In English contract law, for it to be binding, an agreement must have the intention of establishing legal relations; but in commercial transactions (i.e. agreements that do not exist between family members or friends), there is a legal presumption of „intent to establish legal relations“. In the 1925 case of Rose and Frank Co. v. JR Crompton – Bros Ltd., however, the House of Lords found that the phrase “ „This regulation is not … a formal or legal agreement … is only a record of the parties` intention „was sufficient to rebut this presumption.  Gentlemen`s agreements have come to regulate international activities such as the coordination of monetary or trade policy.  According to Edmund Osmasczyk in the United Nations Encyclopedia and International Agreements, it is also defined as „an international term for an oral and unwritten but fully valid agreement.“  This type of agreement may allow a nation to circumvent national legal requirements to enter into a formal contract or it may be useful for a government to want to enter into a secret agreement that does not engage the next government.  According to another author, all international agreements are gentlemen`s agreements because, just before the war, they are all unenforceable.  Osmaczyk noted that there was a difference between gentlemen`s open agreements and secret diplomatic agreements.  In the United States, in 1890, the prohibition of gentlemen`s agreements was introduced in interstate trade relations because the secrecy of these agreements was beyond anyone`s control.  An intense anti-Japanese atmosphere developed on the west coast.
U.S. President Theodore Roosevelt did not want to anger Japan by passing laws banning Japanese immigration to the United States, as had happened with Chinese immigration. Instead, there was an informal „gentlemen`s agreement“ (1907-1908) between the United States and Japan, in which Japan ensured that there was little or no movement in the United States.