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 classification affects duties regarding care and quality, the point at which ownership and risk may pass, and how performance is ultimately determined. Understanding these differences is crucial for drafting clear contracts and managing commercial relationships effectively.

"Specific Thing Obligations" (Tokuteibutsu-Saiken) in Japanese Law

A "specific thing obligation" arises when the subject matter of the obligation is an individually identified item. The key is that the parties, at the time of contracting, have designated a particular, unique item as the object of performance.

What Constitutes a "Specific Thing"?
The determination is based on the parties' intent. Common examples include:

• A specific piece of artwork ("this particular painting by artist X").
• A used car identified by its vehicle identification number (VIN).
• A particular plot of land.
• An animal identified by name or specific characteristics.

If an item is unique and identified as that specific item in the contract, the obligation to deliver it is a specific thing obligation. This is contrasted with "non-fungible things" (fu-daitai-butsu 不代替物), which are objectively unique, though a specific thing can also be fungible (e.g., one specific bag of standard rice from a display, if the parties intend that specific bag). The critical factor is the subjective intention of the parties to single out a particular item.

The Debtor's Core Duty: Delivery of the Identified Thing
The primary obligation of the debtor (typically the seller) is to deliver the exact specific thing that was agreed upon. Substituting another, even identical, item is generally not permissible without the creditor's consent.

The Duty of Preservation (Japanese Civil Code Article 400)
Until the time of delivery, the debtor has a crucial ancillary duty: to preserve the specific thing with the "care of a good manager" (zenryo na kanrisha no chui, often abbreviated as zenkan-chui-gimu). This is a standard of care generally understood to mean the level of diligence an ordinary, reasonable person would exercise when managing someone else's property.

The 2017 reforms to the Japanese Civil Code clarified Article 400, stating that the standard of this care is to be determined "in light of the contract, other cause of the obligation, and common sense in transactions". This means that while the zenkan-chui-gimu is the baseline, the specific requirements of care can be influenced by the particular contract, the reason the obligation arose (e.g., sale, lease), and prevailing business customs. This was a significant clarification, moving away from a purely objective standard to one more contextually sensitive.

A breach of this preservation duty (e.g., negligently damaging the specific car before delivery) can lead to liability for damages, or potentially give the creditor grounds to rescind the contract, separate from any issues regarding the ultimate delivery. It's important to understand that fulfilling the duty of preservation does not automatically mean the duty of delivery has been met if the item, when delivered, does not conform to the contract in other respects (e.g., a specific machine that was preserved carefully but had an inherent defect not caused by lack of care post-contract).

Article 400 applies up to the "time of delivery," which includes periods after the due date if delivery has not yet occurred. However, its practical application post-due date is nuanced by rules on creditor's delay (which can reduce the debtor's duty of care to that for their own property) and debtor's delay (where the debtor may become liable for loss even by force majeure). Article 400 is a default rule and can be modified by agreement or by special laws applicable to particular types of contracts.

Impossibility and Liability
If the specific thing is lost or destroyed before delivery, performance of the obligation to deliver that specific thing becomes impossible. If this impossibility is due to a cause not attributable to the debtor (e.g., a natural disaster destroying a specific painting), the debtor is excused from the obligation to deliver and, generally, from liability for damages for non-delivery. However, the debtor bears the burden of proving that the impossibility was not due to their fault.

Timing of Ownership Transfer
For specific things, Japanese case law has established that ownership generally transfers from the seller to the buyer at the moment the contract of sale is concluded, unless the parties have agreed otherwise (Supreme Court judgment, June 20, 1958, Minshu 12-10-1585). This is an important point, as it means the buyer may become the owner even before taking physical possession.

"Generic Obligations" (Shurui-Saiken) in Japanese Law

A "generic obligation" arises when the subject matter is defined by its kind and quantity, rather than by its individual identity.

What Constitutes a "Generic Thing"?
The object is specified by type or class and amount. Examples include:

• "100 kilograms of Grade A Koshihikari rice."
• "10 new Model X sedans."
• "500 barrels of Brent crude oil."

The individual items within the "genus" are, at the outset, considered interchangeable; their individual characteristics are not the focus.

A distinction is sometimes made for "restricted generic obligations" (seigen shurui saiken), where the genus is limited to a specific source or location, e.g., "100 bottles of Chardonnay from Winery Y's 2023 harvest". The main difference from unlimited generic obligations is the higher likelihood of performance becoming impossible if the restricted source is exhausted or destroyed. However, this is often a matter of degree, as even for restricted generic obligations, parties might intend for the debtor to procure from elsewhere if the primary source fails, unless specified otherwise.

