Japanese Attorney at Law - Bengoshi L.L.

Qualified attorney (Japan & NY), CIPP/E & CIPP/US, MCIArb, CFE — guiding Japanese corporate law & compliance.

What Happens if a Contract is Based on a Fundamental Mistake (Sakugo) in Japan?

Entering into a contract involves a meeting of minds, where parties agree on a set of terms with a shared understanding of the underlying facts and circumstances. But what happens when one or both parties are operating under a fundamental misapprehension? In Japanese law, the doctrine of "Sakugo"

The Importance of Form: Supreme Court's Strict Take on Collective Agreement Formalities in the Tonan Driving School Case

Case: Supreme Court of Japan, Third Petty Bench, Judgment of March 13, 2001 (Case No. 2000 (Ju) No. 192: Claim for Wages, etc.) Appellant (Employer): Y Company (operating a driving school) Appellees (Employees): X (and others) Collective bargaining agreements are a cornerstone of labor relations, providing stability and defining terms

How Does Japanese Law Interpret Ambiguous Contractual Terms?

Clarity in contractual language is a universal aspiration, yet ambiguities often surface, leading to disputes. When the meaning of a contractual term is contested under Japanese law, courts employ a structured approach to interpretation. The ultimate goal is to ascertain the true intentions of the parties and give effect to

My Japanese Counterparty is Using Standard Form Contracts (Teikei Yakkan). What Should I Be Aware Of?

In today's fast-paced global commerce, standard form contracts are ubiquitous. They offer efficiency and predictability for businesses that engage in numerous similar transactions. In Japan, these are broadly known as Yakkan (約款), and the revised Civil Code, effective April 1, 2020, introduced specific, detailed regulations for a subset

How are Contracts Formed in Japan? Understanding Offer, Acceptance, and the "Meeting of Minds."

The formation of a legally binding contract is a critical process in any commercial endeavor. For businesses operating in or with Japan, understanding the nuances of Japanese contract law concerning formation is paramount to ensuring enforceability and mitigating risks. Japanese contract law, primarily governed by the Civil Code (Minpō), lays

What is the "Principle of Freedom of Contract" under Japanese Law and What are its Real-World Limits?

The principle of freedom of contract is a fundamental tenet of modern private law in many jurisdictions, and Japan is no exception. It underpins commercial transactions and individual economic activity by allowing parties to freely determine their rights and obligations. However, this freedom is not absolute and is subject to

Union Bill-Posting on Company Property: The Kokutetsu Sapporo Untenku Supreme Court Judgment

Case: Supreme Court of Japan, Third Petty Bench, Judgment of October 30, 1979 (Case No. 1974 (O) No. 1188: Claim for Confirmation of Status) Appellant (Employer): Y Company (formerly Japanese National Railways) Appellees (Employees): X (and three others) In Japan, where enterprise-based unions are common, many union activities traditionally take

Rescinding Fraudulent Acts in Japan (Sagai Kōi Torikeshi-ken): How Can Creditors Challenge a Debtor's Asset-Shielding Transactions?

When debtors face financial distress, they sometimes engage in transactions that diminish their assets, making it harder for their creditors to obtain satisfaction. Japanese law provides a powerful remedy for creditors in such situations: the "Right to Rescind Fraudulent Acts" (詐害行為取消権 - sagai kōi torikeshi-ken), governed by Articles

What is the Creditor's Subrogation Right (Saiken-sha Dai-ken) in Japan, and How Can It Be Used to Secure Claims?

In the course of commercial dealings or private lending, creditors sometimes face situations where their debtor has rights against a third party but fails to exercise them, thereby jeopardizing the creditor's ability to recover their own claim. Japanese law provides a unique remedy for such scenarios known as

Allocation of Risk in Japanese Contracts: If a Subject Matter is Lost or Damaged After Contract Formation, Who Bears the Loss?

Contracts are formed with the expectation that both parties will fulfill their obligations. However, events can occur after a contract is made but before performance is completed that render one party's performance impossible—for example, the specific goods to be sold are destroyed in a fire, or a

What Are the Legal Consequences of Terminating a Contract Under Japanese Law? Understanding the Duty of Restitution

Terminating a contract (解除 - kaijo) in Japan is a significant legal act that does more than simply end the future obligations of the parties. It triggers a series of legal consequences aimed at unwinding the transaction, particularly concerning performances already rendered. Article 545 of the Japanese Civil Code is

Terminating a Contract in Japan: When is Prior Notice (Saikoku) Required, and When Can You Terminate Without It?

