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NATIONAL LAW INSTITUTE

UNIVERSITY
BHOPAL
Diference Between sale, barter and
exchange
Submitted To
Submitted By Ms. Ga!i Ra"#a$s%i
Naya$ &ai$
Ms. S%uti'a S%i#asta#a Ro(( No.)
*+,-B.A.LL.B,+.
E$o((me$t No. / A),-01
Index
Introduction..
..3
Acknowledgement
4
Sale..
..
Barter.
..
!xchange.

"
Acknowledgement
I would like to take this opportunity to thank both my teachers, Gargi Mam and Shrutika Mam,
for giving me this opportunity to work on this project. I would also like to thank my batchmates
for helping me when I needed it. I would also like to thank my seniors for their help when it was
needed. Last but not the least I would like to thank God for being with me throughout the
duration of this project and giving me support throughout.
Introduction
he Sale of Goods !ct is an !ct to define and amend the law relating to the sale of goods. It also
governs the contracts relating to sale of goods. his !ct applies to the whole of India e"cept the
State of #ammu $ %ashmir
&
. It came into force on &
st
#uly &'().
he contracts for sale of goods are subject to the general principles of the law relating to
contracts i.e. the Indian *ontract !ct. ! contract for sale of goods has, however, certain specific
features such as, transfer of ownership of the goods, delivery of goods rights and duties of the
buyer and seller, remedies for breach of contract, conditions and warranties implied under a
contract for sale of goods.
Sale
! contract of sale has been defined u+s , of the Sales of Goods !ct, &'() according to which -A
contract of sale is made by an offer to buy or sell goods for a price and acceptance of such offer.
The contract may provide for the immediate delivery of the goods or immediate payment of the
price or both, or for the delivery or payment installments, or that the delivery or payment or
both shall be postponed..
/
0ere goods mean every kind of moveable property other than actionable claim and money.
3
# http1++jklaw.nic.in+central2acts.pdf
$ Section ,, Sale of Goods !ct, &'()
3 Section /345, Sale of Goods !ct, &'()
Barter
6artering is when two people trade or e"change one thing for another without using money. It is
probably the oldest form of economic activity. It can involve the e"change of goods or services
or both. herefore bartering entails1
&. 7"changing goods for goods
/. 7"changing goods for services
(. 7"changing services for services
8Service9 has been defined under /3o5 of the *o:r!
,
.
he basic difference between sale and barter is that in sale the consideration is -money. whereas
in barter money is not the consideration. !lso a sale is an e"ecuted contract whereas a barter may
not re;uire a contract. In a barter, the consideration is anything but money. It is a valid contract
but not a sale of goods because it does not entail money.
he Supreme *ourt of India in its judgment in The State of Madras v. Gannon Dunkerley &
Co.,(Madras) Ltd.
5
stated that -if merely title to the goods passes but not as a result of any
contract between the parties, express or implied, there is no sale. o also if the consideration for
the transfer was not money but other valuable consideration, it may then be exchange or barter
but not a sale.
In 0alsbury9s Laws of 7ngland we have the following1
-he law relating to contracts of e"change or barter is undeveloped, but the courts seem inclined
to follow the ma"im of civil law, 8permutatio vicina est emptioni9, and to deal with such
contracts as analogous to contracts of sale. It is clear, however, that statutes relating to sale would
have no application to transactions by way of barter..
As regards to the legal im%lications, it was held in Indian &etal and
&etallurgical 'or%oration (. )he State o* &adras
"
that
A contract concerning the sale of goods may be defned to be a mutual
agreement between the owner of goods and another, that the property in the
goods shall for some price or consideration be transferred to the other, at
such a time and in such a manner as is then agreed. If the consideration to
4 Section /3o5, *onsumer :rotection !ct, &'<=
)he State o* &adras (. +annon Dunkerle, - 'o.,.&adras/ 0td. #11 S'2 331
" Indian Metal and Metallurgical *orporation v. he State of Madras &'=( &, S* 4<< Mad
be given for the goods is not money, it might perhaps, in popular language,
rather be called barter than sale, but the legal efect is the same in both
cases.
!xchange
7"change has been defined under Section &&<
4
of the ransfer of :roperty !ct which states.
More specifically Section &/&
<
states that1
121. !"han#e of Money
>n an e"change of money, each party thereby warrants the genuineness of the money given by
him.
his is the aspect that we will be dealing with in this project. here are basically two types of
currency e"changes, internal and e"ternal.
Internal e"change of money usually takes place when soiled and mutilated notes are e"changed
for new ones at banks. !nother common e"ample would be when a higher denomination note3s5
is e"changed for multiple lower denomination notes. Soiled and mutilated banknotes are
e"changed for value. !ll banks are authori?ed to accept soiled banknotes for full value. hey are
e"pected to e"tend the facility of e"change of soiled notes even to non@customers. !ll branches
of commercial banks are authorised to adjudicate mutilated banknotes and pay value for these, in
terms of the Aeserve 6ank of India 3Bote Aefund5 Aules, /))'. hough there are certain rules
which regulate the value when mutilated notes are e"changed, they are mostly e"changed for full
value.
Coreign e"change in India is regulated by $ore%#n !"han#e Mana#e&ent '"t ($M').
'
It
was made with the objective of consolidating and amending the law relating to foreign e"change
with the objective of facilitating e"ternal trade and payments and for promoting the orderly
development and maintenance of foreign e"change market in India. his act made offences
related to foreign e"change civil offences.
Dou can e"change one currency for another but you cannot buy currency.
3 Section &&<, ransfer of :roperty !ct, &<</
4 Section &&', ransfer of :roperty !ct, &<</
1 Coreign 7"change Management !ct, &'''