CODE IN TOKYO

Why Japanese Contracts Are So Thin — Probably "Kotodama" and "Village Society"

The “Foreign Contracts Are Way Too Long” Problem

When you look at contracts from overseas, sometimes it’s genuinely shocking. They just go on forever.

“If the other party goes bankrupt.” “If we end up in litigation.” “Liability caps.” “Indirect damages.” “Governing law.” “Jurisdiction.” It just keeps going.

Meanwhile, old-school Japanese contracts are incredibly thin.

They usually end with something like:

“In the event of any doubt, the parties shall consult in good faith.”

Wait — what exactly is “good faith”?

Japan Ran on “Relationships,” Not “Contracts”

There’s actually a pretty unique Japanese background to this.

First, the village-society structure. Old Japanese companies rarely did one-off deals with complete strangers.

Keiretsu affiliates, parent companies, banks, industry associations, subcontractors. Everyone is connected somewhere.

And once a relationship starts, it lasts. Ten-year relationships are normal.

So what really matters isn’t locking things down with a contract — it’s:

“Can we keep this relationship going?”

That’s why, if you start out by writing detailed clauses about:

…it creates an atmosphere of:

“Wait, you distrust us that much?”

This isn’t some spiritual mindset thing. It’s literally how Japanese business worked.

”Kotodama” — Don’t Write the Worst Future Into Words

The other piece is more ethnic, more cultural.

In Japan there’s a long-standing sense that:

“Words have power.”

This is called kotodama (言霊). Speak something bad, and it becomes real.

At weddings, you don’t say “separate.” For students taking exams, you don’t say “slip.” Hospitals avoid room number 4 (the number “four” — shi — sounds identical to the word for “death,” 死). That kind of sensibility.

So in contracts, too, going on and on about:

…carried a vaguely “ominous” feeling.

That’s why Japanese contracts tended to skip the detailed risk enumeration and just go with:

“If problems arise, let’s talk it through in good faith.”

But in Modern IT, This Just Blows Up

Of course, in the modern world, this approach genuinely backfires.

Especially in IT.

Vague scope of responsibility. No SLA. Undefined copyright. No clear incident response.

Run a project like this and you’ll see hell later.

That’s why even Japanese companies have been moving toward thick, Western-style contracts lately.

That Said, I Work Pretty “Japanese-Style” Myself

…and yet.

Writing all this, I have to admit I work in a pretty “Japanese” way myself.

I’m sure I exchanged a contract with my current client at some point.

But honestly —

Neither my client nor I really know the details of the contract we’re working under right now. Only the rough unit price is settled.

If you told us to find the contract right now, we’d both be in trouble.

In reality, it runs on daily communication and trust, not on the contract.

In the end, Japanese society — for all the changes — still very much runs on:

“Relationships over Contracts”

in big chunks.