ABSTRACT
Trust versus formality refers to the degree to which the relationship is bounded by contractual agreements. This issue can be affected by culture in the global context: most negotiators are less likely to trust foreigners than they are to trust people from their own cultural background, but also different cultures have different attitudes toward the role of trust in business. Often this comes from the legal codes of the countries involved: in the UK, for example, trust is of high importance because written contracts are not always enforceable – parties to the contract can claim that they were induced to sign by verbal reassurances which subsequently did not materialize. This means that a written contract is not the whole story, and may prove to be unenforceable. In Japan, written contracts are enforceable, but only after expensive and prolonged litigation, which means that written contracts are not regarded as highly as good relationships of trust. In Germany and the United States the written contract forms the basis of the agreement, so business relationships tend to be more formal.
