Can Future Debts Be Validly Assumed Under Japanese Law? Understanding the Requirements for Assumption of Prospective Obligations

Japanese Attorney at Law - Bengoshi L.L.

31 May 2025 • 7 min read

In the dynamic landscape of commercial transactions, parties often need to make arrangements concerning obligations that are not yet in existence but are anticipated to arise. This brings to the fore the question of whether "future debts" (将来債務, shōrai saimu)—those that will accrue at some point after a contractual agreement is made—can be validly assumed by a third party under Japanese law. The answer, generally, is yes, but this is subject to critical requirements regarding the specificity of the debts and the proper involvement of all relevant parties.

The Concept of Debt Assumption in Japan

Before exploring future debts, it's essential to understand the basic framework of debt assumption (債務引受, saimu hikiuke) in Japan. It is a contractual mechanism whereby an assuming party (引受人, hikiukenin) undertakes an obligation owed by an original debtor (債務者, saimusha) to a creditor (債権者, saikensha). Japanese law primarily distinguishes between:

Cumulative Debt Assumption (併存的債務引受, heizonteki saimu hikiuke): The assuming party becomes jointly and severally liable with the original debtor, who remains obligated to the creditor.
Exemptive Debt Assumption (免責的債務引受, mensekiteki saimu hikiuke): The assuming party replaces the original debtor, who is then released from the obligation by the creditor.

The principles governing these forms of assumption also broadly apply when the subject matter is a future debt.

The Validity of Assuming Future Debts

Japanese law, through a combination of case law and prevailing legal theory, recognizes the validity of agreements to assume debts that are yet to arise. This is not a novel concept; for instance, a Daishin-in (Great Court of Cassation, the predecessor to the Supreme Court) judgment as early as March 23, 1935 (Hōgaku Vol. 4, p. 1441), acknowledged the assumption of a future recourse obligation before the underlying conditions for that obligation (a surety's payment) had even occurred.

The permissibility of assuming future debts can be seen as analogous to the established legal acceptance of assigning future claims or establishing suretyship (guarantees) for future obligations. The underlying rationale is that as long as a prospective obligation can be identified with reasonable certainty, its future nature does not inherently prevent parties from making binding arrangements concerning its assumption.

The Linchpin: Specificity of the Future Debts

While the assumption of future debts is permissible, it is not without limits. The most critical requirement for the validity of such an assumption is sufficient specificity (特定性, tokuteisei). The scope of the future debts to be assumed must be defined clearly enough to distinguish them from other potential obligations of the original debtor. A vague, open-ended agreement to assume "all future debts" of a person, without any delineating parameters, would likely be considered void for lack of certainty.

To meet the specificity requirement, an agreement to assume future debts should typically identify:

The originating cause or relationship: For example, all debts arising from a specific long-term supply contract, a particular construction project, or a defined line of business.
The period of generation: The timeframe during which the assumed debts are expected to arise (e.g., debts incurred within the next three years).
The nature or type of the debts: Such as trade payables, lease obligations, or loan repayment obligations.
The counterparty or class of counterparties (creditors or original debtors): If possible and relevant to defining the scope.

A "bulk assumption" (一括した引受け, ikkatsu shita hikiuke) of a bundle of future debts is valid if the overall bundle itself is clearly identifiable and its components are ascertainable based on the agreed criteria.

The general rules regarding the necessary involvement of the creditor, the original debtor, and the assuming party for establishing either a cumulative or an exemptive debt assumption also extend to future debts. The creditor’s rights and the original debtor’s potential release are central to these requirements.

No Effective Assumption Without Creditor Involvement: An agreement solely between an original debtor and an assuming party concerning a future debt cannot, by itself, bind the future creditor or (in the case of an exemptive assumption) release the original debtor from their obligation to that future creditor. The creditor must either be a party to the assumption agreement or subsequently give their consent for it to be effective in creating rights or effecting a release concerning them.
No Effective Release Without Original Debtor's Involvement (Implicitly or Explicitly): Similarly, an agreement solely between a future creditor and an assuming party cannot unilaterally impose an exemptive assumption on an original debtor without the original debtor's actual or constructive involvement or subsequent acceptance of the release. (Though, in a cumulative assumption between creditor and assuming party, the original debtor's consent is not needed as they remain liable).

The Ministry of Justice's Legislative Council, during deliberations for the Civil Code modernization, noted that the framework for debt assumption, including for future debts, inherently requires the participation of all three key parties (creditor, original debtor, assuming party) at some stage for the full effects of the assumption (especially an exemptive one) to materialize. This means:

An exemptive assumption of a future debt cannot take effect without the creditor's consent to release the original debtor once the debt arises.
A cumulative assumption of a future debt agreed between the original debtor and the assuming party requires the creditor's acceptance (as a third-party beneficiary) to have direct effect for the creditor.
The scope of the assumed future debts must be consistently understood and agreed upon by the parties involved at each relevant stage (initial agreement, notification, consent).

