Thin Contract Archives - understand-culture

Master Agreement

J-Net21, the business information site of the government agency for small and medium enterprises, describes how continuing trade is often set up in Japan. The parties put the rules common to all their dealings in a kihon keiyakusho, a basic contract. Each single deal then runs on an exchange of order forms and acknowledgments, or on a simple contract.

The site adds that each deal made under the basic contract still forms a contract of its own. These are called kobetsu keiyaku, individual contracts.

Requests Without End

Asahikawa Medical University ordered a new hospital information system from NTT East. Doctors raised nearly 1,000 additional requirements. NTT East accepted 625 of them, and the two sides froze the specification. After the freeze, 171 more items came in, and NTT East accepted 136. The university then ended the contract.

The first court put 80 percent of the responsibility on NTT East. On August 31, 2017, the Sapporo High Court put all of it on the university and ordered it to pay about 1.415 billion yen.

Nomura sued Japan IBM over a system project, and the first court ordered IBM to pay about 1.6 billion yen. In April 2021, the Tokyo High Court ruled against Nomura. It found that Nomura had repeatedly demanded changes to the specification. Nomura later withdrew its appeal to the Supreme Court.

Terms Left Unstated

On November 1, 2024, a law on fair dealings with freelancers came into force in Japan. A client must now state the fee and the payment date in writing or by email.

In a survey before the law took effect, reported by the Japan Institute for Labour Policy and Training, 44.6 percent of freelancers said that terms had at some point not been stated to them. In construction, the share was 72.7 percent. Among clients, 17.4 percent said that they had not stated terms, and 41.7 percent in construction.

Contracts as a Front

The business site Gentosha Gold Online summarizes the view that the legal scholar Kawashima Takeyoshi set out in Nihonjin no hō-ishiki (The Legal Consciousness of the Japanese). The Japanese, in this view, tend to treat laws and contracts as tatemae, a mere front, and do not always give them much weight. When trouble actually arises, they expect to solve it through talks and personal relationships.

Trust Beyond the Contract

Japan’s Economic White Paper of 1992 described the ties between parent companies and their parts suppliers. These relationships, it said, tend to be long-term and continuous, unlike ordinary spot market trading. Out of cooperation, a relationship of trust is thought to emerge that does not rest on an explicit contract. Shareholdings and the dispatch of directors reinforce the ties.

The paper called the keiretsu system very efficient for the buyers and sellers involved. It also noted its costs, such as the burden on subcontractors.

Good-Faith Consultation Clause

A wide range of Japanese contracts contain a seijitsu kyōgi jōkō, a good-faith consultation clause. A typical version reads: “Matters not provided for in this contract, or doubts about its interpretation, shall be resolved by the parties through consultation in good faith, in accordance with the purpose of this contract.”