Situations arise when individuals are given the power to decide on cases that may involve their personal interests. Such instances refer to a conflict of interest. It is important for individuals who are in a position of authority and judgment to avoid any conflict of interest in an effort to avoid a question of character.
Clauses in contracts or formalized agreements define areas that may be considered a conflict of interest for an individual. For example, a government agent may have a conflict of interest if he or she approves a statute that would directly benefit his or her business. When this occurs, people will begin to question the character or morality of that individual. In this case, it is possible for the individual to lose his or her position if a conflict of interest is proven.
A conflict of interest may be revealed only after a decision or judgment has been reached wherein a person in a position of authority directly benefits from a contract or agreement he or she may have been part of. In this case, it is possible that the agreement or contract may be subject to much controversy and public scrutiny that it could eventually become terminated.
Enforcing agreements that preclude a conflict of interest is difficult because it is in the discretion of a judge, which can be management or an actual court judge, to determine if a conflict of interest did occur. Revealing a conflict of interest is more of an ethical obligation than it is a legal one, making it more difficult to enforce.