Finance:Gentlemen's agreement

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Short description: Informal, non-binding agreement, sometimes based on honor

A gentlemen's agreement, or gentleman's agreement, is an informal and legally non-binding agreement between two or more parties. It is typically oral, but it may be written or simply understood as part of an unspoken agreement by convention or through mutually beneficial etiquette. The essence of a gentlemen's agreement is that it relies upon the honor of the parties for its fulfillment, rather than being in any way enforceable. It is distinct from a legal agreement or contract.

A ladies' agreement, or lady's agreement, is the female equivalent of a gentlemen's agreement.


The phrase appears in the British parliamentary records in 1821[1] and in the Massachusetts public records in 1835.[2] The Oxford English Dictionary cites P. G. Wodehouse's 1929 story collection Mr Mulliner Speaking as the first appearance of the term.[3]


A gentleman's agreement, defined in the early 20th century as "an agreement between gentlemen looking toward the control of prices," was reported by one source to be the loosest form of a "pool."[4] Such agreements have been reported to be found in every type of industry and are numerous in the steel and iron industries.[4]

A report from the United States House of Representatives detailing their investigation of the United States Steel Corporation asserted that there were two general types of loose associations or consolidations between steel and iron interests in the 1890s in which the individual concerns retained ownership as well as a large degree of independence: the "pool" and the "gentleman's agreement."[5] The latter type lacked any formal organization to regulate output or prices or any provisions for forfeiture in the event of an infraction.[5] The efficacy of the agreement relied on members to keep informal pledges.[5]

In the automotive industry, Japanese manufacturers agreed that no production car would have more than 276 bhp (206 kW; 280 PS); the agreement ended in 2005.[6] German manufacturers limit the top speed of high-performance saloons (sedans) and station wagons to 250 kilometres per hour (155 mph).[7][8] However some automakers such as Mercedes-Benz offer options to increase or remove the speed limiter.[9] When the Suzuki Hayabusa motorcycle exceeded 310 km/h (190 mph) in 1999, fears of a European ban or regulatory crackdown led Japanese and European motorcycle makers to agree to a limit of 300 km/h (186 mph) in late 1999.[10] See List of fastest production motorcycles.

International relations

After intense anti-Japanese sentiment developed on the West Coast, US President Theodore Roosevelt did not want to anger Japan by passing legislation to bar Japanese immigration to the United States, as had been done for Chinese immigration. Instead, there was an informal "Gentlemen's Agreement" (1907–8) and a corresponding informal Ladies' Agreement between the United States and Japan, whereby Japan made sure there was very little or no movement to the US. The agreements were made by US Secretary of State Elihu Root and Japan's Foreign Minister, Tadasu Hayashi. The agreement banned emigration of Japanese laborers to the United States and rescinded the segregation order of the San Francisco School Board in California , which had humiliated and angered the Japanese. The agreement did not apply to the Territory of Hawaii, which was treated at the time as separate and distinct from the US. The agreements remained effective until 1924, when Congress forbade all immigration from Japan.[11] Similar anti-Japanese sentiment in Canada at the same time led to the Hayashi-Lemieux Agreement, also referred to as the "Gentlemen's Agreement of 1908", with substantially similar clauses and effects.[12]

Trade policies

Gentlemen's agreements have come to regulate international activities such as the coordination of monetary or trade policies.[13] This type of agreement may allow a nation to avoid the domestic legal requirements to enter into a formal treaty,[13] or it may be useful when a government wants to enter into a secret agreement that is not binding upon the next administration.[14] According to another author, all international agreements are gentlemen's agreements because, short of war, they are all unenforceable.[14] Osmańczyk pointed out that there is a difference between open gentlemen's agreements and secret diplomatic agreements.[15] In the United States, a prohibition against gentlemen's agreements in commercial relations between states was introduced in 1890, because the secretive nature of such agreements was beyond anyone's control.[15]

