What is an example of a quid pro quo

Something for something

Table of Contents Show

• Other phrases interchangeably used in place of quid pro quo are:
• How Quid Pro Quo Works
• What are the Issues Encountered in Quid Pro Quo?
• More Reading
• Understanding Quid Pro Quo
• Examples of Quid Pro Quo
• Soft Dollar Agreement
• Sexual Harassment Quid Pro Quo
• Criminal Sentencing
• Political Context
• Quid Pro Quo in Contracts
• How Does Quid Pro Quo Work?
• Contact a Contract Lawyer Today

In financial terms, a quid pro quo is a mutual agreement between parties that gives consideration to each member of the party in exchange for the goods or services which they have each benefited from receiving.  It is similar to an exchange deal in which one company uses the services of another company in exchange for that business’s products.  The literal meaning of “Quid Pro Quo” in Latin is “something for something”. The emphasis in this type of arrangement is on the equal value of the goods or services offered by each party to the other.

Other phrases interchangeably used in place of quid pro quo are:

• Something for something
• A favor for a favor
• Give and take
• Tit for tat
• You scratch my back and I’ll scratch yours
• This for that
• I give so that you will give
• You help me, I’ll help you

How Quid Pro Quo Works

Although this term is always being used in legal and political perspectives, a concrete example related to business is bartering. It is particularly seen in start-up businesses where the inflow of cash is limited and there is an opportunity to obtain goods or services without sacrificing revenues. No cash is exchanged – instead, services are reciprocated with services.

Another example is the quid pro quo contribution, a donation in which the donor receives something of commercial value in exchange for the monetary grant he/she provided to a company or institution. Like when someone donates $50 to a foundation and the foundation gives the donor a pen with engraved markings worth $5 as a token of appreciation.

Quid pro quo is also present in professional networking.  A business person can reach out to other professionals who share the same interest or passion. A business group is created wherein one group member can offer something of value to other members of the group, such as education on a relevant topic essential to the receiving member’s business core competency, in exchange for services in the future. The quid pro quo is also important for those looking to network to start their career.

What are the Issues Encountered in Quid Pro Quo?

Quid pro quo agreements are occasionally viewed as unfavorable in a business setting. For example, in a reciprocity agreement between a big financial house and a company, the financial house might modify the company’s poor stock rating in exchange for a stake in the company business. This is poor business practice and obviously violates regulatory rules. Acting properly, the financial house should put their investment clients’ best interests first, ahead of any potential gain for the house itself. However, this example does illustrate the fact that quid pro quos are often in the nature of a favor for a favor, as opposed to a direct exchange of goods or services.

In the political arena, quid pro quo is often viewed as giving financial support to a political candidate in exchange for some future benefits or consideration regarding an issue or business operation. The Latin phrase may appear to indicate a bribe, but there is nothing inherently improper with the notion. For example, a business or professional organization may contribute to a political candidate’s campaign, merely with the understanding that the elected official will keep the organization’s interests in mind when considering relevant proposed legislation.

More Reading

Check out the CFI resources listed below to further broaden your financial and business knowledge.

Quid pro quo is a Latin term which loosely translates to "something for something." This refers to a favor or advantage granted in exchange for something else in most contexts.

It's also possible to assess quid pro quo from a business contract perspective. In this context, quid pro quo refers to a contract between two or more parties in which there's a reciprocal exchange. The exchange may be against goods, services, or a favor. The agreement is valid and binding where all parties agree to the terms and conditions stipulated.

Over the years, the quid pro quo concept has become common in different contexts. The meaning of quid pro quo within the business context may vary from a political context.

Understanding Quid Pro Quo

Essentially, the core of a quid pro quo in a business agreement is the “consideration.” Most times, the consideration could be goods, services, money, or other underlying financial instruments. The quid pro quo contract should stipulate what's on offer and the equal consideration of equal value.

Without such considerations and an offer of equal value, the court may decline to recognize the contract's legitimacy. The court may also refuse to acknowledge the contract as binding if the terms appear one-sided and unfair. Therefore, both parties must understand what the contract entails before entering into a binding contract.

Within the common law context, quid pro quo indicates a situation where a good or service has been traded for something of equal value.

Here’s an article about quid pro quo.

Examples of Quid Pro Quo

The concept of quid pro quo may take varying forms depending on the circumstances. For example, the circumstances may include a business-to-business arrangement, work setting dynamics, or even within the political arena.

