Laws on a Gentleman's Agreement
A gentleman's agreement between friends, colleagues and business partners depends on the trustworthiness of the parties. It can be based on words alone, words and a handshake, or a general understanding of shared expectations.
The agreement comes to fruition in a satisfactory means for both parties, or the agreement fails the expectations of one or both parties. A gentleman's agreement works fine if both parties are satisfied.
However, when the agreement fails, it is no longer a gentleman's agreement.
The failed verbal agreement becomes a broken contract. Under contract law, certain elements in a contract must be present for the contract to be legally binding.
A gentleman's agreement is an informal agreement based on casual communication and/or physical actions between the two parties, without any formal written documentation. The terms of the agreement are implied or expressed in the dialogue exchanged between the parties. The agreement may not form a legally binding contract which can be upheld in court. The situation often presents a "he said, she said" dilemma. If the two parties agree on certain facts in the gentleman's agreement, a legal expert can apply a contract analysis to determine if a legally binding contract was actually formed.
Under a contract analysis, certain elements must be present to form a legal contract.
Contract formation requires an agreement and consideration. Intention of the parties to form a contract might also factor.
The agreement must be based on an offer by one party and an acceptance by the other party, in direct response to the offer.
The consideration element requires a bargain-for-exchange, which means each party must offer the other party something of detrimental value. If nothing of value was exchanged or promised, a contract was not likely formed.
A gentleman's agreement is enforceable as a verbal contract when it meets all of the traditional elements required in contract formation. If you can prove an offer was made, the offer was accepted, consideration was exchanged and both parties had the intention to enter into a legally binding contract, your gentleman's agreement can be upheld in court. If the other party is not well versed in contract law, they may inadvertently provide you with the facts you need to prove your case. Once you have the evidence that a contract was formed, you can file in small claims court to enforce the contract or at least recover damages under the small claims limit.