Extinguishing Old Debts in Japan: How Do "Novation" (Kokai), "Release" (Menjo), and "Merger" (Kondo) Work? Beyond common methods like full performance, set-off, or the running of the statute of limitations, Japanese civil law recognizes several other distinct ways in which pre-existing obligations can be extinguished. Among these are "Novation" (Kokai 更改), "Release" (Menjo 免除), and "Merger" (Kondo 混同). Understanding
Can I Use Set-Off if My Claim Against a Japanese Counterparty is Attached by Its Creditor? Imagine your company (let's call it "Garnishee Co.") owes a debt to a Japanese business partner ("Principal Debtor Co."). Suddenly, Garnishee Co. is served with an attachment order from a court, initiated by another creditor ("Attaching Creditor Co.") who has a claim
Mutual Debts with a Japanese Company: How Does "Set-Off" (Sosai) Work Under Japanese Law and What Are Its Functions? In the course of business, it's common for two companies to owe each other money or other obligations. When your company has an outstanding claim against a Japanese counterparty, and simultaneously owes a debt to that same counterparty, Japanese law provides a powerful and efficient mechanism for settling
I Paid a Debt for Someone Else in Japan: What is "Subrogation by Performer" (Bensaisha Dai'i) and How Does It Protect My Right to Reimbursement? It's a situation businesses and individuals sometimes face: you've paid a debt that was primarily owed by someone else – perhaps as a guarantor, a joint debtor, or to protect your own interest in a property securing the debt. Under Japanese law, when you make such a
Who Can Validly Perform an Obligation in Japan, and What if Performance is Made to Someone Without Authority? In any contractual relationship, ensuring that performance is correctly rendered by the right party and received by the right party is fundamental to discharging the underlying obligation. Japanese civil law provides specific rules on who can validly perform a debt (bensai-sha 弁済者) and to whom performance can be effectively made
Unable to Perform Due to Creditor Issues in Japan: When Can I Use "Deposit for Performance" (Bensai Kyotaku) to Discharge My Obligation? Imagine you are a debtor in Japan, ready and willing to fulfill your contractual obligation, but you encounter a roadblock: your creditor either refuses to accept your performance, is unable to accept it, or perhaps their identity or whereabouts are unknown. In such challenging circumstances, Japanese law provides a valuable
My Japanese Counterparty Is Refusing to Accept Performance: What Is "Creditor's Delay in Acceptance" (Juryo Chitai) and Its Consequences? In business dealings, performance often requires cooperation from both parties. But what happens when you, as the debtor, are ready and willing to perform your obligations, and your Japanese counterparty (the creditor) refuses to accept your performance or fails to take necessary steps to enable it? This situation, known in
Making Payments in Japan: What Are the Rules for "Appropriation of Performance" (Bensai no Juto) When Multiple Debts Exist? In the course of business, it's common for a party to owe multiple debts to the same creditor, or for a single debt to comprise various components like principal, interest, and costs. When a payment is made that is insufficient to discharge all outstanding amounts, the question of
My Japanese Debtor Isn't Collecting Its Own Claims: Can I Use the "Creditor's Subrogation Right" (Saikensha Daiiken) to Protect My Interests? Imagine a scenario: your Japanese debtor owes you a significant sum, but they themselves are owed money or have other actionable rights against a third party. Frustratingly, your debtor is taking no steps to enforce these rights, thereby diminishing their own assets and, consequently, your chances of recovery. In such
My Japanese Debtor's Performance Was Delayed and Caused Further Loss: What is "Delayed Performance Damages" (Chien Baisho) and "Impossibility During Delay"? In commercial contracts, timely performance is often critical. When a Japanese debtor fails to perform an obligation by its due date, the creditor may suffer various losses. Japanese law provides for "Delayed Performance Damages" (Chien Baisho 遅延賠償) to compensate for such losses. Furthermore, a distinct and often stricter
Calculating Damages for Breach of Contract in Japan: What is the Scope of Recoverable Damages Under Article 416? When a Japanese contract is breached, leading to financial loss for the non-breaching party, a critical question arises: what is the extent of damages that can be legally recovered? Japanese Civil Code Article 416 provides the primary legal framework for determining the scope of compensable damages in cases of non-performance
Defective Goods or Services from Japan: What is the "Right to Demand Subsequent Completion" (Tsuikan Seikyuken) and How Does It Work? When goods delivered or services rendered by a Japanese counterparty fail to meet contractual specifications—whether they are defective, incomplete, or simply the wrong items—the aggrieved party is not without recourse. A primary remedy under Japanese civil law is the "Right to Demand Subsequent Completion," or Tsuikan
Can You Legally Compel Performance from a Japanese Business Partner? Exploring the "Right to Demand Performance" (Riko Seikyuken) and Its Limits When a Japanese business partner fails to fulfill their contractual obligations, a primary concern for the aggrieved party is whether they can legally compel the counterparty to perform as promised. Under Japanese civil law, the "Right to Demand Performance" (Riko Seikyuken 履行請求権) is a fundamental remedy. However, this
