Gentleman`s Agreement Definition
Although agreements between individuals often create legally binding obligations, reciprocal commitments may not be legally binding. Sometimes referred to as “gentlemen`s agreements,” the parties may respect them because moral obligations require compliance or because future relationships will be more difficult if the current agreement is broken. International organizations may also need such informal agreements to maintain member satisfaction. Gentlemen`s agreements between industry and the U.S. government were common in the 1800s and early 1900s. The Bureau of Corporations, a predecessor of the Federal Trade Commission, was established in 1903 to investigate monopolistic practices. Gentlemen`s agreements were a widespread discriminatory tactic, which would have been more common than restrictive alliances to maintain the homogeneity of upper-class neighborhoods and suburbs in the United States.  The nature of these agreements made it extremely difficult to prove or follow them, and they were long after the U.S. Supreme Court decisions in Shelley/. Kraemer and Barrows v. Jackson.
 A source indicates that the gentlemen`s agreements are “probably still in place” but that their use has declined sharply.  Gentlemen`s agreements, because they are informal and often not written, do not enjoy the same legal and regulatory protection as a formal contract and are therefore more difficult to implement. In 1890, the U.S. government imposed a ban on gentlemen`s agreements in trade and trade relations between nations. Similarly, in 1907 Morgan again collaborated with Roosevelt to create a gentlemen`s agreement that would allow Us Steel to acquire its greatest competitor, Tennessee Coal and Iron, in a tacit and unspoken rule that violated the Sherman Act. Until Jackie Robinson was hired by the Brooklyn Dodgers in 1946, a gentlemen`s agreement ensured that African-American players were excluded from organized baseball.  In many cases, the end result may be a higher cost or lower quality products for consumers. Worse, a gentlemen`s agreement can be used as a means of promoting discriminatory practices, as in a “network of old boys.” In English contract law, for it to be binding, an agreement must have the intention of establishing legal relations; but in commercial transactions (i.e. agreements that do not exist between family members or friends), there is a legal presumption of “intent to establish legal relations”.
In the 1925 case of Rose and Frank Co. v. JR Crompton – Bros Ltd., however, the House of Lords found that the phrase ” “This regulation is not … a formal or legal agreement … is only a record of the parties` intention “was sufficient to rebut this presumption.  In a report by the U.S. House of Representatives detailing its investigation into the United States Steel Corporation, it was stated that in the 1890s there were two general types of bulk associations or consolidations between steel and ferrous interests in which the various groups held ownership, as well as a high degree of independence: the “pool” and the “gentleman`s agreement.”  The latter type lacked a formal organisation to regulate production or prices or forfeiture rules in the event of infringement.  The effectiveness of the agreement relied on members to meet informal commitments.  A gentlemen`s agreement or gentleman`s agreement is an informal and non-binding agreement between two or more parties. It is usually oral, but it can be written or simply understood as part of a tacit agreement by convention or by mutually beneficial label. The essence of a gentlemen`s agreement is that it depends on the honour of the parties for its achievement, rather than being enforceable in one way or another.