In English contract law, for an agreement to be binding, there must be an intention to create legal relations; but in commercial dealings (i.e. agreements that are not between family members or friends) there is a legal presumption of an "intention to create legal relations". However, in the 1925 case of Rose & Frank Co v JR Crompton & Bros Ltd, the House of Lords held that the phrase, "This arrangement is not ... a formal or legal agreement ... but is only a record of the intention of the parties" was sufficient to rebut the said presumption.[16]

As a discriminatory tactic

Gentlemen's agreements were a widely used discriminatory tactic reportedly more common than restrictive covenants in preserving the homogeneity of upper-class neighborhoods and suburbs in the United States.[17] The nature of these agreements made them extremely difficult to prove or to track, and were effective long after the United States Supreme Court's rulings in Shelley v. Kraemer and Barrows v. Jackson.[17] A 1995 source stated that gentlemen's agreements "undoubtedly still exist", but that their use had greatly diminished.[17]

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.[18]

Inclusive alternatives

The expression is listed in the European Institute for Gender Equality's "Gender-sensitive communication toolkit", where "informal agreement" is suggested as an alternative.

See also


  1. Great Britain. Parliament (1812), Royal Commission of the Press, 2, G.E. Eyre and W. Spottiswoode, printers to the Queen's Most Excellent Majesty, p. 267, 
  2. Massachusetts (1835), Public documents of Massachusetts, 4, p. 150, 
  3. "gentleman, n.". OED Online. December 2013. Oxford University Press. 11 February 2014
  4. 4.0 4.1 Jones, Elio (1921). "II". The Trust Problem in the United States. New York: Macmillan Company. pp. 7–8. Retrieved June 28, 2010. 
  5. 5.0 5.1 5.2 . Washington, D.C.: Government Printing Office. 1912. 
  6. Lyon, Peter (January 2005), "Japan Dumps 276-hp Pact", Car and Driver,, retrieved 2016-05-04 
  7. Bogdan Popa (28 July 2012). "Gentlemen's Agreement: Not So Fast, Sir!". autoevolution. 
  8. van Gorp, Anke. "Ethical Issues in Engineering Design; Safety and Sustainability" page 16. Published by 3TU Ethics, 2005. ISBN:9090199071, 9789090199078. ISSN 1574-941X
  9. Mike Spinelli (2006-02-11). "So Long Guv'nor: Mercedes Will Unlock Top Speed on AMG Models in the US, for a Price". Jalopink. 
  10. John Burns (April 2, 2012), "Fifty years of "Do you have any idea how fast you were going?": A brief history of Ludicrous Speed", Cycle World, 
  11. Carl R. Weinberg, "The 'Gentlemen's Agreement' of 1907-08," OAH Magazine of History (2009) 23#4 pp 36-36.
  12. "Gentlemen's Agreement, 1908 | Pier 21". 
  13. 13.0 13.1 Kotera, Akira. Oda. ed. New York. p. 792. ISBN 9780415939225. 
  14. 14.0 14.1 Shafritz, Jay M. (27 August 2004). The Dictionary of Public Policy and Administration. Boulder, Colorado: Westview Press. p. 131. ISBN 9780813342603. 
  15. 15.0 15.1 Cite error: Invalid <ref> tag; no text was provided for refs named Osmańczyk
  16. Rose & Frank Co v JR Crompton & Bros Ltd [1925] AC 445 HL, [1924] UKHL 2
  17. 17.0 17.1 17.2 Higley, Stephen Richard (1995). Privilege, Power, and Place: The Geography of the American Upper Class. Lanham, Maryland: Rowman & Littlefield. pp. 40–41, 61. ISBN 9780847680214. Retrieved June 28, 2010. 
  18. N. Jeremi Duru, Friday Night ‘Lite’: How De-Racialization in the Motion Picture Friday Night Lights Disserves the Movement to Eradicate Racial Discrimination from American Sport, 25 CARDOZO ARTS & ENT. L.J. 485, 530 (2007).