LOGOS GEOPOLITICAL INSTITUTE
contact@geopolitical-institute.com.br
Brazil, São Paulo/SP – February 28, 2024
ABSTRACT
The relationship between consumers and companies is not always peaceful. For the consumer, as a consumer, the contract is presented with a large number of duties to be fulfilled and, subsequently, provides possible penalties if it is not faithfully fulfilled and very few rights are guaranteed. To the consumer is not allowed to consider the contract, this is up to the company alone. There is no way for the consumer to have a voice. Furthermore, it is not possible to allow each consumer to show their considerations, which would make contractual action unfeasible in many cases. In this study we will approach a possibility of remedying, or at least reducing this, through the application of Two-Way Contracts. An ethical action that tends to balance social relationships and to give voice, in an impersonal way, to the client.
Keywords: Contract; Social Ethics; Equality; Rights and duties; Balance in Relationships
1: INTRODUCTION
1.1: Motivation
Corruption is a focus within the political and administrative circles. Most of the time the focus is on large circles, which is not wrong. However, there is corruption within smaller circles that is seen, felt and experienced in our daily lives, as perceived by ordinary citizens.
In our society, the contracts are used for lawful purposes, and legal means, which seeks to formalize the relationship of interest between the parties that constitute it. However, contracts are drafted from a one source, from whoever provides a product or service, without the participation of the other party which has no possibility of change and, even if there is a question, this is not considered, the which means that the contract remains intact.
Therefore; in bigger view, the use of contracts to guarantee rights to youreself and distribute duties to others parties is a form of protectionism, which when is practiced it can be considered a type of corruption. This is because the selfishness and personal interest of one of the parties, in this case, the supplier, overlap equality of rights and duties. This way, the use of contracts to benefit oneself while distributing duties to others parties can be considered a form of corruption because it is a corruption of human behavior.
In this study we will approach a possibility of remedying, or at least reducing this, through the application of Two-Way Contracts. An ethical action with a social background that tends to balance social relations.
1.2: Perspective of a solution
All deal is considered really positive when the two parties, each with their own particular interests, have mutual benefits, each part in their own way, without prejudice the others parties. However, this is not the reality in fact. In today’s world, when the common citizen concludes an agreement, through a contract, it is presented by the company in a closed way, no chance of change or opinion from the consumer.
The contract comes closed for citizen, no possibility of change by the customer. In reality, it isn’t a contract, but an imposition of rules containing duties to filfilled, with a minimum of rights, just enough for the citizen, as a client, to accept the contract, which, in most cases, is unfair. He is no more than a simple passive agent, never an active agent in this relationship, even partially.
Thus, the contract, by has been written by the company, wants, for reasons of logic and even self-preservation, to benefit itself and not the consumer. The contract, seen from the point of view of consumer, makes him a simple payer and follower of the rules. In other words, a contract between a company and a consumer or ordinary citizen is a disproportionate agreement that benefits one of the sides, that is, the company and “punishing” the customer, so to speak, when he doesn’t comply with the contractual clauses, however, the company, in turn, isn’t responsible for “punishment” when it, for some reason, it fails to comply with the contract clauses.
The State, in turn, doesn’t allow itself to interfere in this relationship. It allows that contracts can to be done freely by companies, presenting only a few rules, these in the form of the Law. However, these don’t bans the disproportionality in contracts. The reason for this is because the rules are applied towards citizens and have little action on companies. Way since as the redation of contracts comes from companies and there is no Law of State that supports or allows the modification of clauses by citizens. And even if this were allowed, the companies, in turn, would not accept this contract. Furthermore, if each client write their vision and add it to the contracts, their viability would be compromised given the immense number of possible visions. Real chaos would be generated in these cases.
Therefore, to guarantee and ensure the customer and overcome this difficulty, there should be a mechanism that supports the citizens without them having to create their own redation. Even because if each citizen were to write their contract, from their perspective, as mentioned, the chaos and the disorder would reign in the world of contracts. Thus, the mechanism should be an impersonal action, in this case a Law, from States, which should allows contracts to be regulated in a balanced way for both sides, but, most importantly, in an impersonal way.
The unilateral action by companies corresponds, in one way or another, to a corrupt action. It is corruption because it creates a contract where only one party has a voice and rights and the other party has the duties. This situation can be reduced with the application of a mechanism that regulate more efficiently the contracts in society, elaborated and agreed between companies and citizens.
Our study consists presenting a way to reduce this inequality in terms of contracts, through the preparation of Two-Way Contracts. In this way, in addition to reducing corruption and the unbalance of relationships in deal and contracts, it is possible to equally preserve the rights and duties of companies and consumers, in balanced, just and equitable way.