My Japanese Business Partner Failed to Perform: What Constitutes "Non-Performance" (Saimu-Furiko) and What Are My Basic Remedies? When a contractual relationship with a Japanese business partner sours due to a failure to meet obligations, understanding the Japanese legal framework for "non-performance" – known as Saimu-Furiko (債務不履行) – is the first critical step toward seeking redress. This concept is central to Japanese contract law and dictates the availability
Interest on Claims in Japan: How Are Agreed Interest, Statutory Interest, and the Interest Restriction Act Regulated? When dealing with monetary claims and obligations in Japan, the rules governing interest can significantly impact the final amounts due, whether in commercial lending, trade credit, or damages for late payment. Japanese law provides a framework that addresses interest agreed upon by parties (yakujo-risoku), interest set by statute (hotei-risoku), and
Handling Monetary Obligations in Japan: What Are the Rules for Foreign Currency Debts and Fluctuating Exchange Rates? In an increasingly globalized economy, cross-border transactions frequently involve monetary obligations denominated in currencies other than Japanese Yen. For businesses operating in or with Japan, understanding how Japanese law treats these obligations—particularly regarding the currency of payment and the impact of exchange rate fluctuations—is vital. The Japanese Civil
Delivering Specific vs. Generic Goods in Japan: What Are the Key Legal Differences for Your Business? When your business involves contracts for the delivery of goods in Japan, a fundamental distinction in Japanese civil law can significantly impact your rights and obligations: whether the goods are "specific things" (tokuteibutsu 特定物) or "generic things" (shurui-mono 種類物, also referred to as futokuteibutsu 不特定物). This
Understanding "Safety Consideration Duty" (Anzen-Hairo-Gimu) in Japanese Contracts: What Are an Employer's Obligations to Employees? In Japan, employers bear a significant legal responsibility for the safety and well-being of their employees, a principle encapsulated in the doctrine of "Anzen-Hairo-Gimu" (安全配慮義務), often translated as the "Safety Consideration Duty" or "Duty to Provide a Safe Working Environment." This duty, primarily developed
My Japanese Counterparty Breached Its Obligations: What Fundamental Duties are Owed Under Japanese Obligation Law? When a business relationship with a Japanese counterparty encounters a breach of obligations, understanding the full scope of duties owed under Japanese law becomes paramount. While the explicit terms of a contract are the primary reference point, Japanese civil law, particularly its principles concerning "Saimu" (債務 – obligations or
What Exactly is a "Saiken" (Obligatory Right/Claim) Under Japanese Law, and How Does It Differ from a Property Right? In the intricate landscape of Japanese civil law, the concept of "Saiken" (債権) holds a position of paramount importance, particularly in the realm of commercial transactions and interpersonal legal relationships. For businesses and legal professionals engaging with Japanese counterparts or navigating Japanese contractual agreements, a precise understanding of
Conflict, Promissory Notes, and Corporate Liability: A Japanese Supreme Court Landmark on Director Transactions Case: Action for Payment on Promissory Notes Supreme Court of Japan, Grand Bench, Judgment of October 13, 1971 Case Number: (O) No. 1464 of 1967 Transactions between a company and one of its own directors inherently carry the risk of a conflict of interest, where the director might prioritize personal
Shareholder Unanimity vs. Formal Rules: A Japanese Supreme Court Look at Conflict-of-Interest Deals and Share Transfer Validity Case: Action for Dissolution of a Company Supreme Court of Japan, First Petty Bench, Judgment of September 26, 1974 Case Number: (O) No. 1225 of 1972 Japanese company law typically requires formal approval from the board of directors for transactions where a director's personal interests might conflict with
Internal Controls on Trial: Japan's Supreme Court on Director Duty and 'Unforeseeable' Fraud Case: Action for Damages Supreme Court of Japan, First Petty Bench, Judgment of July 9, 2009 Case Number: (Ju) No. 1602 of 2008 In an era of increasing corporate complexity and regulatory scrutiny, the establishment and maintenance of effective internal control systems have become paramount. Directors, particularly representative directors, bear
Bank Directors Under Scrutiny: A Japanese Supreme Court Case on Risky Lending and the Duty of Care Case: Action for Damages Supreme Court of Japan, Second Petty Bench, Judgment of January 28, 2008 Case Number: (Ju) No. 1440 of 2005 The collapse of Japan's "bubble economy" in the early 1990s led to a surge in non-performing loans and the failure of several financial
How Much is Too Much? Director's Business Judgment in Share Buyouts Under Japanese Law Case: Action for Damages Supreme Court of Japan, First Petty Bench, Judgment of July 15, 2010 Case Number: (Ju) No. 183 of 2009 Directors of a company are often faced with complex decisions involving significant financial implications and uncertain future outcomes. When such decisions, made in good faith, result in