BARTERING is an ancient economic system whereby one party exchanges a good or service for another instead of using money. Today, bartering is not just for the unemployed or those short of cash, it is experiencing resurgence due to the worldwide economic crisis. Our view is that despite this current economic climate, goods and services should not be bartered as there is no contractual arrangement in place, and thereby no legal redress if anything goes wrong.
Bartering requires discipline and honesty between the parties. From the beginning of the process, it should be made quite clear what is being bartered (and what the alternatives are if what was being offered is no longer available). This seems reasonable and workable; however, the parties involved may abuse the process leaving one of the parties feeling aggrieved and exposed. Would you say that legal services can be exchanged for the creation of a website? One party would cut the grass in exchange for cleaning a house? One person trades a religious book in exchange for an educational one? How can you measure the value of the two goods or services? What if the particular medical service agreed is no longer viable? What is the alternative?
A barter system may not work for the following reasons: in a barter system, one of the parties is always getting a better deal. The party proposing the barter system may not value or have confidence in the services of the other party; rating what he or she has to offer far more superior in his or her mind than what he or she is willing to exchange. It is likely, that these individuals suffer from deluded egos and are passing on their own self-interest as the primary goal of the bartering system.
Although there are no laws in Saint Lucia currently to regulate such a system, one consideration is whether or not such an arrangement ought to be declared for tax purposes. It is certainly not illegal to barter goods or services, however without the necessary regulations in place, it is a system without structure or legal framework. Another consideration is: What is the intention of the parties? Is it the intention of one or both of the parties to avoid paying taxes by such an exchange? Bartering is not a good idea for small businesses because they rely on a steady cash flow to survive on a monthly basis. If the business has what the party wants but prefers to barter, then it can be suggested that the party proposing the bartering system simply did not want to dispense with his or her funds because it was not worth it in that party’s mind.
The bartering system exposes both parties to risk of the human relationship being damaged. Most bartering done in professional relationships does not work because one party is always giving more value and time than the other, and the other party may feel vulnerable and/or abused.
Therefore, our recommendation to small business owners and individuals generally, if a barter is proposed that you graciously decline. People value what they pay for and you are worth more than an exchange of your services. Bartering puts you at a disadvantage as it is an immeasurable situation which can be on going if circumstances change beyond either of the parties’ control. The intention of the parties is vital to the arrangement. Both parties need to know why they are entering this arrangement and be clear on what is being offered and exchanged. In most cases, this is NOT what happens and the relationship between the parties suffers as a result.
It is simple: in theory, bartering may seem feasible, one party has something the other party wants and they exchange so that both parties get what they want. In practice, it is better to pay for each other’s services and preserve the personal and/ or professional relationship. When a value is put on each other’s services that is not monetary, it exposes the parties to abuse, lack of confidence, and lack of worth in the other’s services. Money is best! Bartering is a system of the past, let’s keep it there.
As a postscript: Although, we discourage the bartering system, we are supportive of free consultations on occasion; and assisting your friends, family and colleagues pro bono within reason.
Ms. Trudy O. Glasgow is a practising attorney at the law firm Trudy O. Glasgow & Associates, a court-appointed mediator and author in Saint Lucia (and has also taught law at University level in the UK)* Ms. Glasgow is also the Vice President of the Bar Association of Saint Lucia and Chairperson of the National Research Development Foundation (NRDF).
This column is for general use only, for advice specifically for your case, please see your lawyer.
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