2: TWO-WAY CONTRACTS
2.1: Overview
It is called Two-Way Contract the contract whose clauses of an agreement are made in such a way that any penalty indicated in the contractual terms by the company toward consumer, when the consumer fails to comply with one of the contractual clauses, is applied equally to itself. It is a contract whose clauses and conditions are applied to both sides of the relationship, with the same values and the same responsibilities, but mirrored.
For this purpose the responsability each of the parties and the amounts involved shall be clear and in continuity the penalties, by rates or by the imposition of percentage interest, are applied, in the same way, for both sides, when there is transgression of either side involved in the relationship.
2.2: Balance in relationships
In the case of a companny the product or service dlivered by it is from responsability it and in the case of consumer it corresponds, in general, the payment. For each percentage value apllied as fine toward consumer for non-payment on the scheduled date, corresponds to company the same fine or interest imposition, in accordance with their responsibility and, in general, but not always, on the value it has to the customer as a product or final service.
In resume, if the customer doesn’t pay the contactual value that corresponds him, within the stipulated period, the customer shall be subject to a penality in the form of interest imposed by the company, accordinf of redation of contract. Similarly, in a Two-Way Contract, if the company doesn’t deliver the product or service in due time or these have physical or operational flaws, it must bear the same penality that is indicated to the customer, having to pay the same interest to the customer from the contract value.
This is, in a generic terms, the idea of a Two-Way Contract which aims to provide greater balance between companies’ relationships with customers.It must be clear that, in today’s contracts, the companies have the control of rights and the duties are imposed to customers. With the application of a Two-Way Contract this relationship tends to be more balance whereby the rights and duties are imposed in equal measure for companies and customers.
3: PRACTICAL APPLICATION OF TWO-WAY CONTRACTS
One way to understand the practical application of Two-Way Contracts is through the following example:
A construction company has a contract that indicates the values and payment conditions concerning the building and delivery of a house. In this contract, the customer is responsible for payment within the period stipulated, according to the payment conditions presented in the text of the contract. In turn, the construction company’s responsibility is delivery of the house within the agreed period. Thus; assuming a fine of 10% applies to the consumer when this is a delay in the regular monthly payment; the construction company should keep in mind that it will pay 10% of the fine in favor of the customer if the construction company delays the delivery property. The fine of 10% to the customer is applicable on the monthly payment, to the construction company the calculation basis is the final value of the house stipulated in the contract. Therefore, in this way, the penalty applicable by the company to the consumer will certainly be reconsidered, since the same percentage will fall on it in the event of a delay in delivery of the property.
This way the contract would be fairer and, as will be seen later, its construction becomes leaner. In the case of Two-Way Contracts, it would only be necessary to (i) specify the responsibilities of each party to the relationship; (ii) indicate the percentage value to be applied; (iii) it is also necessary to have clear payment conditions, which include the final contractual value and the deadlines involving the entire transaction, restricting the delivery time to values within the acceptable range, depending on the type of work to be delivered, having considering that the case of the given example is being considered.
This would reduce the size of the contract since the conditions mentioned already inherently bring simultaneous application to both sides of the relationship. That’s why it’s a Two-Way Contract. Any percentages applied are valid for both sides of the relationship, without exceptions.
Another example is now aimed at financiers. An ordinary citizen requests financing to purchase a vehicle. The finance company imposes its rules and applies a percentage in case of delay, assuming it is 15%. In the case of the consumer, he is guaranteed the right to advance payment with a reduction in the amount by the same percentage allocated to the fine by the consumer, in this case, 15%. Thus, relationships become balanced. The possibility of abuse by the company is reduced since it will be affected by the same rigor that it applies to the consumer. The possibility of the financed vehicle having a hidden problem or defect may also be foreseen. In this particular case, the percentage levied would be on the value of the vehicle, since the finance company is responsible for the object that finances, in this case, the vehicle.
The general idea of Two-Way Contracts is to have the same severity for both sides of the relationship and the same benefits. This guarantees greater balance and comfort for the consumer and guarantees greater balance between relationships.
4: OTHER EXAMPLES
The idea of drafting Two-Way Contracts is a logical way of maintaining the equity of social relations. To avoid or reduce a probable imbalance in the relationship between the State and Society or between Companies and the Population, the Two-Way Contract is a very viable alternative.
