Etymologists and historians are not sure how the expression was born and who used it for the first time. Etymologists study the history and origins of words and phrases, and how they evolved. The term “gentleman`s agreement” appears in the recordings of the British Parliament of 1821. It also appeared in the Massachusetts Public Archives of 1835. However, in the United Kingdom, this type of agreement can be legally binding (see the last part of this article). 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 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.  Each party in a gentleman`s agreement believes that everyone will keep their promise because of their personal sense of honour. In some cases, these are gentlemen`s agreements in which Wall Street financiers, such as J.P. Morgan and his “House of Morgan,” would meet with the bureau to obtain prior authorization for mergers and acquisitions.
One such example was the gentlemen`s agreement in which regulators and the president ignored the Sherman Antitrust Act, which allowed united States Steel Corp. to become the world`s first multi-billion-dollar company. 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.” Gentlemen`s agreements, because they are informal and often not written, do not have the same legal and regulatory protection as a formal treaty and are therefore more difficult to enforce. 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.