Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Quid Pro Quo

What it is:

Quid pro quo is a Latin phrase that literally means "something for something." The phrase usually indicates an exchange of goods or services of roughly equivalent value.

How it works (Example):

From a legal perspective, quid pro quo indicates that a good or service has been traded for something of equal value. In particular, quid pro quo is used explicitly to indicate that there has been "consideration" in a contract, meaning that there are goods or services being delivered and that acceptable payment is made for these goods or services. Without consideration, or quid pro quo, for example, a contract may be determined to be nonbinding and invalid.

In the political world, for example, quid pro quo sometimes refers to giving support, financial or otherwise, to a political candidate in exchange for the expectation of direct support for an activity of the political benefactor. Quid pro quo may appear as bribery in these cases and such support must always be tested for conflicts of interest.

Why it Matters:

Quid pro quo is one of the most common Latin legal terms used. In any transaction, legal, political or otherwise, it is helpful to know the quid pro quo, that is, the balance of the value of the service or good and the financial compensation being offered.     

Related Terms View All
  • Auction Market
    Though most of the trading is done via computer, auction markets can also be operated via...
  • Best Execution
    Let's assume you place an order to buy 100 shares of Company XYZ stock. The current quote...
  • Book-Entry Savings Bond
    Savings bonds are bonds issued by the U.S. government at face values ranging from $50 to...
  • Break-Even Point
    The basic idea behind break-even point is to calculate the point at which revenues begin...
  • Calendar Year
    If Company XYZ starts its fiscal year on January 1 and ends its fiscal year on December...