Barter is the simplest type of countertrade. In a barter deal, goods are exchanged for goods - the principal export is paid for with goods (or services) from the importing market.
A single contract covers both flows and in the simpler case, no cash is involved. In practice, however, the supply of the principal export is often released only when the sale of the bartered goods has generated sufficient cash.
Barter is often the main means of trading in subsistence economies and in cross border trade in undeveloped regions of the world. More developed markets use it in international trade where they have commodities to offer which are accessible to world markets.
Barter may also be introduced into existing contracts to recover debts i.e. when the original payment terms have failed.
This means if Party A sells mining equipment to Party B in return for Oil - they will probably hold some of the mining equipment back until they have made some good profit from the Oil.
