What Does Quid Pro Quo Mean?
Quid Pro Quo is a Latin term meaning “something for something”that implies a reciprocal relationship between two parties.
It is used to differentiate between items that are given solely as gifts, with nothing expected in return and those items that are given in an exchange i.e., in “consideration”for something else.
Quid Pro Quo Origin
The term was first used in the 16th century by apothecaries who substituted one potion or medicine, if they did not have it in stock, for another.
Bartering is an example of a business quid pro quo because both parties exchange goods or services that they mutually agree have equal value.
Use of Quid Pro Quo
Quid pro quo is most frequently used as a legal term.
- In contract law, it is used to state whether consideration exists in a contract. The consideration refers to whether each party to an agreement is giving up something of value in exchange for a good or service of value from another party.
- In employment law, quid pro quo is used to refer to a type of sexual harassment claim where a boss or supervisor offers professional advancement opportunities, such as a promotion or pay raise, to their juniors in exchange for a sexual favor.
- In government law, the term describes a situation in which a politician may promise favorable legislation to a business, even though their constituents voted against it, in exchange for donations to the election campaign. Often, politicians also ask for personal monetary benefits. To be clear, almost every political decision could be described as a quid pro quo situation in that the politician often acts on behalf of his constituents in exchange for their future vote.
- In securities law, quid pro quo is used to evaluate cases of insider trading. Individuals or parties benefit, often monetarily, from exploiting information that is passed onto them in such cases. It is important to establish a quid pro quo between both parties involved in the insider trading transaction in order to establish their guilt.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.