Legal Definitions - dry exchange

Definition: Dry exchange is a term used to describe a transaction that appears to involve both parties, but in reality, only one party benefits. It is a way of disguising usury, which is the practice of lending money at an excessively high rate of interest.

Example: Let's say that John wants to borrow $100 from Jane. Jane agrees to lend him the money, but only if he pays her back $150 in a week's time. This is an example of usury, which is illegal in many places. To make the transaction appear legitimate, they might agree to a dry exchange. John would give Jane a worthless item, like a piece of paper, and Jane would give John the $100. In a week's time, John would give Jane back the worthless item, and she would give him back $150. In reality, nothing of value has been exchanged, and Jane has charged John an excessive amount of interest.

Explanation: The example illustrates how a dry exchange can be used to disguise usury. By pretending to exchange something of value, both parties can make the transaction appear legitimate. However, in reality, only one party benefits, and the other is left worse off. This is why usury is illegal in many places, as it can be used to exploit vulnerable people who are in need of money.