Exchange
Also called: Barter
A transaction in which two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only. Section 118 of the TPA.
Explained
Section 118 of the Transfer of Property Act, 1882 provides that when two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an exchange. The essence is a transfer of ownership on both sides, with the thing given on each side being something other than money, or money on both sides. Where one side gives property and the other pays only money, the transaction is a sale under Section 54, because a sale is a transfer of ownership in exchange for a price.
The second paragraph of Section 118 lays down the form: a transfer of property in completion of an exchange can be made only in the manner provided for the transfer of such property by sale. So if immovable property worth one hundred rupees or more is exchanged, each transfer must be by a registered instrument as Section 54 requires, regardless of the difference in value of the two properties. Delivery suffices for movables, as on a sale of movables.
Sections 119 to 121 set out the incidents. Under Section 119, a party deprived of the thing received in exchange because of a defect in the other party's title may, unless a contrary intention appears, claim compensation for the loss or, at his option, the return of the thing he transferred if it is still with the other party. Section 120 gives each party the rights and liabilities of a seller as to what he gives and of a buyer as to what he takes. Section 121 provides that on an exchange of money each party warrants the genuineness of the money given by him.
Exchange differs from sale (money consideration), gift (no consideration) and partition (division of jointly held property). Examiners test the 'neither or both money' wording, the registration requirement by reference to sale and the remedy under Section 119.
What the law says
When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an “exchange”.
Defines exchange and requires the mode of transfer applicable to sale
[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.]
Remedy of a party deprived of the thing received for defect of title
Save as otherwise provided in this Chapter, each party has the rights and is subject to the liabilities of a seller as to that which he gives, and has the rights and is subject to the liabilities of a buyer as to that which he takes.
Rights and liabilities of parties as seller and buyer
On an exchange of money, each party thereby warrants the genuineness of the money given by him.
Warranty of genuineness on an exchange of money
“Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale how made.—Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Mode of sale that governs transfer on exchange
Example
For example, A agrees to give his agricultural land worth Rs 3 lakh for B's house worth Rs 5 lakh. This is an exchange, and both transfers must be made by registered instruments as on a sale of immovable property.
For the exam
- Exchange: mutual transfer of ownership of thing for thing, neither or both being money only (Section 118 TPA).
- Property for money only is a sale, not an exchange.
- Exchange is completed in the manner required for a sale of that property; immovables of Rs 100 or more need registration.
- Each party has a seller's liabilities for what he gives and a buyer's rights in what he takes (Section 120).
- On an exchange of money, each party warrants its genuineness (Section 121).
539 questions in the Law Maker question bank use this term. Practise Transfer of Property Act questions
Related terms
- SaleA transfer of ownership in exchange for a price paid or promised or part-paid and part-promised (Section 54 of the TPA). Sale of goods is governed separately by Section 4 of the Sale of Goods Act, 1930.
- GiftThe voluntary transfer of existing movable or immovable property without consideration by a donor to a donee, accepted by or on behalf of the donee during the donor's lifetime. Section 122 of the TPA.
- Transfer of propertyUnder Section 5 of the TPA, an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons.
- Immovable propertyLand, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth. Defined inclusively in Section 3(26) of the General Clauses Act, 1897.
- ConsiderationAn act, abstinence or promise done or made at the desire of the promisor by the promisee or any other person, which is the price for the promise (Section 2(d) of the Contract Act).
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.