Fungibility

Fungibility refers to the property of a good or Asset whose individual units are interchangeable and indistinguishable from each other. This means that each unit can be substituted for another of the same type without loss of value or functionality.

For instance, currency is a prime example of fungibility. A $10 bill is equal in value to another $10 bill, and either can be used in transactions without any difference. Similarly, Commodities like oil, gold, and wheat are fungible, as specific quantities can be exchanged for others of the same type without altering their value.

In legal terms, fungibility can be significant in cases involving contracts or property rights. For example, if a contract states that one party will deliver 100 tons of wheat, any 100 tons of wheat from that same grade can fulfill the contract, emphasizing the fungible nature of the commodity.