What does gentlemans agreement mean

Gentlemen's agreements have been commonly made in international trade and relations, as well as in most industries. Gentlemen's agreements were especially prevalent at the birth of the industrial age and well into the first half of the s, as regulation often lagged new business practices. Such agreements were found to be in use to control prices and limit competition in the steel, iron, water, and tobacco industries, among others.

At its worst, a gentlemen's agreement may be made to engage in anti-competitive practices, such as price-fixing or trade quotas. Since a gentlemen's agreement is tacit—not committed to paper as a legal, binding contract—it may be used to create and impose rules that are illegal. The end result, in many cases, may be higher costs or lower quality products for consumers.

Worse yet, a gentlemen's agreement may be used as a means to promote discriminatory practices, such as in an "old boy's network. Gentlemen's agreements, because they are informal and often not written down, do not have the same legal and regulatory protections in place that a formal contract has, and thus are more difficult to enforce.

The U. Gentlemen's agreements between industry and the U. The Bureau of Corporations, a predecessor to the Federal Trade Commission , was formed in to investigate monopolistic practices. What resulted, in some cases, were gentlemen's agreements in which Wall Street financiers, such as J.

Morgan and his "House of Morgan," would meet with the bureau to receive prior clearance on mergers and takeovers. One such example was the gentlemen's agreement that had regulators and the President overlook the Sherman Antitrust Act to allow United States Steel Corp.

In , a stock market panic that hit several big investment banks led to a financial crisis. The panic led to President Theodore Roosevelt working closely with J. Morgan to consolidate banks under the argument that doing so would stave off a larger crisis. Similarly, in Morgan again worked with Roosevelt to create a gentlemen's agreement that would allow U.

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But opting out of some of these cookies may have an effect on your browsing experience. Powered by. Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free! Log in Sign Up. Save Word. Definition of gentleman's agreement. Examples of gentleman's agreement in a Sentence Recent Examples on the Web Dortmund has a gentleman's agreement in place with the year-old.

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