Can a Third Party Perform an Obligation ("Daisansha Bensai") on Behalf of a Debtor in Japan?

Under Japanese law, an obligation is typically a legal bond between a specific debtor (obligor) and a specific creditor (obligee), with the debtor being primarily responsible for its fulfillment. However, situations can arise where someone other than the debtor steps in to perform the obligation. This act, known as "Daisansha Bensai" (第三者弁済 – performance by a third party), is generally permitted but is subject to a nuanced set of rules that balance the creditor's interest in receiving performance, the debtor's autonomy, and the motivations of the third party.

The General Principle: Validity of Third-Party Performance

Article 474, paragraph 1 of the Japanese Civil Code establishes the basic principle: "An obligation may be performed by a third party." This general permissibility stems from the practical rationale that, in many cases, the creditor's primary interest lies in the satisfaction of their claim. If the creditor receives what is due, the identity of the performer is often secondary, provided the performance itself conforms to the tenor of the obligation. The law effectively gives the third party's act the same legal effect—the extinguishment of the obligation—as if the debtor themselves had performed.

It's important to distinguish true "Daisansha Bensai" from situations where a third party performs under a mistaken belief. If a third party performs an obligation believing it to be their own debt, when in fact it is the debt of another, this is not treated as Daisansha Bensai. Instead, it typically falls under the rules of unjust enrichment, particularly Article 707 of the Civil Code, which deals with the performance of another person's obligation by mistake, potentially giving the performer a right to seek reimbursement from the actual debtor if certain conditions are met. Daisansha Bensai, in contrast, involves a third party knowingly performing an obligation recognized as belonging to someone else.

Exceptions to Validity: When Third-Party Performance is Not Permitted

Despite the general rule of validity, Article 474, paragraph 4 of the Civil Code outlines circumstances where performance by a third party is not allowed or is ineffective:

1. Nature of the Obligation ("Saimu no Seishitsu")

If the nature of the obligation is such that it inherently requires personal performance by the debtor, a third party cannot validly perform it (Art. 474(4), first part). These are obligations where the specific skills, characteristics, or personal relationship of the debtor are essential to the performance. Classic examples include:

• The services of a particular artist commissioned for a portrait.
• A lecture to be delivered by a named scholar.
• The personal labor of a specific employee under an employment contract.
• The duties of a specific bailee involving personal trust and care.

In such cases, performance by anyone other than the designated debtor would not provide the creditor with what was bargained for. However, even for these highly personal obligations, if the creditor explicitly consents to performance by a specific third party, such performance can become valid.

2. Contrary Intention of the Parties ("Tōjisha ga Hantai no Ishi o Hyōji Shita Baai")

The parties to the original obligation (i.e., the debtor and creditor) can agree to prohibit or restrict performance by a third party (Art. 474(4), second part). If such an agreement exists, an attempted performance by a third party in contravention of this agreement would generally be invalid. This agreement can be made at the time the original obligation arises or subsequently, but typically must be in place before the third party attempts to perform. Furthermore, if an obligation arises from a unilateral act, such as a will, the person creating the obligation can similarly stipulate that it may not be performed by a third party.

Performance by a Third Party Lacking a "Legitimate Interest" ("Seitō na Rieki")

The most complex rules regarding third-party performance involve situations where the third party lacks a "legitimate interest" (正当な利益 - seitō na rieki) in performing the obligation. The Civil Code (Art. 474(2) and (3)) sets out specific conditions under which such a third party's performance may be invalid if it goes against the will of either the debtor or the creditor. The concept of "legitimate interest" is key to understanding these scenarios.

A. Performance Against the Debtor's Will (Art. 474(2))

• General Rule: Invalidity: If a third party who lacks a legitimate interest in performing the obligation does so against the expressed will of the debtor, such performance is generally invalid (Art. 474(2), main sentence).
  The rationale behind this rule is twofold:
  1. Respect for Debtor's Autonomy: It protects the debtor from unwanted interference in their affairs. A debtor may have valid reasons for not wanting a particular third party to discharge their debt (e.g., disputes with the third party, a desire to negotiate terms with the creditor, or simply not wanting to be indebted to an officious intermeddler).
  2. Protection from Unwanted Reimbursement Claims: If such performance were valid, the third party would typically acquire a right of reimbursement against the debtor. This rule prevents a debtor from being forced into an unintended debtor-creditor relationship with a third party, who might pursue reimbursement more aggressively than the original creditor.
     The debtor's contrary will should generally be clear and definitive for this rule to apply, although it does not necessarily have to be communicated directly to the performing third party. The third party's knowledge (or lack thereof) of the debtor's objection is not the primary determinant of invalidity under this main sentence.
• Exception – Creditor's Lack of Knowledge: A crucial exception exists. The performance by a third party lacking legitimate interest, even if against the debtor's will, is not rendered invalid on this ground if the creditor, at the time of accepting the performance, did not know that the performance was contrary to the debtor's will (Art. 474(2), proviso). This provision protects a creditor who, in good faith, accepts a performance that appears to satisfy the debt, without being aware of any underlying objection from the debtor.
• Burden of Proof: Typically, the debtor (or another party seeking to invalidate the performance) bears the burden of proving that the third party lacked a legitimate interest and that the performance was indeed against the debtor's will. If this is established, the burden may then shift to the creditor (or the third party seeking to uphold the performance) to demonstrate that the creditor was unaware of the debtor's objection when accepting the performance.

