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 Seikyuken (追完請求権). This right allows the creditor to demand that the debtor cure the non-conforming performance, aiming to put the creditor in the position they would have been in had the performance been correctly executed from the outset.

What is the Tsuikan Seikyuken?

The Tsuikan Seikyuken is the creditor's right to demand that the debtor takes corrective action when the performance rendered is non-conforming with the "main purport of the obligation" (saimu no honshi). This non-conformity can relate to the quality, quantity, or type of goods or services.

The typical forms of subsequent completion that can be demanded include:

• Repair (Shuho 修補): For defective goods or improperly performed services.
• Delivery of a Substitute (Daitai-butsu no Hikiwatashi 代替物の引渡し): Replacement of defective goods with conforming ones.
• Delivery of Missing Quantity/Parts (Fusoku-bun no Hikiwatashi 不足分の引渡し): If the quantity delivered was insufficient or parts were missing.
• Re-performance of a Service: If a service was performed inadequately.

This right can arise not only after a non-conforming performance has been tendered but also if it becomes apparent before the due date that the anticipated performance will be non-conforming (e.g., if a contractor is clearly using substandard materials for a construction project).

Legal Basis and Nature of the Tsuikan Seikyuken

Understanding the legal nature of the Tsuikan Seikyuken involves considering its relationship with the general right to demand performance (Riko Seikyuken) and the specific provisions in the Japanese Civil Code, particularly those concerning sales contracts.

Relationship with the General Right to Demand Performance

There has been academic discussion on whether the Tsuikan Seikyuken is merely a specific manifestation of the general Riko Seikyuken or a distinct remedy. During the deliberations for the 2017 Civil Code reforms, the idea of enacting a general provision for Tsuikan Seikyuken applicable to all contract types was considered. However, this was ultimately not adopted. The prevailing view, especially within the reform process, seemed to be that the Tsuikan Seikyuken is fundamentally a form of the Riko Seikyuken, and thus general principles governing the demand for performance (including its limitations) would apply. This means that if subsequent completion is, for example, impossible, it cannot be demanded, just like initial performance.

Some legal scholars, however, argue for a more distinct characterization, suggesting that while both aim to achieve the creditor's contractual interest, the Tsuikan Seikyuken arises in the specific context of an already tendered but flawed performance (or an imminently flawed one) and thus might warrant specific rules or considerations beyond those applicable to an initial failure to perform at all.

Drawing from Sales Law (Japanese Civil Code Article 562)

In the absence of a general provision, Article 562 of the Japanese Civil Code, which details the buyer's right to demand subsequent completion in the event of non-conforming goods in a sales contract, serves as a crucial reference point. The principles enshrined in Article 562 are often considered applicable by analogy to other types of onerous contracts (via Article 559, which extends sales provisions to other onerous contracts unless their nature dictates otherwise) and provide a strong model for understanding how Tsuikan Seikyuken operates more broadly. This is because the rationale for providing such a right—ensuring the creditor receives what was essentially bargained for—is not unique to sales.

Key Elements and Operation (Primarily based on the Sales Law Model - Art. 562)

Article 562 of the Civil Code, which replaced the older "defect warranty liability" (kashi-tanpo-sekinin) provisions with a framework centered on "non-conformity with the contract" (keiyaku-futekigo), outlines the following key aspects for a buyer's Tsuikan Seikyuken:

1. Creditor's (Buyer's) Right to Demand Specific Forms of Cure (Art. 562, Para. 1, main clause):
   If the delivered subject matter does not conform to the contract in terms of type, quality, or quantity, the buyer may demand that the seller provide subsequent completion by:
   • Repairing the goods.
   • Delivering substitute goods.
   • Delivering the missing quantity.
     The initial choice among these methods generally lies with the buyer (the creditor).
2. Debtor's (Seller's) Right to Offer an Alternative Method of Cure (Art. 562, Para. 1, proviso):
   The seller may perform subsequent completion by a method different from that demanded by the buyer if doing so does not impose an "unreasonable burden" (fusoto na futan 不相当な負担) on the buyer. This allows the seller some flexibility if, for example, repair is significantly more efficient or practical than replacement, provided the buyer is not unduly inconvenienced. What constitutes an "unreasonable burden" is a matter of case-by-case judgment, considering factors like the nature of the non-conformity, the buyer's intended use, and the time and effort involved for the buyer with the alternative method.
3. When Subsequent Completion Cannot Be Demanded (Art. 562, Para. 2):
   The buyer cannot demand subsequent completion if the non-conformity is attributable to a cause for which the buyer is responsible.

