Exchanging contracts
An agreement to purchase foreign exchange at a specified date in the future at an agreed exchange rate. In international trade, with floating exchange rates, the forward-exchange market provides an important way of eliminating risk on future transactions that will require foreign exchange [Law, p. 128]. A barter contract in which property is transferred from one party to the other in return for other property. No money passes from one party to the other [Law, p. 130]. The formal exchange between parties to a contract of the original and counterpart contracts, most commonly in real property transactions. Exchange is sometimes simultaneous, but in practice, it is generally effected through an estate agent or legal practitioner, who holds the first signed part in escrow until the signed counterpart has been handed over or posted, ensuring that each party has a signed copy [Mann, p. 125]. A procedure adopted in the sale and purchase of land in which both parties sign their copies of the contract, having satisfied themselves as to the state of the property, etc., and agreed that they wish to be bound. There needs to be no physical exchange of documents; the parties or their advisers can exchange contracts by agreeing to do so orally (for example, by telephone). From that moment, the contract is binding and can typically be enforced by specific performance [Law, p. 128].
Law, J. (2016). A Dictionary Business and Management (6 ed.) Oxford: Oxford University Press.
Law, J. (2018). A Dictionary of Finance and Banking (6 ed.) Oxford: Oxford University Press.
Law, J. (2022). A Dictionary of Law (10 ed.) Oxford: Oxford University Press.
Mann, T. (2017). Australian Law Dictionary (3 ed.) Oxford: Oxford University Press.