BANKS: Regarding bank interest, the Two-Way Contract can be applied as follows. The bank interest applied as a penalty to the citizen when the bank grants a loan to the citizen must be the same as that paid by the bank when it uses the money lent by the common citizen for investments. Today the interest imposed by banks on citizens is greater than the interest paid by banks to citizens when they receive money on loan. Furthermore, the charging of interest by banks occurs in the form of a Geometric Progression (PG) and if the bank has to return some amount to the citizen if a problem has occurred in this regard, the return is used as a basis for calculating interest compensation in the form of Arithmetic Progression (AP). Soon; there is disproportionality in the relationship between the customer and the bank. Like this; The Two-Way Contract is a way of maintaining the equity of the relationship. This will certainly be a reason for protests from banks and other financial institutions. However, an interesting case to mention is banks from some Arab League countries that, when they make loans to the population, do so without charging interest. They have their methods for this to happen; We can and should create our own methods to carry out this action. Therefore, with the application of Two-Way Contracts, the population as a whole would benefit in terms of relations with banks and financial institutions.
AIR TRANSPORT COMPANIES: Another example that can equalize relations concerns air transport companies. Various fees apply to the user. For example, the excess baggage fee charged must be the same for items damaged during transportation, as long as there is proof, which can happen with a photographic record of the baggage when it is on the check-in conveyor belt and checking it when arriving at your destination. Another example is fees for rescheduling tickets. The same percentage must be applied if the take-off is delayed, regardless of the reason, since the airline is not interested in knowing the reason why the user was delayed, even if this justification has a real practical basis. This results in a balance in favor of society as a whole. This action, using the Two-Way Contract, equalizes relations in society between companies and customers, without the loss falling only on one side of the relationship.
COURSES IN GENERAL: This example includes schools, universities, general improvement courses, technical courses, and general courses, such as academies with martial arts courses and dance courses. Also painting courses, music courses – singing and instrumental – and any activity that includes the teaching/learning relationship that involves costs and requires the presence of a contract. For this category, the customer’s counterpart can have two possible paths. How is the teaching/learning relationship; (i) – the client, as a student, may be interested in continuing their studies or (ii) – request compensation in another way, other than continuing classes. Therefore, if the school fails to comply, the client may request an extension of the course in the same time frame in which the interest is charged. In other words, if the interest applied for penalty purposes is 20%; In case of non-compliance with the contract by the school, the client has the right to extend the term of their classes by 20% of the term stipulated in the contract, free of charge (item i). If this is not possible or viable for the student or school, the client may request the value of the penalty plus the nominal portion converted into funds for the acquisition of the object of their study, which could be books, a dance outfit, a multimeter, an instrument or any another object as long as it is directly related to the study carried out at that institution (item ii).
LIFE AND SIMILAR INSURANCE: Any percentage charged to the customer as a penalty for late payments, this same percentage must be applied to the total value of the policy if the customer’s receipt of the policy is delayed due to the company’s responsibility. Furthermore, deadlines must be consistent for both parties. This must comply with local legislation.
MEDICAL AND HOSPITAL AGREEMENTS: In the case of medical or hospital plans, the percentage of penalty to the customer is converted into a temporary gain in the contract, which is applied to the total amount payable by the customer, according to the contract, as long as the company fails to comply with any clause.
These are some examples, which do not end with this simple list. Each case must be studied individually, to find its generalization. The next step is to understand some concepts and the methodology to be applied for the use of Two-Way Contracts.
5: METHODOLOGY FOR APPLICATION OF TWO-WAY CONTRACTS
5.1: Concept of BENEFICIUM
The application of Two-Way Contracts must be automatic and having a nomenclature that allows their presence to be identified in the drafting of the contract is desirable. Once the percentages of interest and penalties have been determined, they must apply to both sides. To achieve this, the conditions that benefit the citizen must be clear. This condition or element can be called BENEFICIUM, which is the term benefit in Latin.
Thus, for the example of the construction company, the BENEFCIUM refers to the delivery time. If this isn’t met by the construction company, the BENEFICIUM to the customer is automatic.
5.2: Concept of OBJECTUM
In the case of the construction company or company, the penalty with the application of fees and interest occurs for late payment, in this case, the late payment can be called OBJECTUM word derived from Latin that means object.
Therefore, for the example given of a construction company’s contract with a client; We have the OBJECTUM and the BENEFICIUM. The first refers to the company and the objective of the contract for it under conditions that favor, in this case, the payment itself within a certain period. The second refers to the guarantee given to the citizen, obtaining the same penalty conditions applied to them that are also applied to the company.
5.3: The three elements of the Two-Way Contract
The Two-Way Contract can be written, in this context, as follows: A clause stating the value of the penalty. A second clause describing the OBJECTUM, with this as the title or highlighted text. A third clause, along the same lines as the second, just replaces the term OBJECTUM with BENEFICIUM making the appropriate indication of this.
