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QUID PRO QUO

BY-MEGHANA VUTTARADI

(DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY)


ABSTRACT

Quid pro quo refers in common use to the granting of one important item to another. Quid pro quo has the same definition in law but in different contexts and varying consequences.

Quid pro quo, or the exchange of valuable consideration, is necessary for the establishment of a legal contract between two parties. This reciprocal consideration obligation, or the exchange of something of value, demonstrates the seriousness of the intent of the parties to adhere to the contract between them.

ORIGIN

Quid pro quo, a 14th-century, Latin which means "something for something,"defines when two parties agree to share goods or services in a reciprocal arrangement. This was also used to substitute one drug for the other, by mistake or design, in the case of apothecaries. A transfer is dependent on a reciprocal transfer in a quid pro quo deal. In commercial and legal contexts, quid pro quo conveys that something of equal value has been traded for a good or a service. This was part of the trade lexicon as well as a symbol for the barter system.

Like other Latin terms, Quid pro quo has found its way into legal Language, where it is often used to mean a mutually beneficial arrangement between two parties.


Quid Pro Quo :A General Introduction and Meaning

If you're a fan of police or legal procedural Television shows, you've probably noted how criminals are often given a shortened sentence in exchange for knowledge or confession in these series. That's a quid pro quo — a condition in which someone is doing something else in return. The term quid pro quo is widely used in the legal system, but also in the financial and political spheres.Too much happens everywhere transactions occur.


This maxim forms an essential part especially of consideration in the field of mercantile law.

A consideration, which may take the form of a product , service, capital, or financial instrument, is the key to a quid pro quo business agreement. These considerations are tantamount to a contract where something is given and something of equal value is returned in exchange. Without these considerations a court may find a null or non-binding contract.

However, if the arrangement appears unilateral, courts can find the contract null and void. So Every person, company or other organization should be aware of what is required of both parties to conclude a contract.


One example of a quid pro quo business agreement is a bartering arrangement between two parties. In other contexts, a quid pro quo may involve more of a questionable ethical "favor for a favor" arrangement than a balanced exchange of goods or services of equal value.


This word is specified in Latin, and it occurs when jobs, wages, benefits, title, place or other opportunities are conditioned on submission to unwelcome sexual advances for advancement or training.Quid pro quo abuse happens when an individual uses the application to or dismissal of such actions as the basis for the employment decisions involving the individual.

Quid Pro Quo defined

It is a maxim in Latin. The definition of this, in actual context, is "consideration." The literal sense of the "quid pro quo" maxim is: "something for something".

For each contract consideration will flow from each side towards each other, the part of the contract is signified by the Latin maxim "quid pro quo." The concern must oblige all parties to do something or discontinue doing something according to the other's wish and/or desire. According to common practice quid pro quo means trading one important item for another. Accordingly, the word "quid pro quo" means the compensation component of the contract which passes from one party to the other, of a contract which makes the agreement legitimate and binding.

Examples of Quid pro quo

● In certain cases, the quid pro quo relationships can have negative connotations. For example, in a quid pro quo arrangement between a research arm of an investment bank and a public company, the broker might adjust their rating of the company's shares in return for business underwriting. U.S. financial regulators have reviewed and released guidelines in response to these possible conflicts of interest to ensure companies put the interests of investors above their own in issuing stock ratings.


● A soft dollar deal is yet another example of a quid pro quo arrangement in industry. One company (Firm A) uses research from another firm (Firm B) in a soft dollar deal. In return, Firm B takes out all the trades of Firm A. This service exchange is used as payment rather than a conventional, hard-dollar payment. Research has demonstrated that transactions under soft dollar contracts cost more than just execution-only arrangements.

Today, these soft dollar deals are legal in the US and elsewhere, although they are prohibited in some jurisdictions.


Quid Pro Quo and English Common Law

According to the English Common Law, quid pro quo refers to the assumption that something of value or an act and/or service has been provided and/or performed for something of value , usually when the transaction 's equity is in doubt. The ultimate upholding specifies the rule that a contract must require consideration: that is, the exchange of value for something else of value. The maxim makes it work.


Quid Pro Quo in Britain under the Unfair Contract Terms Act 1977

In the United Kingdom, Quid Pro Quo is unilateral, incomplete character and/or absence of a contract is protected by the Unfair Contract Terms Act 1977 and various amendments and changes thereof. In the absence of a quid pro quo, a provision and/or the whole contract can be left invalid, and it is considered unfair. It falls under the perview of civil law, however, and not common law.


Indian Law Position

Quid Pro Quo is one of the basic elements of a legal contract according to Indian law. 'Quid Pro Quo' means 'Consideration' under the Indian Contract Act. Section 2(d) of the Indian Contract Act, 1872 describes as follows the term 'Consideration' –

"When a promisee or any other person has made or abstained from doing, or does or refrains from doing, or intends to do or refrain from doing anything, such act or abstinence or pledge shall be referred to as a consideration of the undertaking;'


In fact, Section 25 of the same act renders a contract as 'void' without consideration. It says the following-

"An agreement is null and void, unless-

(1) It shall be stated in writing and registered in compliance with the law for the time being for the registration of documents, and shall be rendered by reason of natural love and affection between the parties in a close relationship with each other; or unless otherwise specified;

(2) it is a promise to reimburse, in whole or in part, a person who has already done something willingly for the Promiser or something that the Promiser was legally obliged to do; or it is a promise unless

(3) it is a contract, made in writing and signed by the person to be charged with it, or by his agent, generally or expressly allowed in that case, to pay in full or in part a debt for which the creditor may have extracted payment except in respect of the law through restricting suits.'

