The gentleman’s agreement in legal theory and in modern practice : the Dutch civil law perspective

Abstract

According to an often quoted saying a gentleman’s agreement is an agreement which is not enforceable at law and binding only as a matter of honour. Honour, so the saying suggests, does not belong to the province of civil law. However, on second thoughts this suggestion may appear to be not very accurate. This is so, in the first place, since the anthropology of law reveals that for instance in mediaeval Europe between the ninth and the thirteenth century honour in connection with the ownership and defence of land was considered as property in the agro-pastoral society. In the second place, honour plays a prominent role as a legally protected interest in defamation and libel, and slander cases. Although in such cases compensation for personal injury is usually placed at the forefront, the proprietarian element (e.g. the loss of good name may lead to a loss of goodwill in business) is quite often also at stake. The same is true for those legal regimes such as the Dutch one, that protect the moral rights of authors under copyright law. Modern Dutch practice shows that gentleman’s agreements are commonly used as substitutes for contracts to structure long term continuing commercial relations. Although the parties completely agree on all the terms of a contract, they also agree that this does not lead to legal consequences but is binding in honour only. Indeed these gentleman’s agreements reflect the parties intention not to be bound in law as an expression of the autonomous ordering process which is quintessential for contract law. Businessmen often find that contracting is not needed because of relational sanctions. A party that is acting infra honore will be sanctioned socially in its field of trade; it will be stigmatized and set aside. The notion honour should not be taken to literally in this respect though. It refers to the customs and practice common to a particular trade. So what may be called dishonorable in one trade may not necessarily also be dishonorable in other business relations. Moreover under the circumstances dishonorable conduct may be judged by private governments referring to particular codes of conduct. The fact that the parties declare expressis verbis to stay outside the domain of the law does not mean that the law is of no importance at all. Gentleman’s agreements are made in the shadow of the law. This is particularly true in those instances that they accompany contracts. When long term relations collapse, contract law and legal action will often come into play. What then if such a case occurs, will be the answer given by Dutch legal doctrine and case law to the question of the legal status of gentleman’s agreements? It appears that the answer will be far from clear cut and can be split up in a general and a specific part. General is the part which refers to the intention of the parties and the requirements of contract law for a contract to be validly concluded. Both legal doctrine and case law clearly accept that the freedom of contract includes the freedom of the prospective parties to agree staying outside the domain of the law, and that the discretionary power of the courts entails mitigating the requirements of contract law. The key issue seems to be that the constituent elements of a contract: offer and acceptance, as well as the contract itself are juridical acts. Being essential for juridical acts to aim at legal consequences no juridical act exists if such aim is lacking. So it appears that the gentleman’s agreement as a legal concept again functions in the shadow, this time in the shadow of the contract. Gentleman’s agreements are would-be contracts.What does this finding mean for the binding force of the agreed issues in a gentleman’s agreement? Case law tend to follow here the view taken by Wessels and others that these separate agreements ought to be considered as naturalis obligationes. They are not enforceable at law as long as they are not performed. Further – and here comes the specific part of the answer to the question about the legal status of gentleman’s agreements into play – taking into account some or all of the factors enumerated in section II.B (nr. 19) may lead the court in a particular case to the conclusion that what is presented as a gentleman’s agreement really is a contract. This all concerns the internal effect of gentleman’s agreement – the relation between the parties. But the mere existence of a gentleman’s agreement may have as well an external effect, leading to legal consequences based on other than contractual liability, e.g. tortuous liability.