This time, there is no need to repeat the value of the penalties since this is done only once in paragraph number one, which is the paragraph referring to the penalty. In other words, the Two-Way Contract is characterized by the existence of these three sequential paragraphs: PENALTY, OBJECTUM, and BENEFICIUM.
In the paragraph on PENALTY, only the penalty value is indicated, for example, 12%. To maintain the same logic, instead of using the term penalty, the Latin term can be used POENA.
In the paragraph referring to OBJECTUM only the object and deadlines are recorded.
In the paragraph referring to BENEFICIUM only the benefit and, if applicable, deadlines are recorded.
It must be clear that the parameters OBJECTUM and BENEFICIUM must consider the type of business; the country and its culture and other relevant parameters, as they, to be clearly defined, must be properly analyzed on a case-by-case basis and once the parameters for each type of business have been decided, simply keep it for the respective country or location.
There is no way to report all possible cases because there are many variants, starting with the types of possible businesses. Furthermore, it is important to consider that each country has a unique vision and this must be considered in the analysis for the application of Two-Way Contracts.
Regardless, the idea of the Two-Way Contract can be applied to any case and in all countries in the world, to maintain a balance between companies’ relations with citizens. The idea of the Two-Way Contract is simple and can be properly used in any situation, as long as there is prior analysis.
5.4: Objectum and Beneficium for some specific cases
Construction Company
Objectum: Payment deadline for installments.
Beneficium: Reimbursement to the customer based on the total contractual value plus the penalty.
Financiers
Objectum: Case 1 – Payment deadline for installments; Case 2 – Payment deadline for installments.
Beneficium: Case 1 – Reduction if advance payment is applied, with the application of the percentage penalty value; Case 2 – Percentage levied on the value of the vehicle (for example) if it has a hidden defect.
Banks
Objectum: Method of applying interest to the customer, whether PA or PG.
Beneficium: Method of payment of investment to the customer or refund (reversal), if PA or PG, in the same way as applied by the bank.
Air transport companies
Objectum: Case 1 – Charge for excess baggage; Case 2 – Ticket value.
Beneficium: Case 1 – Amount charged for excess baggage as reimbursement for each damaged item; Case 2 – Delay in take-off, with reimbursement of the ticket price, with a penalty applied, if there is a penalty on the part of the company.
Courses in general
Objectum: Case 1 – Payment term; Case 2 – Payment term.
Beneficium: Case 1 – Temporary increase in the course in the same percentage as the penalty, at no cost to the customer; Case 2 – Receipt of the object, in the same value as the portion plus penalty, which must comply with the scope of the course.
Life insurance and similar
Objectum: Payment deadline for installments.
Beneficium: Reimbursement to the customer in the same percentage as the penalty incurred on the total value of the policy.
Medical and hospital insurance
Objectum: Payment deadline for installments.
Beneficium: Temporal gain in the same percentage proportion as the penalty, at no cost to the customer.
Carriers and Suppliers
Objectum: Amount charged under the contract or penalty for delay, as applicable. If there is a deadline in the contract, this is the objectum.
Beneficium: Delay in receiving the merchandise, with reimbursement of the amount in the same percentage as the penalty on the contractual value or the amount charged as reimbursement, according to the contract.
Streaming, telephony, internet services and similar services
Objectum: Payment term.
Beneficium: The percentage value of the penalty is converted into contract time at no cost to the customer, as long as there are problems with the services offered by the company.
Water, Electricity, Piped Gas and Telephone/Internet supply services and similar
Objectum: Payment term.
Beneficium: Reimbursement based on the value of the bill from the last period plus the penalty percentage for the period of service interruption, considering the time of this interruption in proportion to the amount charged; in other words, there must be a proportion between the interruption period and the period of the last registered account. This refund amount must appear in the next period’s bill in the form of a discount.
General rentals
Objectum: Payment term.
Beneficium: In the case of any problem with the rented asset, it must be repaired within the current period following local rules, with a period counting from notification by the person renting the asset concerning the owner of the asset. Example 1: Renting a house with a wall measuring 5 x 2.4 m2 with peeling paint. If it is not resolved within the deadline (suppose, one day), the user will be entitled to receive the rental amount, proportionally plus the imposition of interest, which will be charged on the monthly rental amount. So, if there is no repair in one day, the beneficium must be applied. Example 2: Rental of electronic equipment that has a problem with a certain part. The repair time in this case, suppose, is three days. After this period, the user must receive, as a refund, the rental amount proportional to the time in which he cannot use the asset plus the interest imposed by the owner on the monthly rental amount.
