what is trade by barter

Barter is the exchange of goods or services between two or more parties without the use of money. In a barter transaction, one party provides a good or service in return for another good or service from another party. For example, a carpenter could build a fence for a farmer in exchange for $1,000 worth of crops or foodstuffs instead of receiving cash. Bartering is considered the oldest form of commerce and is common among traditional societies, particularly in those communities with some developed form of market. In modern times, barter and trade have evolved considerably to become an effective method of increasing sales, conserving cash, moving inventory, and making use of excess production capacity for businesses around the world. Bartering has the benefit that one gets to know each other, discourages investments for rent, and one can impose trade sanctions on dishonest partners.