Updated On — 7th Sep, 2020
Last Updated on September 7, 2020 by admin
Countertrade is a transaction between two entities, involving the exchange of products, rather than using the hard currency for payment. Individuals, companies, and even governments can use this type of transaction. Often referred to as barter or offset, counter-trade makes it possible to obtain the goods or services needed even if there is no cash available to pay for these products.
While obtaining all the needs, countertrade can also be used to maintain household budget items. The process of counter trading is very simple. The buyer proposes to the seller a plan to purchase a specific product provided by the seller, instead of bidding for the product, the buyer proposes to exchange something with the seller of comparable value.
If the seller agrees that the two products have comparable value, and the seller is interested in buying the products provided by the buyer, the parties arrange to exchange ownership of the two products. Depending on the nature of the product involved, this may require a formal transfer of ownership or simply the transfer of actual possession of the product to another party.
In countertrade, diamond rings and fur coats may be of comparable value, but each party must hope that the other party’s goods can be traded. In addition to direct barter trade, countertrade can also take the form of the so-called anti-purchase.
This method is sometimes used as a means of trade between the two countries, requiring one country to purchase goods from another country. In exchange, the seller’s country promises to purchase certain goods from the buyer’s country, usually for a period of time included in the contract terms and conditions governing the transaction to help expand the family budget.
In this application, this strategy is often referred to as an exchange meeting. At the specified date and time, people gather at the specified place, with whatever items they want to trade in other commodities. Throughout the day, participants trade with each other, deal with items they no longer need and protect items they think are needed.
This method allows everyone to avoid the cost of buying new products, and at the same time, remove those items that are no longer useful to the original owner from the home. In order for the counter transaction to be effective, both parties to the transaction must have an understanding of the market value of the product as part of the transaction.
Certainly understand. Sometimes, the knowledge of market value will increase due to the desirability of trading items. For example, although the value of a diamond ring and a fur coat may be equivalent, the owner of the ring must want to own the coat so that the transaction will occur.