We’ve seen documents and signatures as a formality for concluding contracts in the previous article. I now move on to seals and electronic signatures.
4. Seals (inkan or hanko)
You may have a seal, but it is not a requirement to conclude contracts under the law. Again, Article 522(2) [1] of the Civil Code (“CC”) says “formation of contracts does not require any method…”. In practice, however, we are often required to affix a seal, especially when entering into an important agreement such as a loan agreement. The function of seals is the same as signatures which are used as evidence of the formation of a contract in most countries.
There are several types of seals used in Japan, the three main types of which are jitsu-in (registered seal), ginko-in (bank seal) and mitome-in (personal seal). They are slightly different in the case of individuals and the case of companies.
(1) Individuals
Most Japanese have at least a mitome-in which is for everyday use. For instance, we use it when receiving registered mail from a postman.
A jitsu-in is used for an important agreement such as buying a house. As the English translation (i.e. registered seal) indicates, the imprint of a jitsu-in is registered at a municipal office (e.g. Chuo Ward Office, Fukuoka City) and a certificate can be issued whereby the imprint of a jitsu-in and the name of the jitsu-in holder is certified if the holder requests. Therefore, if a contract is affixed with a jitsu-in and the signor submits the certificate, the other party has strong evidence that the seal is indeed affixed by the jitsu-in holder himself/herself, i.e. not a forgery. Furthermore, taking the importance of a jitsu-in in society into consideration, it is strongly inferred that the jitsu-in holder intends to enter into the contract.
Foreigners who have a residence card can also register a seal at the nearest municipal office (i.e. you can create a jitsu-in). See the relevant webpage from Kagoshima City (the Fukuoka City website doesn’t seem to have a similar page). Hankoman, a seal shop based in Fukuoka, deals with seals for foreigners.
A ginko-in is a seal registered at a bank when you open a bank account and is used when the bank needs to identify the account holder. As you can register any seal including mitome-in and jitsu-in at a bank, you do not necessarily need a bank seal in addition to mitome-in and jitsu-in.
(2) Companies
Every company has a corporate jitsu-in as it is requested to register when setting up a company. Aside from a corporate jitsu-in, most companies have a kaku-in (square seal), which is equivalent to mitome-in for individuals, and ginko-in (bank seal) as well.
Seals for companies are not uncommon outside of Japan. In China, they use a company seal and a signature to execute a legal document while a signature or a name and a seal is requested in Japan. In countries/regions adopting the English legal system (e.g. England & Wales, Hong Kong, etc.), they use a company seal, which is called common seal, when executing a deed.
5. Electronic signatures
Electronic signature or eSignature is a way to sign electronically on electronic devices such as PCs and smartphones. The largest contractual eSignature service provider is DocuSign and the Japanese counterpart is CloudSign.
Again, as the law does not require any formality for concluding a contract (Article 522(2) of the Civil Code), an electronic signature can be used as a proof of the formation of contracts. As digitalization is developed, an electronic signature will have more market share.
6. Digitalization
While Japanese seals are historically derived from China, Chinese are not using them any more except for company seals mentioned above. In Korea and Taiwan, while seals are likely to remain, they are more progressive than Japan and have abolished them as well as made regulations to catch up with the digital age.
There were several attempts to abolish seals as a system in Japan as well. For instance, the Government recently proposed to abolish the requirement to register a seal upon setting up a company. However, it appears that the proposal was unsuccessful due to pressure from the seal industry. Interest groups are always the hardest obstacle when relaxing the existing regulations. They must know that we have to shift toward digital economy sooner or later, though.
This is the end of my article for this month. If you have any suggestions, requests or questions, please feel free to contact me. You may utilize this series as a free legal consultation.
Note
[1] This provision itself takes effect on April 1, 2020. Nevertheless, the same has been an established legal principle.
Disclaimer: While every effort has been made to ensure that the information on this article is accurate at the time of posting, it is not intended to provide legal advice as individual situations will differ. If you do require advice or wish to find out more about the information provided and related topics, please contact the author.
Text by: Atty. Atsushi Miyake of Miyake Law, Oct. 2019.
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