Limitations on the Tsuikan Seikyuken

Like the general right to demand performance, the Tsuikan Seikyuken is not absolute and is subject to several important limitations:

1. Impossibility of Subsequent Completion (Tsuikan Funo 追完不能)

If curing the non-conformity is impossible, the right to demand subsequent completion cannot be exercised. This is a direct application of the general principle that impossible performance cannot be demanded (Civil Code Art. 412-2, Para. 1).
"Impossibility of cure" can take various forms:

• Physical Impossibility: For instance, if a unique, custom-made item is defective and cannot be replicated or repaired (e.g., a commissioned artwork by a deceased artist).
• Legal Impossibility: If a law or regulation prevents the specific method of cure.
• Economic Impossibility / Gross Disproportionality: If the cost or effort required for any effective method of subsequent completion is grossly disproportionate to the value of the cured performance or the creditor's actual interest in receiving it. For example, if a very minor aesthetic defect in a large-scale construction would require demolition and rebuilding at an exorbitant cost, demanding such a cure might be deemed impossible in this economic sense.
• Unreasonableness in Light of the Contract's Purport: If, for example, the debtor fundamentally lacks the skill or capability to ever perform correctly, demanding re-performance might be considered futile and thus unreasonable (e.g., a software developer contracted for a highly specialized program demonstrably lacks the expertise to complete it, even after a failed attempt).

When assessing impossibility of subsequent completion, courts may consider factors different from those relevant to initial performance impossibility. These can include the costs of unwinding any prior defective performance, the specific costs of the proposed cure method, and the actual benefit the creditor would derive from that cure, all weighed against the contractual context.

2. Unreasonable Burden on the Debtor

This is closely related to economic impossibility but can also operate where the creditor's chosen method of subsequent completion (when multiple are possible) imposes an excessive and disproportionate burden on the debtor compared to other available and effective cure methods, or compared to the creditor's actual interest. This often leads to the debtor's right under Article 562, Paragraph 1, proviso (in sales) to employ an alternative, less burdensome method of cure, provided it doesn't unduly prejudice the creditor.

Time Limits for Demanding Subsequent Completion

The Japanese Civil Code does not set a single, universal statutory deadline for demanding subsequent completion across all contract types. However, the following considerations are relevant:

• For Sales Contracts (under the "Contract Non-Conformity" regime): The 2017 Civil Code reforms shifted away from specific short "defect warranty" periods. Now, claims arising from non-conformity, including the Tsuikan Seikyuken, are generally subject to the standard contractual statute of limitations. This is typically 5 years from the time the creditor became aware of the right to make the claim, or 10 years from the time the right could have been exercised (or 20 years for personal injury/death if it's also a tort), whichever is earlier (Civil Code Art. 166).
• Notice of Non-Conformity: For sales, especially commercial sales, the buyer has a duty to inspect goods and notify the seller of any non-conformity promptly (or within a reasonable period). Failure to do so in a timely manner might affect their ability to claim remedies, including subsequent completion. For consumer sales, the buyer must notify the seller of the non-conformity within one year from becoming aware of it if the non-conformity was not something that should have been apparent upon delivery.
• It is generally understood that the right to demand subsequent completion should be exercised within a reasonable timeframe, consistent with the period for claiming damages or other remedies for the non-conforming performance.

Relationship with Other Remedies

The Tsuikan Seikyuken often stands as the primary or preferred remedy when a non-conforming performance is tendered. The principle of the "primacy of subsequent completion" is frequently emphasized. This means the creditor should generally give the debtor an opportunity to cure the defect before resorting to more drastic remedies.

If subsequent completion is:

• Not demanded;
• Demanded but not provided within a reasonable time;
• Impossible; or
• Refused by the debtor,

then the creditor can typically pursue other remedies, such as:

• Damages (Songai Baisho): For any loss suffered due to the non-conformity and the failure to cure.
• Price Reduction (Daikingengaku Seikyu 代金減額請求): In sales contracts, the buyer can demand a reduction in price proportionate to the decrease in value due to the non-conformity (Art. 563).
• Rescission of Contract (Keiyaku no Kaijo): If the non-conformity is material, or if subsequent completion is not performed after a demand, the creditor may be entitled to rescind the entire contract (Art. 541, 542).

Conclusion

The Right to Demand Subsequent Completion (Tsuikan Seikyuken) is a vital tool for creditors in Japan when faced with defective or incomplete performance. It embodies the principle that a creditor is, first and foremost, entitled to receive what was contractually promised in a conforming state. While the creditor generally has the initial choice of how the non-conformity should be cured (repair, replacement, etc.), this right is balanced against considerations of impossibility and unreasonable burden on the debtor. For businesses contracting under Japanese law, understanding the scope, operational mechanics, and limitations of the Tsuikan Seikyuken is key to effectively asserting their rights and ensuring they receive the quality of goods and services they bargained for.