Legal Writing: Exchange

Exchange.— 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 the manner provided for the transfer of such property by sale. (Section 118, Transfer of Property Act.)
An exchange can be of immovable property as well as of movable property. An exchange of movable property is called a barter. Barter is regulated by the provisions of the Contract Act while exchange other than barter is governed by the provisions of the Transfer of Property Act, 1882.

'Rights and liabilities of parties.—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.

Exchange how made.—Exchange is a kind of sale. Therefore the modes of transfer provided in respect of sale are also applicable to exchange. The transfer in exchange can, therefore, be effected by (i) Registration and (n) Delivery. When exchange is made of two properties by registration of deed, then two documents must be executed by the owner of each of the two properties which are the subject of exchange. The cost of stamps will be shared by both the parties equally.

Execution, attestation and registration.—Exchange deeds are executed and attested like agreements. In case of tangible immovable property of the value of one hundred rupees and upwards or in the case of a reversion or other intangible things exchange can be made only by a registered deed. In all other cases a registered deed is optional and exchange can be made only by delivery.

Registration of exchange deed is governed by Section 54 of the Transfer of Property Act and Section 17 of the Registration Act, 1908.

Right of party deprived of thing received in exchange.—If any party to an exchange or any person claiming through or under such party is by reason of any defect in 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 (Section 119 of the Transfer of Property Act.)