From the data presented, each State can build its relationship tables containing the Beneficium and the Objectum for each case; You can generalize or particularize, depending on your vision. Each case is different and must be evaluated individually.
6: ADVANTAGES OF TWO-WAY CONTRACTS
The following advantages can be listed:
ADVANTAGE 1 – EQUAL RIGHTS: The first advantage is to guarantee equal rights to ordinary citizens, to consumers. This allows the company, when it fails to fulfill its responsibility, to be penalized in the same way that ordinary citizens are penalized when they fail to fulfill their responsibilities. It’s a balancing act. This acts against the economic corruption of companies and balances the market relationship.
ADVANTAGE 2 – PREVENTION OF GETTING RICH AT THE EXPENSE OF OTHERS: Another advantage, a consequence of the previous one, is to limit the possibility of easy gain, from a contract that supports, through a contractual penalty, extracting profits from the client without the company, in turn, having the same penalty when it leaves to fulfill its responsibility. Some contracts are now almost a death sentence.
ADVANTAGE 3 – IMPROVEMENT IN PRODUCTS/SERVICES OFFERED: Another notable advantage is the improvement in the services offered by companies, this is because companies, in an attempt to avoid fines to be paid to consumers, will seek to meet deadlines and respond to requests in the best possible way so as not to incur expenses that could be avoided.
ADVANTAGE 4 – IMPROVES FAIR COMPETITION: To achieve this, there must be action from governments with the creation of mandatory Two-Way Contracts. This does not affect Economic Liberalism, on the contrary, it benefits the company that has the best strategic resources, favoring fair competition. And this is a benefit for the whole society.
ADVANTAGE 5 – REDUCTION IN LEGAL COSTS: With the use of the Two-Way Contract, the most relevant rights on the part of the customer are already included. Therefore, legal demands tend to be smaller, and, consequently, legal expenses also reduce.
ADVANTAGE 6 – GREATER TRANSPARENCY IN RELATIONSHIPS: The use of a Two-Way Contract provides greater transparency when compared to a common contract. This is because the company, in its quest to reduce the possibility of unforeseen expenses, will take greater care in drafting the contract. This in practice represents greater contractual transparency because the care that the company will take in the contract is the result of self-preservation and has the consequence, when seen and perceived by the client, greater transparency in relationships. At first glance, this is not real transparency on the part of the company, but this is how it is felt, in practice, by the customer.
ADVANTAGE 7 – CUSTOMER PORTFOLIO LOYALTY: Two-Way Contracts are contracts that seek greater equity, giving greater security to the consumer. This results in greater trust in the company, resulting in greater customer loyalty. Safer customer contracts represent greater trust placed by the customer in the company. Viewed from the perspective of strategy and marketing Companies that know how to get ahead and correctly manage these aspects have advantages over others.
ADVANTAGE 8 – SOCIAL ETHICS: A very obvious advantage is that this type of contract is Ethical in all its senses; therefore, it is valid for everyone and benefits everyone, without creating or allowing privileges.
These are some of the advantages. The most impactful and obvious ones are brought out. However, these are not limited to these, since advantage 5 is, in itself, a means of propagating many other possible advantages.
Finally, a two-way contract is something so coherent, logical, and fair that it is difficult to believe that this has not become a reality in countries in the 21st century.
7: CONCLUSION
Needs create opportunities. A Two-Way Contract is a viable answer to balance relations between companies and consumers. Giving consumers a voice, in an impersonal way, is the appropriate solution that allows a series of impasses to be resolved.
There is no need to change a contract, just add the parameters that transform it into a Two-Way Contract. In this way, selfishness, unbridled greed and the search to get rich through others will have their limits imposed by their greed and selfishness, in the search to not have a financial loss. A true counterweight that balances relationships. In this case, the contracts will be well thought out, or, ultimately, the companies will offer an excellent service or product.
One possibility for continuing this study is to categorize the relationship Objectum/Beneficium to facilitate the application of Two-Way Contracts. This is because in some cases the Benefiticium is something physical; in other cases it is immaterial and in others it is temporal. Therefore, categorization can facilitate its understanding and application, making its application more viable.
To conclude, a sentence by Marcus Tullius Cicero (106–43 BC): “What is morally wrong can never be advantageous, even when it enables you to make some gain that you believe to be to your advantage. The mere act of believing that some wrongful course of action constitutes an advantage is pernicious.“
Author of this Article: LOGOS GEOPOLITICAL INSTITUTE
