For an agreement to be binding in English contract law, the intention must be to create legal relationships; but in business transactions (i.e. agreements that are not concluded between family members or friends), there is a legal presumption of an “intention to create legal relationships”. However, in the 1925 Rose & Frank Co v JR Crompton & Bros Ltd case, the House of Lords noted that the phrase “This agreement is not. a formal or legal agreement. is only a record of the intention of the parties was sufficient to rebut the presumption in question.  Gentlemen`s agreements between industry and the U.S. government were common in the 1800s and early 1900s. The Bureau of Corporations, the predecessor of the Federal Trade Commission, was founded in 1903 to investigate monopolistic practices. Until Jackie Robinson was hired by the Brooklyn Dodgers in 1946, a gentlemen`s agreement guaranteed that African-American players were excluded from organized baseball.  The end result may, in many cases, be higher costs or lower quality products for consumers. Worse still, a gentlemen`s agreement can be used as a means of promoting discriminatory practices, as in an “Old Boy`s Network”. In the worst case, a gentlemen`s agreement may be entered into to engage in anti-competitive practices such as price fixing or trade quotas.
Since a gentlemen`s agreement is tacit – and not bound as a legal and binding contract on paper – it can be used to create and enforce illegal rules. The U.S. government banned gentlemen`s agreements in trade and commerce relations between nations in 1890. In 1908, Canadian Labour Minister Rodolphe Lemieux negotiated an agreement with Japanese Foreign Minister Tadasu Hayashi to restrict Japanese immigration to Canada. As part of the gentlemen`s agreement, the Japanese government agreed to voluntarily limit the number of Japanese immigrants who come to Canada each year. Gentlemen`s agreements have often been concluded in commerce and international relations, as well as in most industries. Gentlemen`s agreements were particularly prevalent at the birth of the industrial age and into the first half of the 1900s, as regulation often lagged behind new business practices. It has been found that such agreements are used, inter alia, to control prices and restrict competition in the steel, iron, water and tobacco industries. In the automotive industry, Japanese manufacturers agreed that no production car would have more than 276 hp (206 kW; 280 hp); the agreement ended in 2005.  German manufacturers limit the maximum speed of high-performance sedans and station wagons to 250 kilometers per hour (155 mph).  T82  When the Suzuki Hayabusa motorcycle exceeded 310 km/h (190 mph) in 1999, fears of a European ban or crackdown led Japanese and European motorcycle manufacturers to agree on a cap of 300 km/h (186 mph) at the end of 1999.  See the list of the fastest production motorcycles.
Japan has agreed to limit the number of passports it will issue to male and domestic workers to 400. Four categories of immigrants would continue to be allowed to enter Canada: returning residents and their wives, children and parents; immigrants employed by Japanese residents in Canada for personal and domestic services; workers approved by the Canadian government; and agricultural workers under contract with Japanese landowners in Canada. Although no specific rules were adopted to enforce the quota, the agreement resulted in a significant drop in Japanese immigration. In the year following the agreement, only 495 Japanese immigrants came to Canada.  Gentlemen`s agreements, because they are informal and often un written, do not have the same legal and regulatory protection as a formal contract and are therefore more difficult to apply […].