It is necessary to have an adequate understanding of Japanese law to ensure that a contract does not violate public policy in Japan. The interaction between contracts and public policy in Japan is a complex one. Parties in Japan are free to contract regarding almost anything but contracts that are against public policy are considered void. This makes sense and most people would agree that the concerns of public health and safety outweigh the parties’ right to enforce a contract for the sale of illegal drugs. However, there is no specific line to determine which contracts will be considered as “against public policy,” and contracts that might infringe on public policy are dealt with on a case-by-case basis. Sometimes the only way to know whether a certain contract clause will violate public policy is to examine precedents of past court decisions in Japan.
Sometimes these public policy goals may not be as obvious as the above example where the contract in question was also a violation of criminal law. Many Japanese contracts contain provisions to ensure that no “anti-social forces” are involved in the dealing because Japan has very strict rules about the involvement of criminal organizations or individuals in commercial transactions.
Also, much like other jurisdictions, any contract clause that is contrary to Japan’s laws would not be valid; for example, an employment contract forbidding an employee to use the bathroom during working hours is a violation of Japan’s labor laws and would be in violation of public policy..
Another example of a contract that could be invalidated as against public policy is a contract signed between a husband and his mistress that would require the husband to divorce his wife. Since divorce is also against public policy, although not illegal, it’s possible that such a contract would not be valid. Therefore it is always best to talk with a lawyer before drafting or signing any contracts that might run afoul of this rule.