Exchange Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Exchange, written in plain English, along with examples of how it is used.
What is Exchange?
1\) v. to trade or barter property, goods and/or services for other property, goods and/or services, unlike a sale or employment in which money is paid for the property, goods or services. 2) n. the act of making a trade or barter. An exchange of “equivalent” property, including real estate, can defer capital gains taxation until the acquired property is sold. 3) n. short for “Starker” exchange of investment real property to defer capital gains tax.
History and Meaning of Exchange
The term "exchange" refers to the act of trading or bartering property, goods, or services for other property, goods, or services, instead of paying or receiving money. The exchange has been a fundamental economic concept for centuries, as trading and bartering have always been a way of acquiring goods and services. With the development of legal systems that recognize property rights and contract law, exchanges became more regulated and enforceable.
Examples of Exchange
- Jane exchanges her bicycle for Tom's skateboard.
- The two countries agree to exchange goods of equal value in a bilateral trade deal.
- A customer can exchange a faulty product with a new one at the store.
- The company issues shares in exchange for capital from investors.
- In a 1031 exchange, a property owner can defer capital gains tax by exchanging their investment property for another property of equal or greater value.
Legal Terms Similar to Exchange
Trade: Similar to exchange, trade refers to the act of exchanging goods or services. However, trade is more commonly used to describe the commercial exchanging of goods and services between different parties.
Swap: A swap is a contractual agreement between two parties to exchange financial instruments, such as currencies, commodities, or interest rates. It is a type of derivative contract, commonly used in financial markets.
Barter: Barter is an early form of exchange, where people directly trade goods and services without the use of money. It is still used in some societies and is gaining popularity as an alternative to cash transactions.