The Parol Evidence Rule – Differences between American and Japanese Contracts
As a VTuber signing with a Japanese agency or otherwise engaging in business with a Japanese company, there are many factors to consider when reviewing the contract—especially if the contract is to be enforced under Japanese law. Perhaps the biggest is the lack of the Parol Evidence Rule in Japanese law.
What is the Parol Evidence Rule?
The Parol Evidence Rule is the common law principle that, for a completely integrated written contract that is clear and unambiguous, courts will only look at the “four corners of the document” to determine the meaning of the contract. In other words, any outside communication prior to the signing of the contract is not admissible as evidence. That doesn’t mean that if a term is ambiguous or otherwise defined by prior dealings or usage of trade the court won’t take it into account, but it does mean that what is on the actual paper is the contract. This also doesn’t mean that a contract can’t be verbally modified afterwards if the modification complies with the Statute of Frauds (which states that certain contracts, including modifications, have to be in writing to be enforceable, usually involving real estate or large purchases of goods). This principle avoids drawn-out “he said, she said” disputes over written contracts, limiting the evidence to what is actually in the written document and whether a party performed under the contract or breached its terms.
Why Doesn’t Japan Have This Rule?
Although officers of the United States Army wrote Japan’s Constitution and restructured its government in the aftermath of World War II, they kept Japan’s civil law judicial system based on the Napoleonic and Prussian law codes that Japan adopted during the Meiji Restoration. Because of this, Japan did not inherit the Anglo-American body of common law that governs contracts in the United States, Canada, the United Kingdom, and other common law countries.
In addition, there are cultural mores where contracted parties are expected to deal fairly with one another. In Confucian-influenced societies, including pre-Meiji Japan, merchants were considered below peasants in the social hierarchy. Except for Osaka and the Kansai region, there is a cultural tendency to avoid appearing as if you’re selling something or hawking a product. As noted in Robert March’s The Japanese Negotiator: Subtlety and Strategy Beyond Western Logic, there is even an aversion to reading the fine print of a contract and a tendency to trust that the opposing party is dealing fairly and honorably.
What Does This Mean For My Contract with a Japanese Agency?
If your contract is to be enforced under Japanese law per its choice-of-law provision, this means that any verbal or other agreements not in the contract itself may still be valid and enforceable. This is true even if the written contract itself has an integration clause stating that it contains the totality of the agreement, although Japanese courts will take it under consideration and weigh it heavily against any evidence of communications from before the contract was signed. Effectively, the written contract acts as a memorial that an agreement has been reached, not as a record of the entire contract.
When negotiating terms with Japanese agencies, VTubers should keep this in mind: any terms that they agree to verbally or through written communications may in fact still be enforceable, even if those terms are not in the written contract itself—even if that contract contains an integration clause stating that the written contract is the complete agreement.
If you are a VTuber currently negotiating with a Japanese agency, our firm can help. Our expertise in international law and deep knowledge of the VTuber industry allow us to ensure your interests are best represented in negotiations. Contact us today for a confidential consultation to ensure your interests are properly safeguarded.