What Should I Know When Negotiating a Contract in the U.S.?(米国における契約交渉について知っておくべきこと)



Hi. This is John Sasaki again.

This month was Ichigo’s birthday.  She is 13 years old!


Today’s topic is U.S. contract law.  Remember, when I say “U.S.”, I actually mean one of 50 states’ laws, because contract law in the U.S. is governed state-by-state.

Anyway, here are 5 things to remember when negotiating a contract in the U.S. (which may differ from what you know about contracts in Japan).


1.Why are U.S. contracts so long?

Perhaps you think it’s because Americans like long contracts.  Well, even if this is true, there is a legal reason.  It’s called the “parol evidence rule”.

Under the parol evidence rule, outside evidence is generally excluded in interpreting a contract.  This means that the language in the contract must be clear in and of itself, and complete.  This results in long contracts.

Contrast this to Japan, which has no such legal limitation.  This allows parties that enter into contracts under Japanese law to prepare a relatively simple document, and then just introduce outside evidence (e.g., e-mails or other correspondence) to interpret an unclear provision or otherwise clarify the intent of the parties.

Although there are some exceptions to the parol evidence rule (e.g., when a provision is ambiguous on its face), it is very important to make sure that (1) the language in the contract is clear, and (2) the provisions in the contract are complete.


2.What is the difference between governing law and jurisdiction?

The term “governing law” refers to the substantive law of a country (or state, in the U.S.) that determines how to interpret a contract.  On the other hand, “jurisdiction” just means the location to settle disputes.

These are separate concepts.  So, for example, you can have a contract governed by Japanese law, but with the jurisdiction in the California.  You may think that this is a “win” for you because the location to resolve the dispute is less important than the governing law.  But this means that judges in California would be required to study and understand Japanese law.  This may not be practical.  At the very least, it would reduce your advantage in choosing Japanese law if it will be interpreted by judges who have no such experience.  So, as a general matter, the governing law and the jurisdiction are usually the same.

But this becomes a black and white proposition.  Each party will want the governing law and jurisdiction to be that of their own country (or state).  And, in that case, the party with the greater bargaining power wins.

One compromise idea is to utilize arbitration.  In an arbitration proceeding, it is easier to choose a venue for the arbitration (e.g., Singapore), but then choose a different governing law (e.g., Japan).  Why?  In arbitration, the parties can choose the arbitrators, and they do not have to be from the venue.  So, you can choose arbitrators who are familiar with Japanese law, but then resolve the dispute in a neutral location.  One party can “win” on the governing law issue, while the other party can “win” on the location to resolve the dispute.  And the “win” on the governing law issue is less likely to be diluted by the lack of experience of the arbitrators


3. What is “consideration”?


Consideration is a requirement under every U.S. contract.  It basically means that each contract must involve an exchange of something for something.  That something could be something tangible, like money, or something intangible, like a promise to do something or not to do something.  In other words, unilateral promises are not enforceable as contracts in the U.S.

Contrast this to Japanese contracts, which do not require consideration.  In Japan, unilateral promises can be enforceable as contracts (subject to the satisfaction of certain conditions).

In most commercial contracts, consideration is not an issue.  One party promises to provide a product or a service.  The other party promises to pay money for the product or service.

However, what if one of the promises is not really a promise?  For example, suppose a written contract provides that the paying party will pay for the product or service, but only if the party providing the product or service actually delivers the product and service.  And, the party providing the product and service can choose whether or not it provides the product or service.

In Japan, this is most likely an enforceable contract.  In the U.S., this is more than likely to be unenforceable as a contract because of a lack of consideration.

Anyway, make sure that there are binding promises on each side of your contract.


4. Are letters of intent binding?

A letter of intent is generally a preliminary document that indicates the parties’ intent to enter into a contract, before the material terms are decided.  The letter of intent generally includes a provision that states that it is non-binding.  So, that means that the parties to a letter of intent have no obligation to enter into a binding contract, right?

Well, not exactly.

First, if the material terms are decided in the letter of intent, the document can be considered a binding contract, regardless of what you call it.

And even if a letter of intent purports to be non-binding, courts can impose a good faith obligation on the parties to try to enter into a binding contract.  This doesn’t necessarily mean that you are obligated to enter into a binding contract, but you can’t walk away without trying either.

So, don’t enter into a letter of intent unless you really intend to enter into a binding contract.


5. What is the difference between a legal remedy and an equitable remedy?

A “legal” remedy just means monetary compensation.  An “equitable” remedy is everything else.  So, suing someone for damages is a legal remedy.  An action for an injunction is an equitable remedy.

In the U.S., the general rule is that you can only obtain an equitable remedy if the legal remedy is inadequate.  And in most cases the legal remedy is deemed to be sufficient.

So, under a typical product purchase agreement, if the seller breaches its obligations, you can sue the seller for monetary damages, but you can’t compel the seller to deliver the promised product (which is known as “specific performance”).

Contrast this to Japan, where in that situation you can choose your remedy (because the law doesn’t distinguish a legal remedy from an equitable remedy).

So, don’t expect to be able to compel the other party to fulfill its obligations under a U.S. contract if the other party breaches its obligations.  You may have to “settle” for a monetary claim.

Note that this also means that a U.S. party may be more likely to breach its contracts than a Japanese party, if the cost of breaching the contract (i.e., the payment of damages) is less than the cost of fulfilling its obligations under the contract.

So, make sure you properly set your expectations.  You probably won’t be able to force the other party to specifically perform its obligations if it decides it doesn’t wish to do so.

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As mentioned above, each state has its own requirements, so make sure to check the actual requirements once you determine the applicable state law.  The points above are based on general contract law principles in the United States, but different states may have different laws regarding these matters.

If you have any questions, please feel free to contact me at









1. なぜ米国の契約書はとても長いか?




口頭証拠排除原則にもいくつかの例外(契約条項の文言自体が曖昧である場合など)がありますが、(1) 契約書の文言を明確にしておくこと、(2) 契約書の規定が完全なものにしておくこと、は非常に重要です。


2. 準拠法と管轄の違いは?




ひとつの妥協案は、仲裁を利用することです。仲裁手続では、ある仲裁地(例えばシンガポール)を選び、異なる準拠法(例えば日本法)を選ぶことがより容易です。なぜか? 仲裁の場合、当事者が仲裁人を選ぶことができ、仲裁人は仲裁地の人である必要はありません。したがって、日本法に詳しい仲裁人を選びつつ、中立の場所で紛争解決するということが可能になります。一方当事者が準拠法の点で「勝つ」一方で、他方の当事者が紛争解決地で「勝つ」ことが可能です。そして準拠法での「勝ち」が、仲裁人の経験不足によって薄められてしまう可能性が低くなります。


3. 「対価(Consideration)」とは?




しかし、もしその約束の一方が、真の約束ではなかったら? 例えば契約書に、実際に製品やサービスを提供された場合にのみ代金を支払うと記載されていて、提供側の当事者が製品やサービスを提供するかどうか選択できることになっていたらどうでしょう。




4. レター・オブ・インテントは拘束力がある?







5. 法律上の救済とエクイティ上の救済の違いは?








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【参考和文作成:弁護士 林 賢治】


AZX Professionals Group
AZX Professionals Group
弁護士 パートナー
濱本 健一
Hamamoto, Kenichi
AZX Professionals Group
弁護士 パートナー
高橋 知洋
Takahashi, Tomohiro