Assumption of Future Debts with Unspecified Parties

Interestingly, Japanese legal thinking allows for a degree of flexibility regarding the identification of all parties at the moment the framework agreement for assuming future debts is made, provided the scope of the debts themselves is sufficiently specific.

Unspecified Original Debtor(s): In an agreement between a (future) creditor and an assuming party to assume future debts, the specific original debtor(s) might not be identified at the outset, if the agreement clearly defines the class of debts to be assumed (e.g., an assuming party agrees with a bank to assume all future loan defaults by any small business that receives a loan under a specific government-backed program facilitated by that bank). Once a specific small business defaults on such a loan, that debt falls under the assumption.
Unspecified Creditor(s): In an agreement between an original debtor and an assuming party for the assumption of future debts, the specific creditor(s) might not be known at the time of the agreement, provided the type and origin of the debts are clear (e.g., a company (original debtor) arranges for a financial institution (assuming party) to assume all its payment obligations that will arise in the next fiscal year from contracts with its raw material suppliers, whoever they may be). For an exemptive effect, each supplier (creditor), once identified, would need to consent to the original debtor's release.

Practical Application: Centralized Payment Systems

A prominent example where the assumption of future debts is practically applied is in centralized payment or settlement systems (一括支払システム, ikkatsu shiharai shisutemu or 一括決済システム, ikkatsu kessai shisutemu). In these systems, a central entity, often a financial institution, may enter into a framework agreement with a large buyer (original debtor). This agreement might stipulate that the financial institution (as the assuming party) will (often cumulatively) assume the buyer's future payment obligations to its various suppliers (future creditors) arising from ongoing commercial transactions.

For such a system to function effectively and for the suppliers to gain direct rights against the financial institution, the suppliers typically need to be brought into the arrangement, often by agreeing to the terms of the centralized payment system, which would include their consent to the financial institution's assumption of the buyer's future debts to them. The specificity of "all debts arising from purchase orders issued by Buyer X to approved suppliers under this system" would likely meet the requirements.

Limitations and Legislative Context

The ability to assume future debts is not absolute:

Nature of the Debt: As with existing debts, future obligations that are strictly personal in nature (一身専属的債務, isshin senzokuteki saimu), meaning they can only be performed by the original debtor, cannot be validly assumed.
Public Policy: Any agreement to assume future debts that contravenes public order and morals would be void.

It is noteworthy that during the extensive discussions leading to the modernization of the Japanese Civil Code (effective 2020), the Ministry of Justice's Legislative Council considered introducing explicit statutory provisions to regulate the assumption of future debts, similar to those enacted for the assignment of future claims. However, it was ultimately decided not to include such specific articles. The primary reason cited was that the legal theory and judicial precedent concerning future debt assumption were considered less developed or "mature" compared to those for future claim assignments, and thus, codification was deemed premature. This implies that while the practice is recognized and generally considered valid based on existing principles and case law, some of the more intricate aspects might continue to be shaped by judicial interpretation and evolving academic discourse.

Furthermore, the Legislative Council also considered, but ultimately did not codify, rules regarding potential conflicts arising when a future debt assumption interacts with actions by the original debtor's other creditors, such as claim seizures or competing assignments (often termed "third-party effect issues" or 対抗問題, taikō mondai). The lack of explicit statutory rules in these nuanced areas suggests that parties structuring such arrangements must do so with careful attention to general contract law principles and the existing body of case law to mitigate potential risks.

Conclusion

Under Japanese law, the assumption of future debts is a valid and commercially useful legal tool, provided certain fundamental conditions are met. The paramount requirement is that the scope of the future debts to be assumed must be defined with sufficient specificity to make them reasonably ascertainable. Additionally, the general rules for debt assumption, particularly concerning the necessary involvement and consent of the creditor (especially for exemptive assumption, which releases the original debtor), apply with equal force to future obligations.

While the Japanese Civil Code does not contain explicit articles detailing all aspects of future debt assumption, the practice is supported by established case law and general contract principles. Its utility in sophisticated financial arrangements, such as centralized payment systems, underscores its importance. However, given the absence of detailed statutory provisions for every contingency, careful drafting of agreements and a clear understanding of the roles and consents required from all parties are crucial to ensure the validity and enforceability of arrangements involving the assumption of prospective obligations.