While Asia is so large and diverse that making generalizations about commercial transactions law in Asia is impossible, the East Asian nations of China, Japan, and South Korea display similarities in the structure of their commercial transactions governance.
China, Japan, and South Korea have civil law systems, which are inherently rule-based. The basic laws governing commercial transactions can be found in the basic civil law or civil code of all three. Thereafter, specific types of commercial activity are governed by a myriad of statutes.
This article illustrates the basic structure of commercial transactions law in these three Asian nations.
Commercial transactions law in China
In China, the Civil Law sets out the fundamental rules with regard to commercial transactions. Basic principles such as the profit-making goal of Chinese commercial law, the importance of disclosure and the organization of the parties’ relationship are set out in the Civil Law.
As China operates under a rule-based civil law legal system, there are large amounts of legislation pertaining to various kinds of commercial transactions such as banking or intellectual property.
Commercial transactions law in Japan
The fundamental laws pertaining to the formation of and adherence to contracts in Japan are found in the Civil Code. In drafting the Civil Code of Japan, the civil codes of many other civil law jurisdictions were studied and borrowed from.
There is a myriad of other statutes that deal with the specifics of contracts and commercial transactions. The Commercial Code sets out the laws specific to contracts in commercial transactions, such as sale and purchase transactions. The Consumer Contract Law is particularly noteworthy in as much as it pertains to sale and purchase and other commercial transactions.
Commercial transactions law in South Korea
Commercial transactions in South Korea are governed by the Civil Code, which deals with general principles pertaining to contract and sale and purchase transactions, the Commercial Code, as well as the Commercial Registration Regulations. Legislation such as the Fair Trade Law has been enacted to prohibit anti-competitive practices, and the Small and Medium-Sized Business Promotion Law aims to protect smaller companies.
Contracts to which a foreign entity is a party may require approval by the government before they can be recognized by the law. Legal advice is recommended as South Korean contract law prohibits certain terms that may be valid elsewhere.
It is clear that the civil law legal systems in China, Japan, and South Korea have resulted in similar systems of commercial transactions governance. However, although the three nations have a civil law or civil code that sets out the fundamental laws pertaining to commercial transactions, each has its own legislation catering to a wide range of commercial situations. It is this legislation that provides the bulk of the state’s guidance on appropriate conduct in commercial transactions. Hence, it should never be assumed that appropriate conduct in commercial transactions is uniform or even similar across the three countries.