section 118 defines exchange. The definition of exchange as given in this section is founded on Section 309 of the New York Civil Code. This definition-covers the cases of exchange in respect of both moveable and immovable property.

 Section 118 runs as follows:

When two persons mutually transfer the ownership of one thing for the ownership of another, neither 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.

Essentials-

 To constitute exchange, the following conditions are to be satisfied-

 (1) Two persons mutually transfer.

(2) Ownership of one thing for the ownership of another thing.

(3) Things given and taken may be either things only or money only.

(4) The procedure of sale should be followed for the completion of the transaction.

Mode of Exchange-

-The second paragraph of Section 118 prescribes the mode in which a transfer of property in completion of an exchange can be effected, namely, the manner provided for the transfer of such property by sale.

-Where the exchange is of movable things mere delivery is enough to complete the transfer. Where it is immovable properties or where one of the items is immovable, and the value of any of such properties is Rs. 100 or more the provisions of Section 54 will be applicable and the transfer will be completed only by a registered instrument. Where both properties are immovable, exchange is usually effected by mutual conveyances, but it is not necessary that there should be two separate deeds.

Distinction between Sale and Exchange-

Sale	Exchange
It refers to immovable property only. The subject matter of sale is transfer of absolute interest in an immovable property.	It refers to both immovable and movable properties.
The consideration in sale is price, paid or promised, partly paid and partly promised.	The consideration for transfer of one property is in exchange for another property.
The seller or vendor exercises lien on the property if the price remains unpaid in full or in part. (Vendor's lien).	There is no such lien in case of exchange.

 

Right of party deprived of thing received in exchange (Section 119)-

If any party, to an exchange or any person claiming through or under such party is by reason of any defect in the title of the other party deprived of the thing or any part of the thing received by him in exchange, then, unless a contrary intention appears from the terms of the exchange, such other party is liable to him or any person claiming through or under him for loss caused thereby, or, at the option of the person so deprived, for the return of the thing transferred, if still in the possession of such other party or his legal representative or a transferee from him without consideration.

Rights and Liabilities of the Parties to an Exchange (Section 120)-

Some rights and liabilities are enumerated to the parties to an exchange. Every party to an exchange acts in dual capacity i.e. seller as well as buyer. He is a seller as to that which he gives and he is a buyer as to that which he receives. So every person can enjoy rights recognized to the seller as well as buyer. The rights and responsibilities recognized to seller as well as the buyer under Section 55 of the T.P.Act are applicable to the parties to an exchange excepting the right of unpaid vendor's lien.

Exchange of Money (Section 121)-

 On exchange of money, each party thereby warrants the genuineness of money given by him.

Example-

Where A gives a currency note of Rs.100 to B and B in exchange gives Rs.100 in coins. A guarantees that the note is genuine and B guarantees that every one of the coin he has handed over is genuine.

-This section is based on the principle that payment of spurious money is no payment at all. It applies only to spurious money and not money depreciated by use or wear.