1. The Japanese regard contracts differently than do Westerners. They believe that the language of a contract and the terms it lays out are secondary to the spirit of trust that exists between the contracting parties. They view a contract as an agreement to have an ongoing, harmonious relationship and to create mutually beneficial business.
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2. When you are negotiating a contract with the Japanese, do not agree to any points until you have first obtained the necessary approvals from your home office. Having to pull back from points already agreed on will seriously undermine, and perhaps even terminate, your business relationship with the Japanese company.
3. Contracts in Japan have traditionally been much shorter and far more general than Western contracts. However, in recent years, Japanese companies have begun to write more detailed, Western-style contracts, particularly for international transactions. Your choice of contract should be reviewed with an attorney. Carefully consider any provisions relating to the resolving of disputes, as well as clauses that define the official language the parties will use and the type of currency to be employed in transactions.
4. The Japanese have a traditional distrust for attorneys, whom they regard as representing and advocating only one side of an issue. They rarely involve their attorneys in business negotiations. If you feel you must have your attorney present at meetings, stress to the Japanese that he or she is merely representing your company and lending assistance. Your attorney should refrain from openly disagreeing with ideas brought forward at the meeting and should instead discuss any disputed issues away from the negotiating table.
5. Note that Japan has far fewer attorneys per capita than Western nations and that many legal services in Japan are performed by "quasi-lawyers." You may be dealing with one of these legal practitioners while doing business in Japan. They are often skilled in a particular area, though they lack a graduate-level law degree.
6. Be aware that Japan has many laws that govern business with foreign companies. Laws and regulations can be passed by Japan's Diet (legislative body) and also by its ministries (executive branch). Rules and regulations may also be found in unpublished policy statements. In addition, Japan's 47 prefectures, while not autonomous, do write some of their own laws.
7. Due to the importance the Japanese place on maintaining social harmony, it is customary in Japan for disputes to be resolved without seeking legal recourse. When differences arise between you and the Japanese that cannot be resolved through discussions, it may be appropriate to ask your shôkai-sha (the person who introduced you to your Japanese partner) to mediate a new understanding. You may also wish to seek the assistance of a chûkai-sha (mediator or intermediary).
8. Even though many Japanese contracts have arbitration clauses, the Japanese rarely utilize them. Arbitration in Japan can be a difficult and expensive undertaking and can seriously damage your business relationship. Litigation has even more adverse ramifications. Therefore, thoroughly explore all other options before resorting to either arbitration or litigation.