For the average American, a contract is the final point of every successful negotiation. How can things be settled without a written document to clearly and immutably define what has been agreed, with the requisite signatures to wrap it all up in a sense of finality?
Yet not every culture sees contracts as indispensable. In some situations, particularly when the resources in play are less significant, the suggestion could even be considered a mark of distrust. "We have discussed this and settled it, so why should I sign this? Do you not trust me?"
Once a contract has been signed, different cultures may view its purpose in different ways. Richard Lewis, active in the fields of applied and anthropological linguistics for more than four decades, explains that the Japanese see "the contract they were uncomfortable in signing anyway" as a "statement of intent"—a starting point in defining the relationship which reflects the situation at the time of the negotiation. As such, it should be flexible should conditions change.
Lewis conjectures that whereas the American might call the Japanese unethical if the latter breaks a contract, the Japanese could retort that it is unethical for the American to apply the terms of the contract if things have changed.
"They will adhere to it as best they can but will not feel bound by it if market conditions suddenly change, if anything in it contradicts common sense, or if they feel cheated or legally trapped by it. New tax laws, currency devaluations or drastic political changes can make previous accords meaningless. If the small print turns out to be rather nasty, they will ignore or contravene it without qualms of conscience."
An American is likely to write a contract to cover all possible eventualities, with clearly defined consequences should contract items be infringed. The French, too, are perhaps surprisingly precise in the drawing up of contracts, affirms Lewis in When Cultures Collide: Leading Across Cultures (2006). Meanwhile, Italians and South Americans might be more inclined to see a contract as less relevant if things do not turn out as expected. For them, Lewis writes, the contract is "an ideal that is unlikely to be achieved but that is signed to avoid argument."
In The Geography of Thought: How Asians and Westerners Think Differently... and Why (2004), social psychologist Richard Nisbett recounts a story that illustrates the different ways in which two cultures can view the idea of a contract. In the 1970s, Japanese sugar refiners negotiated a five-year agreement with Australian suppliers to buy sugar at $160 per ton. However, because of the vagaries of the commodities markets, the price of sugar dropped considerably soon after delivery started. The Japanese refineries said to the Australians that the contract should be cancelled because the conditions under which it had been negotiated had changed. After all, a contract is just a statement of intent. However, the Australians said the contract was a legally binding agreement—and they refused to renegotiate its terms in any way.
"The importance attached to contractual relationships is mirrored in the respective job markets," writes Bryan Hopkins, author of Cultural Differences and Improving Performance: How Values and Beliefs Influence Organizational Performance (2009).
"The United States has 300,000 lawyers to a population of over 300 million—one lawyer to 1,000 people—whereas Japan has just over 10,000 lawyers to a population of 128 million; one lawyer to 12,800 people.
"It would be interesting to consider what is driving the feedback loop: the numbers of lawyers promoting litigation to encourage work for themselves or the litigious culture demanding the lawyers."