Soft Dollar Agreement

The soft dollar agreement is the most common example within a business context. For example, the investment manager may enter into a quid pro quo agreement with a broker in such an arrangement. The manager, in such cases, directs all transactions to a broker. The broker, in return, provides brokerage and other services such as research on behalf of the investment manager.

This arrangement is considered legal in the United States as long as all other considerations exist. The mutual agreement results in gains for all the parties involved.

Another example of quid pro quo in business could be through bartering. In such arrangements, companies can easily barter trade a product for a service, a good for another product, or vice-versa. Media bartering is among the more recent forms of bartering.

Companies can exchange surplus products and inventory for an equal value media inventory in this arrangement.

Sexual Harassment Quid Pro Quo

In the United States, workplace sexual harassment may take the form of quid pro quo principle. In such contexts, a supervisor or superior may demand sex, sexual favors, or various forms of sexual contact as a "consideration" for their employment. However, it's important to note that only top-level supervisors can hire, fire, suspend or promote an employee charged with the quid pro quo sexual harassment claim.

Criminal Sentencing

In more recent times, the concept of quid quo pro has also become common, especially where criminal sentencing is concerned. In this case, criminals may receive reduced sentencing in exchange for providing implicating testimonials against others.

In such cases, the prosecution may enter into a pre-trial agreement with the said criminals. That way, the prosecutor gets more criminals on the dock in exchange for a lenient judgment.

Political Context

The concept of quid quo pro may also be applied within the political context. For example, a candidate may approach potential donors for financial support during the electioneering period. Campaigns can be capital intensive, which necessitates the need for external support.

Once the candidate receives such support, they will promise to lobby for policies and laws that favor the donor. Ideally, this should create a win-win outcome for the two parties. Even, it may become contentious if the agreement can potentially disenfranchise the electorate.

Both parties have the express right to embrace or reject the offer in all the given examples. Each party assesses the extent of value the arrangement presents for them before agreeing to the arrangement.

Here’s an article on bartering as an example of quid pro quo.

Quid Pro Quo in Contracts

Quid pro quo is a legal principle that parties can use to enter into binding contracts. Where contracts are concerned, consideration is often the technical term for the forbearance or promise with which one party in an agreement buys the promise of the other.

As noted earlier, there must be some economic value for the contract to be binding. From a contract law perspective, this may refer to the valuable consideration. Within common law, a quid pro quo contract that lacks a provision for review is null and void.

The underlying principle is "no contract without consideration." Before settling into a quid pro quo contract negotiation, parties should consult seasoned lawyers. This is because layers have a better understanding of this important legal concept.

Common law suggests that contractual liability exists based on the commitment made between parties. In any quid pro quo contract, the central area of concern is often the issue of reciprocity. Finding the balance between the value of "consideration" offered and the "consideration" received can be a daunting task at times.

The best way to approach quid pro quo contracts should be to have an experienced contract lawyer. The attorney can decipher a mutual agreement and advise the parties on the legal dynamics involved.

Quid pro quo agreements may be between two businesses, two individuals, or between government agencies and companies. In either of the cases, it's essential to have a binding contract. This will avoid the nullification of the contract in a court of law.

Here’s an article on quid pro quo in contracts.

How Does Quid Pro Quo Work?

There must be a mutual agreement to commit for the quid pro quo arrangement to work. Both parties come into a deal that's more of a give and take. The legal requirement that the consideration in question should amount to equitable value premises on the need for fairness.

The court may declare a contract null and void if the terms of engagement appear one-sided. Even then, the quid pro quo principle underscores the usefulness of the barter economy between parties. In basic terms, two parties can still get what they need without spending a dollar.

As long as the two parties agree on the modalities of the contract with the advice of their contract lawyers, it becomes easy to pursue mutual benefits.

At times, the concept of quid pro quo is faulted as ethically flawed. However, it depends on the spirit and commitment to fairness when exchanging considerations. Apart from such existing issues, in the actualization of quid pro quo, the contract remains one of the more common options in the common law.

Here’s an article on how quid pro quo works.

Contact a Contract Lawyer Today

As noted, the quid pro quo contract can be declared null and void if it fails to meet the legal parameters set. Suppose you intend to enter into a contractual agreement that may take the form of quid pro quo. It's essential to have a contract lawyer by your side. Our legal team is always up to the task related to the quid pro quo principle. Post a project today for all your contract related needs.