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Main Dictionary Q

Quid Pro Quo

Quid pro quo is a Latin phrase which appeared in medieval England, it literally can be translated as "something for something". The term states a situation in which two sides come to an agreement in which they have to reciprocate commodities or services. Thus, in such relationships one exchange depends on some exchange from the other side. 

In a business field the above concept refers to exchanging of similar commodities or services, it should have the same value, quality etc. It also is utilized in politics to define not quite ethical relationships in which politicians establish an agreement through doing favors for each other. Although it isn’t entirely approved practice, unless it doesn’t involve bribery it can be accepted.

Rules of Quid Pro Quo

In business the central concept of the term is consideration. It may have distinct embodiments as a service, commodity or even financial instrument. Every quid pro quo agreement must be based on equal consideration, otherwise a court has all rights to assess a contract as nonbinding or invalid. 

Moreover, once a contract is exceedingly unfair or more beneficial for one of the parties, a court can make it void or null. Thus every part of a quid pro quo kind relationship should be aware of every condition stated in a contract.

One of the brightest examples of the term is a bartering arrangement, where parties of a contract exchange something with similar or even equal value. Definitely there aren’t always situations that involve equal exchange of commodities, there are also controversial situations which are rather about "favor for a favor". 

More examples of Quid Pro Quo

In some fields or situations quid pro quo may refer to something with a negative meaning. It is common practice for investment banks to have quid pro quo agreements between its research department and a firm. In return for underwriting business the department may alter the firm's shares. Such arrangements may deteriorate terms of an organization and its customer and cause strong interest’s conflict between them, thus to prevent it the U.S. the agencies that regulate the financial sector established several rules. These rules guarantee that companies instead of their own interests put customers' interests first.  

More specific example of controversial quid pro quo arrangement in a business field is soft dollar agreement. In such agreements the first company utilizes the second company’s investigations. In return the second company carries out all the first company’s transactions. This kind of exchange is another way of payment, sometimes for companies this way is more convenient rather than paying with hard dollar. 

Although soft dollar arrangements as described above are totally legal in America, some experts estimate these agreements as unethical and discourage using them. 

Quid Pro Quo and Politics

It isn’t rare for quid pro quo agreements to be in a political field. For example, getting donations right now a politician in the future in some way assures people to consider particular policymaking or political decisions. 

For sure It doesn’t always have to implicate bribes etc. When elaborating and creating a new policy the politician can take into account the donor’s ideas or wishes. However, around forty years passed and more cases appeared before clear understanding of what constitutes illegal quid pro quo relationships came. It was defined by the U.S. Supreme Court.

For example, in America even the quantity of donations that voters are allowed to make is limited by the Federal Election Campaign Act (FECA).

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