When a party to a contract in Japan fails to fulfill their obligations, the non-breaching party often looks to termination (解除 - kaijo) as a way to end the agreement and seek other remedies. The Japanese Civil Code, particularly after its revisions effective April 2020, provides two main statutory pathways

Is a Party's Culpability a Prerequisite for Contract Termination Under Japanese Law? Exploring the New Civil Code's Approach

When a party to a contract fails to perform their obligations, the non-breaching party often considers termination (解除 - kaijo) as a primary remedy to extricate themselves from the agreement. A fundamental question that arises is whether the non-breaching party (the creditor) must prove that the debtor's failure

Wearing Union Insignia at Work: The Taisei Kanko (Hotel Okura) Supreme Court Decision

Case: Supreme Court of Japan, Third Petty Bench, Judgment of April 13, 1982 (Case No. 1977 (Gyo Tsu) No. 122: Revocation of Unfair Labor Practice Relief Order) Appellant (Labor Relations Commission): Y (Tokyo Local Labor Relations Commission) Appellee (Company): X Company The right of union members to engage in union

Understanding Contract Termination in Japan: What Are the Different Types and Their General Implications?

In any contractual relationship, circumstances may arise that lead one or both parties to seek an end to their obligations. Under Japanese law, "termination" (解除 - kaijo) is the primary legal mechanism for formally dissolving a contract. This process is governed by specific rules regarding its types, methods

Liquidated Damages Clauses in Japanese Agreements: How Do They Work and When Might They Be Restricted?

In commercial and private agreements under Japanese law, parties often seek to pre-determine the financial consequences of a potential breach by including "liquidated damages clauses" (損害賠償額の予定 - songai baishōgaku no yotei) or "penalty clauses" (違約金 - iyakukin). These provisions aim to provide certainty, simplify the process

How Effective Are Exemption or Limitation of Liability Clauses in Japanese Contracts, Especially in Cases of Intentional Misconduct or Gross Negligence?

In the world of commercial agreements, parties often include clauses that aim to exempt one party from certain liabilities or to limit the amount of damages that can be recovered in the event of a breach or other harmful event. These exemption clauses (免責条項 - menseki jōkō) and limitation of

Recovering Legal Costs in Japan: Are Attorney's Fees Considered Part of Damages in Breach of Contract Cases?

When a contractual agreement is breached in Japan, the non-breaching party often incurs significant legal expenses, including attorney's fees, to enforce their rights or seek compensation for the damages suffered. A critical question for businesses and legal professionals is whether these attorney's fees can themselves be

Damages Beyond Interest for Monetary Default in Japan: Can Creditors Recover More Than the Agreed or Statutory Interest Rate?

When a debtor in Japan fails to make a monetary payment on time, Article 419, Paragraphs 1 and 2 of the Civil Code provide a straightforward mechanism for the creditor: they are entitled to damages in the form of default interest (at the statutory or a higher agreed-upon rate) and

Monetary Obligations in Japan: Are There Special Rules for Default, and Is 'Force Majeure' a Valid Defense?

In the realm of contract law, the failure to perform a monetary obligation—essentially, not paying money when it's due—is a common type of breach. Japanese law, under Article 419 of the Civil Code, provides a set of special rules (tokusoku - 特則) that govern the consequences

The Employee's Right to Say "Stop": Supreme Court Clarifies Check-Off Agreement Limits in Esso Sekiyu Case

Case: Supreme Court of Japan, First Petty Bench, Judgment of March 25, 1993 (Case No. 1991 (O) No. 928: Claim for Damages) Appellant (Employer): Y Company Appellees (Employees): X (and others) The check-off system, whereby an employer deducts union dues directly from employees' wages and remits them to the

What Happens if the Creditor is Also at Fault? Understanding Comparative Negligence in Japanese Contractual Damage Claims

In Japanese contract law, when a debtor fails to perform an obligation, the creditor is generally entitled to claim damages for the losses incurred. However, the situation becomes more nuanced if the creditor's own actions or omissions have contributed to the debtor's failure to perform, or

Balancing Accounts in Breach of Contract: How Does Japanese Law Handle Set-offs for Benefits Gained from a Breach?

The fundamental aim of awarding damages for breach of contract under Japanese law is to compensate the aggrieved party (the creditor) for the losses suffered due to the non-performance. It is not intended to place the creditor in a better position than they would have been in had the contract

Determining the Basis for Damage Calculation in Japan: What Is the "Substantive Pluralism Theory"?

Once it's established that a breach of contract has occurred and the aggrieved party (creditor) is entitled to damages, a critical and often complex question arises under Japanese law: as of what point in time should these damages be assessed and valued in monetary terms? This is particularly

Price Escalation in Japanese Contracts: How Are Damages Calculated, and What Is the Significance of the "Fukumaru Judgment"?

When a contract is breached and performance is not rendered—perhaps due to the seller making performance impossible or the creditor terminating the contract due to default—a critical question arises if the market price of the subject matter has significantly increased between the time of contracting and the time