A gentlemen`s agreement is an informal agreement or transaction, often unwritten, which is supported only by the integrity of the other party to effectively comply with its terms. Such an agreement is generally informal, oral and not legally binding. The end result may, in many cases, be 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 the worst case scenario, a gentlemen`s agreement can be entered into to practice anti-competitive practices such as pricing or trade quotas. Since a gentlemen`s agreement is tacit – which is not subject to the document as a binding legal treaty – it can be used to create and enforce illegal rules. A gentlemen`s agreement, or gentleman`s agreement, is an informal and legally 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. It differs from a legal agreement or a contract. See the full definition of a gentleman`s Agreement in the English Language Learners Dictionary “Gentleman`s agreement.” Merriam-Webster.com Dictionary, Merriam-Webster, www.merriam-webster.com/dictionary/gentleman%27s%20Aop. Access 27 Nov 2020.
A report by the U.S. House of Representatives detailing its United States Steel Corporation investigation stated that in the 1890s there were two general types of associations or bulk consolidations between steel and ferrous interests in which different groups owned 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.  Gentlemen`s agreements have often been concluded in international trade and international relations, as well as in most industries. Gentlemen`s agreements were particularly prevalent at the birth of the industrial era and well beyond the first half of the 200th year, as regulations often delayed new business practices.