Paid on Both Sides: Quid Pro Quo Exchange and the Doctrine of Consideration

Abstract

I scratch your back, you scratch mine—how must these services relate in order to constitute a quid pro quo exchange? In the ordinary quid pro quo exchange, each party agrees to do their part in order to get the other party to do theirs; each conditions their own willingness to perform on the willingness of the other; and each regards the other as obligated to do their part in light of their agreement. But not all exchanges are ordinary, and a proper analysis is of considerable practical and theoretical significance. In the law alone, quid pro quo figures prominently in a wide range of contexts—civil as well as criminal, public as well as private—and lies at the core of a number of raging controversies concerning official corruption, insider trading, and other matters. This Article offers the first philosophical analysis of quid pro quo exchange in the Anglophone tradition. This analysis is framed by an investigation of the doctrine of consideration in contract, the site of the law’s most influential treatment of quid pro quo. The textbook definition of consideration relies on a conception of exchange - first elaborated by Oliver Wendell Holmes Jr. – that is couched in the motivational terms of reciprocal inducement. On this motivational conception, a quid pro quo is defined in terms of the instrumental motives that typically animate it, where each service is rendered as a means of bringing about the other. This Article argues against the motivational account of exchange and offers an original account in its place. This account takes as a starting point the traditional common law definition of exchange as reciprocal payment. On the account of exchange that emerges, two performances constitute a quid pro quo when the parties regard those performances as satisfying two conditions: first, that each performance satisfies the debt incurred by the other, and second, that after the sequence of performances neither party shall owe the other anything on account of the other’s performance. Together, these conditions imply that, in the wake of the performances, the parties will be “all paid up” as far as the performances are concerned. Finally, this Article offers an alternative consideration rule that incorporates its definition of reciprocal payment. This alternative rule locates the required element of bargain or exchange within the apparent terms of the agreement, and not in the motives—actual or apparent—that led the parties to assent to those terms. The reciprocal payment conception of consideration is superior to the textbook definition at the levels of both justification and fit, and sidesteps the problems that have made the doctrine an object of pillory in so many quarters.