B. Performance Against the Creditor's Will (Art. 474(3))

The creditor also has a say, particularly when the third party attempting to perform lacks a legitimate interest.

• Third Party Has Legitimate Interest: If a third party does possess a legitimate interest in performing the obligation, the creditor generally cannot refuse their valid tender of performance. If the creditor refuses, they risk being deemed in "creditor's delay" (juryō chitai), with its associated negative consequences for the creditor.
• Third Party Lacks Legitimate Interest – General Rule of Invalidity if Creditor Objects: If a third party who lacks a legitimate interest offers to perform, and this is against the creditor's will (i.e., the creditor objects to receiving performance from this specific third party), the performance is invalid (Art. 474(3), main sentence). The creditor has a right to expect performance from their specific debtor or from someone with a recognized stake in the matter. They are not generally obliged to accept performance from any unrelated volunteer.
• Exception – Debtor's Entrustment and Creditor's Knowledge: An exception applies here as well. The performance by a third party lacking legitimate interest, even if initially against the creditor's will, is not invalid on this ground if two conditions are met:
  1. The third party was entrusted by the debtor to make the performance (e.g., the debtor asked the third party to pay on their behalf, which could happen in a performance delegation agreement or "rikō hikiuke" - 履行引受).
  2. The creditor knew about this entrustment from the debtor at the time the performance was tendered (Art. 474(3), proviso).
     If both these conditions are satisfied, the creditor cannot validly refuse the third party's performance simply because the third party otherwise lacks a direct legitimate interest. Refusal in such a case could lead to creditor's delay.
• Burden of Proof: If a creditor refuses performance from a third party who appears to lack a legitimate interest, the creditor would typically assert this lack of interest and their objection. To overcome this and validate the performance, the party arguing for its validity (e.g., the debtor or the third party) would need to establish both the debtor's entrustment of performance to the third party and the creditor's knowledge of this entrustment.

Who is a "Third Party With a Legitimate Interest" ("Seitō na Rieki o Yūsuru Daisansha")?

The concept of "legitimate interest" is central to the application of Articles 474(2) and (3). While not exhaustively defined in the statute, legal practice and scholarship have identified several categories of persons generally considered to have such an interest. Broadly, a legitimate interest exists if:

1. The third party would suffer direct legal prejudice (such as their own property being subject to execution by the creditor) if the primary debt is not performed.
2. The third party's own rights against the debtor (or related rights) would be lost, diminished in value, or otherwise jeopardized if they do not perform the obligation.

Specific examples include:

• Sureties ("Hoshōnin" - 保証人) and Joint and Several Obligors ("Rentai Saimusha" - 連帯債務者): These parties are directly or secondarily liable for the debt, so their interest in performing to avoid their own liability is clear. (Note: Strictly speaking, when these parties perform, they are often performing an obligation to which they are already bound, rather than acting purely as a "third party" in the sense of an outsider. The Civil Code, in a separate section (Art. 474, Section 4, as mentioned in the provided PDF's table of contents), distinguishes their performance from a true Daisansha Bensai, though the underlying principle of having a stake is similar).
• Persons Providing Real Security ("Butsujō Hoshōnin" - 物上保証人): Individuals who have provided their own property (e.g., real estate) as collateral for another person's debt. They have a legitimate interest in paying the debt to prevent foreclosure on their property.
• Third-Party Acquirers of Encumbered Property ("Tanpo Mokutekibutsu no Daisan Shutokusha" - 担保目的物の第三取得者): A person who has purchased property that is already subject to a mortgage or other security interest securing the debt in question. They perform to protect their ownership of the acquired property.
• Junior Secured Creditors ("Kōjun'i Tanpokenja" - 後順位担保権者): A creditor holding, for example, a second mortgage on a property has a legitimate interest in paying off the first mortgage to prevent a foreclosure by the senior mortgagee that could wipe out their junior interest, or to improve their own priority.
• Lessees of Mortgaged Property ("Teitō Fudōsan no Chinjaku'nin" - 抵当不動産の賃借人): A tenant whose leasehold interest might be extinguished if a mortgage on the leased property is foreclosed may have a legitimate interest in paying the mortgage debt to preserve their tenancy.
• Lessees of a Building on Leased Land (regarding ground rent): A tenant of a building has a legitimate interest in paying the ground rent owed by their landlord (the building owner, who is the lessee of the land) if non-payment of ground rent could lead to the termination of the land lease and thus the tenant's eviction from the building. The Supreme Court affirmed such an interest in a decision on July 1, 1988, under the older terminology of a "person with an interest."
• Debtor's General Unsecured Creditors ("Ippan Saikensha" - 一般債権者): In certain situations, a general unsecured creditor might have a legitimate interest in performing another of the debtor's obligations. For example, paying off a secured creditor who is about to seize and sell essential business assets of the debtor could preserve the debtor's overall estate or going-concern value, thereby improving the general creditor's own prospects of eventual (partial) recovery.

