In a business world dominated by digital contracts and regulatory oversight, the gentlemen’s agreement—the informal, non-binding handshake deal—remains surprisingly relevant in Australia. But with regulators ramping up scrutiny in 2025, where do these unwritten rules fit in, and what should business leaders know about them?
What Is a Gentlemen’s Agreement in 2025?
At its heart, a gentlemen’s agreement is an understanding between parties based on trust, honour, and mutual benefit—without written documentation or legal enforceability. These agreements have been a fixture in Australia’s business landscape for generations, from property negotiations to supply chain deals and mergers.
In 2025, as AI-driven compliance and stricter disclosure laws become the norm, many wonder if there’s still room for these informal pacts. Yet, they persist in sectors where relationships and reputation matter just as much as legal contracts.
- Business partnerships: Joint ventures and collaborations often start with handshake agreements before formal paperwork is drawn up.
- Property and construction: Developers and builders may rely on mutual understandings for preliminary work or site access.
- Supply chains: Preferred supplier status, volume discounts, or flexible payment terms may be agreed upon informally, especially with long-term partners.
Recent Legal and Regulatory Developments
The Australian Competition and Consumer Commission (ACCC) and the Australian Securities & Investments Commission (ASIC) have tightened their oversight of informal business practices. In the wake of several high-profile cases—such as cartel investigations in the construction and banking sectors—regulators have signaled that ‘handshake deals’ are no longer immune from scrutiny.
- 2025 Competition Law Update: The Competition and Consumer Act now explicitly covers collusive arrangements, even if they aren’t in writing. Verbal agreements that restrict competition or fix prices can trigger hefty penalties.
- Disclosure and Transparency: New ASIC guidelines require that any material arrangements impacting shareholders or consumers must be disclosed, regardless of whether they’re formalised in writing.
- Banking and Finance: APRA has urged banks to document all lending and partnership agreements to avoid ambiguity and legal risk, particularly after the 2024 Royal Commission into Non-Bank Lenders.
Despite these developments, not all gentlemen’s agreements are illegal or discouraged. Many are simply the lubricant of efficient business, provided they don’t breach competition law or fiduciary duties.
Gentlemen’s Agreements in Practice: Risks and Rewards
Real-world examples show both the power and the pitfalls of these informal deals:
- Positive: In regional agribusiness, farmers and distributors often rely on verbal commitments for seasonal supply, fostering flexibility and community trust.
- Negative: In 2023, a group of mid-tier construction firms faced ACCC action after a handshake agreement to share pricing information was deemed anti-competitive, resulting in multi-million-dollar fines.
Key risks to watch in 2025:
- Legal enforceability: If a dispute arises, unwritten agreements are hard to prove in court.
- Regulatory exposure: Even informal deals can breach competition or disclosure laws.
- Reputation: Breaking a gentlemen’s agreement can damage long-term business relationships, especially in close-knit industries.
Conversely, the rewards can be substantial—speed, trust, and flexibility are hard to match with lengthy contracts. Many Australian businesses use informal understandings as a precursor to formal agreements, balancing agility with compliance.
Best Practices for Navigating Gentlemen’s Agreements in 2025
- Know the Law: Stay updated with ACCC, ASIC, and APRA guidelines. Don’t assume informality shields you from legal obligations.
- Document Critical Terms: Even a simple email summary can provide clarity if disputes arise, without undermining the spirit of trust.
- Build Trust, Not Just Transactions: Reputation is currency in Australian business—honour your word, but understand when formal documentation is required.
- Review Regularly: As compliance standards evolve, periodically review all informal arrangements for legal and ethical risk.
Conclusion: The Future of Gentlemen’s Agreements in Australia
Gentlemen’s agreements have always been about trust, not loopholes. In 2025, Australian business leaders must balance the agility of informal deals with the demands of a highly regulated environment. As technology and policy keep raising the bar for transparency, expect the handshake deal to survive—but increasingly as a first step, not the final word, in doing business Down Under.