Special Considerations: Quid Pro Quo in Politics

Within the political sphere too, there can be quid pro quo agreements. A politician may be obligated, in exchange for contributions, to offer a potential consideration on policy making or decision taking.


Nevertheless, such a quid pro quo does not mean a payoff but simply the expectation that the representative should take into account the interests of the donor when making policies or voting on legislation. A lot of confusion surrounds quid pro quo in politics — so much so that a number of cases have come before the Supreme Court in the past 40 years to describe what constitutes an unethical contract.


Related Case Laws

Corporation of Calcutta and another v.Liberty cinema

In this case the respondent was charged by the Calcutta Corporation for a very high licence fee assessed according to the sanctioned seating capacity of the Cinema house. The High Court quashed the imposition. In appeal to the Supreme Court the stand of the appellant Corporation was that the levy was a tax and section 548(2) of the Calcutta Municipal Act did not suffer from the vice of excessive delegation: while the respondent cinema contended that the levy was a fee and had to be justified as being imposed in return for services to be rendered. Alternatively the respondent submitted that if it was a tax it was invalid as it amounted to an illegal delegation of legislative functions. The majority view was expressed by Sarkar J., as he then was, and the impost was upheld as a tax. In the minority opinion delivered by Ayyangar J., it was held that even in the case of a licence fee a correlation between the fee charged and the service rendered was necessary to be established. It was, therefore, held to be a tax but invalidly imposed under a power suffering from the vice of unconstitutional legislative delegation. In the cases before us the licence fees charged from the various traders in the market areas are not excessive and have not been attacked on any ground whatsoever. We are. therefore, not concerned to find out whether an element of quid pro quo is necessary in cases of all kinds of licence fees.


Nagar Mahapalika Varanasi v.Durga Das Bhattacharya&ors

In this case it was held that the annual licence fee charged from the rickshaw owners and the drivers by the Varanasi Municipal Board could be justified only on the basis of the element of quid pro quo. The fee was held to be ultra vires and illegal because after excluding certain items of expenditure the balance did not constitute sufficient quid pro quo for the amount of the licence fee charged. It could not be sustained as a tax. Certain major items of expenditure incurred by the Municipal Board were attributable to the discharge of its statutory duty and, therefore, at page 386 it was said by Ramaswami J.,-it is manifest that the licence fee cannot be imposed for reimbursing the cost of ordinary municipal serves which the Municipal Board was bound under the statute to provide to the general public." The expenditure incurred by the Municipal Board for the benefit of the licensees constituted 44% of the total income of the Municipal Board and hence it was held that there was no sufficient quid pro quo established in the circumstances of the case.


Delhi Cloth & General Mills Co.Ltd v.Chief Commissioner of Delhi & ors.

In this case the High Court had found that 60% of the amount of licence fees charged from the mills was actually spent on services rendered to the factory owners. On that basis sufficient quid pro quo was found to exist and the impost was upheld by this Court also. We may, however, add that the rule of 60% cannot be of universal application. It is not a static rule. The cases of licence fees are, generally speaking, on some different footing. There is a substantial element of regulatory measure involved in them. Over and above that a good portion of the fee, may be in the neighbourhood of 60% or more, must be correlated to the service rendered to the person from whom the fee is charged. But there may be cases where, as in the instant one, the licence fee charged by way of regulatory measure is not exorbitant or excessive. But the other kind of fee charged has got to be justified on the ground of existence of sufficient quid pro quo between the payer of the fee and the authority charging it. In such a case from a practical point of view it may be difficult to find out with arithmetical exactitude as to what amount of fee has gone in incurring the expenditure for the services. But, broadly speaking, a good and substantial portion of it must be shown as being spent for the services rendered.


Kewal Krishna Puri v.state of Punjab

In this case,it was held that the impost of fee and the liability to pay it is on a particular individual or a class of individuals. They are under the obligation to submit accounts, returns or the like to the authorities concerned in cases where quantification of the amount of fee depends upon the same. They have to undergo the botheration and harassment, sometimes justifiably and sometimes unjustifiably, in the process of discharging their liability to pay the fee. The authorities levying the fee deal with them and realise the fee from them. By operation of the economic laws in certain kinds of imposition of fee, the burden may be passed on to different other persons one after the other. In that case, the market committees and the market boards assume to themselves the liberty of utilising and spending the realisations from market fees to a considerable extent as if it was a tax although in reality it was not so. It was further held that rendering some service, however remote the service may be, cannot, strictly speaking, satisfy the element of quid pro quo, required to be established in cases of the impost of fee. Registration fee, however, had to be taken to stand on a different footing altogether. In the case of such a fee, the test of quid pro quo is not to be satisfied with such a close or proximate relationship as in the case of many other fees. By and large, the registration fee is charged as a regulatory measure.

CONCLUSION

Quid pro quo means something offered or earned for something else. There is nothing inherently wrong about giving or obtaining something in return for something else.Quid pro quo, Latin for something, defines an arrangement between two or more parties in which the goods or services are exchange and Quid pro quo deals are permissible in politics so long as they do not suggest bribery or any other misappropriation.

REFERENCES:

www.invvestopedia.com

www.indiankanoon.com

www.cjr.org

www.legaldictionary.com

www.npr.org


[DISCLAIMER: This article is for general information only. We have tried to include as much information as possible but there are chances that some important information may have been missed .It is NOT to be substituted for legal advice or taken as legal advice. The publishers of the this article shall not be liable for any act or omission based on this note].

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