Conversely, a mere factual, commercial, or familial relationship without a direct legal stake in the extinguishment of the specific debt typically does not constitute a "legitimate interest." For instance, the debtor's wife's sister's husband, or a newly formed company that is merely a successor to a liquidated company without formally assuming its debts, would generally be considered to lack such an interest.

Effects of Third-Party Performance ("Daisansha Bensai no Kōka")

The legal consequences flowing from a third party's performance depend on whether that performance is deemed valid:

1. If Third-Party Performance is Valid:

• Extinguishment of the Original Obligation: The primary effect is that the debtor's obligation to the original creditor is extinguished to the extent of the performance.
• Right of Reimbursement ("Kyūshōken" - 求償権): The third party who performed the obligation generally acquires a right to be reimbursed by the original debtor for the value of the performance made. The basis for this reimbursement right can vary (e.g., contract, if the third party acted at the debtor's request; officious management of affairs or "jimu kanri" - 事務管理, if they acted without mandate but for the debtor's benefit and not against their presumed will; or unjust enrichment).
• Subrogation ("Bensai ni yoru Dai'i" - 弁済による代位): To secure this right of reimbursement, Japanese law (Articles 499 et seq. of the Civil Code) provides for the performing third party to be subrogated to the rights of the original creditor against the debtor. This means the third party effectively steps into the original creditor's shoes and can exercise the original claim, along with any associated security interests (e.g., mortgages, guarantees), against the debtor up to the amount of their reimbursement right. In this sense, the original claim is not absolutely extinguished but rather is kept alive for the benefit of the performing third party.

2. If Third-Party Performance is Invalid:

• Original Obligation Remains: If the third party's performance is deemed invalid (e.g., it was against the debtor's will by a party without legitimate interest, and the creditor knew this), the original debtor's obligation to the creditor is not extinguished.
• Claim by the Third Party: The third party who made the ineffective performance cannot claim reimbursement from the debtor based on a valid discharge of the debt (as it wasn't validly discharged by their act as against the debtor if the debtor validly objected). Their primary recourse would typically be a claim for unjust enrichment (不当利得 - futō ritoku) against the creditor who received and retained a performance they were not entitled to receive from that third party under those specific invalidating circumstances. A Taishō era court decision (November 20, 1942) suggests that the third party generally cannot claim unjust enrichment from the debtor in such cases, as the debtor’s original obligation to the creditor remains.

Performance by Co-obligors (Guarantors, Joint and Several Obligors, etc.)

It is important to briefly distinguish the performance by parties like indivisible obligors, joint and several obligors, guarantors, and persons who have assumed an obligation alongside the original debtor (併存的債務引受人 - heizonteki saimu hikiukenin). While their performance also results in the satisfaction of the creditor and often discharges the principal debtor's liability (or the liability of other co-obligors), these individuals are not "third parties" in the strict sense of Article 474. They are, in various capacities, already obligors themselves with respect to the creditor. Their performance is often the fulfillment of their own (co-extensive or secondary) obligation. Consequently, their rights to reimbursement from the principal debtor or contribution from other co-obligors, and their rights to subrogation, are governed by specific rules applicable to those relationships (e.g., rules on guarantee, joint and several liability) rather than directly by the general rules of "Daisansha Bensai" under Article 474, although the underlying principles of fairness and securing reimbursement are similar.

Conclusion

The Japanese Civil Code's provisions on "Daisansha Bensai" reflect a balance between facilitating the satisfaction of claims and protecting the autonomy and legitimate interests of both debtors and creditors. While performance by a third party is generally accepted as an effective means of discharging an obligation, this principle is qualified by considerations of the nature of the obligation, the expressed intentions of the original parties, and, critically, whether the performing third party possesses a "legitimate interest" when their intervention is against the will of the debtor or the creditor. For businesses and legal practitioners, understanding these rules is essential when dealing with situations where parties other than the primary obligor offer or make performance, particularly in assessing the validity of such performance and the subsequent rights and liabilities of all involved.