Gentlemen's agreement

A gentlemen's agreement is based on mutual trust, usually verbal agreement.

According to the principle of Roman law " pacta sunt servanda " (Eng. contracts must be observed ) are also oral contracts complied with; under a gentlemen's agreement is understood but in German law an agreement that is not to be enforceable in court. Fulfilment of the arrangement thus depends largely on the trustworthiness of the partner, the non-compliance is punishable only with social sanctions. In legal parlance, so it is just not a real contract. In a decision of the Supreme Court of 21 April 1927 Case No. V 476/26, RGZ 117, 121 et seq, the Supreme Court has found that when it comes to an exceptionally positive need of legal transaction, this form can not be replaced by the fact that a party her " word as a gentleman " are - the contract is still ineffective (so called nobleman case).

An example of a gentlemen's agreement is still the international diamond trade today. In this case, the trade is agreed with jewels worth several million U.S. dollars, often with a handshake. Once a contractor does not fulfill his obligations, he is ostracized and excluded within this elite group. As the market and the users are connected to manageable and socially closely, this means the business and also social Off in the diamond industry for the person concerned.

• Contract Law
• English phrase