Business Without Contracts

It is said that Japanese are not aware of the significance of a contract. With little regard to specifics, business deals are commenced, such as delivering goods before neither payment nor writing up a contract to set a price for the goods are made. Since Japanese society is somewhat homogenous, both business parties are culturally similar and have a common trust and knowledge of each others behavior, therefore, they can expect payment without a contract. Not only it is needless to write up a contract but each party can estimate the price the other is capable of paying, thus, negotiating a price leisurely after delivery of goods. Situations like this do not just happen often but it is the norm among minor enterprises. Even when contracts are drawn they are very short only about two pages compared to ten pages in an American business contract. Since the Japanese do business based on trust; even if a contract was made it would contain minimal agreements.

Moreover Japanese write up contracts themselves without legal counsel, which proves how little significance is put on the contract. Company employees with only a layman’s knowledge of the law would draw up a contract based from standard contract formats. As a result, these contracts lack the needed specifics and can later lead to having no verity in court. Furthermore, inappropriate wording of these layman contracts can complicate reaching a resolution.

As I mentioned above, Japanese contracts are two pages compared to 10 of that of American contracts. This is due to the concise attitude of Japanese attorneys and the general attitude that contracts are not considered significant, and businesses would like to keep contracts as short and simple as possible. American contracts are tedious and I wonder if so much rhetoric is necessary. It would be quite interesting to see the outcome of a study on this matter by American and Japanese attorneys.

Kaneko Hirohito Law Office
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