Question Details

Each question consists of legal propositions/ principles (hereinafter referred to as 'principle') and facts. These principles have to be applied to the given facts to arrive at the most reasonable conclusion. Such principles may or may not be true in the real sense, yet you have to conclusively assume them to be true for the purposes of this section. In other words, in answering the following questions, you must not rely on any principles except the principles that are given herein below for every question. Further, you must not assume any facts other than those stated in the question. The objective of this section is to test your interest towards study of law, research aptitude and problem solving ability even if the 'most reasonable conclusion' arrived at may be unacceptable for any other reason. It is not the object of this section to test your knowledge of law.


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 Rs. 50 Lakhs to 'B' for a shopping building worth the same amount, as consideration, from 'B'.

Options

A

The transaction is a gift

B

The transaction is a sale

C

The transaction is an exchange

D

The transaction is a mortgage.

Show Answer

Correct Answer :

Option C

The transaction is an exchange

Solution :

The correct option is The transaction is an exchange.

1. Understanding the Principle:
According to the provided legal principles:
- An exchange occurs when ownership of one thing is transferred for the ownership of another thing.
- A sale occurs when ownership is transferred in exchange for money consideration.
- A gift occurs when ownership is transferred without any consideration.

2. Application to the Facts:
In the given case, 'A' transfers the ownership of his house to 'B' in return for receiving the ownership of a shopping building from 'B'.
Because the transfer involves swapping the ownership of one property (a house) directly for the ownership of another property (a shopping building) rather than for monetary consideration, it satisfies the precise definition of an exchange.

3. Conclusion:
Therefore, applying the principle strictly to the facts, the transaction is an exchange.

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