Principle Where there is transfer of ownership of one thing for the ownership of some other thi...........

Indian Contract Act (ICA)1872 Consideration of Contract

Principle: Where there is transfer of ownership of one thing for the ownership of some other thing it is called exchange; while transfer of ownership for consideration of money is called sale, whereas, without consideration it becomes gift.

Facts: ‘A’ transfers his house worth ? 50 Lakhs to ‘B’ for a shopping building worth the same amount, as consideration, from ‘B’.

The transaction is a gift

The transaction is a sale

The transaction is an exchange

The transaction is a mortgage

Explanation:

Since A’s transfer is not gratuitous, it is not a gift. Since he does not receive money in lieu it cannot be sale. The principle does not speak of mortgage, therefore by elimination it can only be an exchange. Even by selection of options, he has received shopping building in exchange for his house; thus, exchange, or option (3) will be the right answer.