Quality of Goods to be Delivered (Japanese Civil Code Article 401(1))
If the contract does not specify the quality of the generic goods, and no relevant commercial custom exists, Article 401(1) of the Civil Code provides a default rule: the debtor must deliver goods of "medium quality" (chuto-no-hinshitsu 中等の品質). If the goods delivered do not meet this standard (or any contractually specified standard), the performance is considered defective. However, this is a default rule, and parties are free to agree on specific quality standards, which will take precedence.

The Crucial Step: "Specification" (Tokutei) of Generic Goods

For a generic obligation, before performance can be completed, the specific individual items that will be delivered must be identified and segregated from the larger genus. This process is called "specification" (tokutei 特定).

Meaning and Necessity of Specification
Specification is the act of designating the particular items from the generic class that will fulfill the obligation. Until specification occurs, the obligation remains generic. For example, if a seller agrees to deliver 100 tons of coal, the obligation is generic until a specific 100 tons of coal are identified and set aside for that particular buyer.

How Specification Occurs (Japanese Civil Code Article 401(2))
Specification transforms the generic obligation into one concerning specific items. According to Article 401(2), specification occurs when the debtor has done all acts necessary to tender performance of the goods, or with the creditor's consent, has designated the goods to be performed. The specific acts required depend heavily on the agreed place and method of performance:

1. Jisan-Saimu (持参債務 - Obligation performable at the creditor's domicile/place of business): Where the debtor is to bring the goods to the creditor. Specification typically occurs when the debtor has selected the goods, brought them to the creditor's location, and made an "actual tender" (genjitsu-no-teikyo 現実の提供). Merely packaging goods or handing them to a carrier may not be sufficient if the ultimate place of performance is the creditor's domicile (e.g., Supreme Court, November 6, 1969, Hanrei Jiho 579-49, concerning goods damaged during transit by a carrier when delivery was at buyer's location).
2. Toritate-Saimu (取立債務 - Obligation performable by the creditor collecting from the debtor's domicile/place of business): Where the creditor is to collect the goods from the debtor.
   • Traditionally, under the pre-2017 Civil Code, specification was generally considered to occur when the debtor had separated the goods, made them ready for delivery, and notified the creditor. This was important because specification was often linked to the transfer of risk of loss to the creditor. A key case, the "Fishery Tar Case" (Supreme Court, October 18, 1955, Minshu 9-11-1642), held that merely notifying the creditor of the place of delivery and arranging for labor was only an "oral tender" and did not amount to specification if the goods were not yet separated.
   • The 2017 Civil Code reforms significantly altered the landscape for risk transfer in sales contracts. Article 567(1) now links the transfer of risk of loss (for goods lost or damaged due to causes not attributable to either party) to the "delivery" (hikiwatashi 引渡し) of the goods, with specification being a prerequisite for this rule to apply to generic goods. This delinking of specification from the direct trigger of risk transfer means the traditional rationale for requiring strict "separation" for specification (due to its risk-transferring effect) is less compelling.
   • Under the current Civil Code, whether specification has occurred in a toritate-saimu situation should be determined by examining the specific contract to see what acts by the debtor were necessary to identify the goods as the object of that particular creditor's claim, sufficient to trigger other effects of specification like transfer of ownership or the duty of preservation for those specific items. Physical separation remains a strong indicator but might not be the sole determinant if the contract implies otherwise or if other clear acts of designation have occurred and been communicated.
3. Sofu-Saimu (送付債務 - Obligation to send goods to a third place): If the contract designates a third place (neither debtor's nor creditor's domicile) as the place of performance, specification occurs upon actual tender at that third place. If, however, the debtor sends the goods to a third place merely as a courtesy at the creditor's request (where the primary place of performance was elsewhere), older theories suggested specification upon dispatch. This is now more likely viewed as a matter of interpreting the agreed scope of the debtor's performance duties.
4. Specification by Agreement or Designation: Parties can always agree on the method of specification. Alternatively, if a party (or a third person) is given the right to designate the goods, specification occurs upon such designation.

Legal Effects of Specification
Once specification has validly occurred:

• The obligation effectively transforms: The obligation regarding the specified goods is thereafter treated similarly to a specific thing obligation. For instance, if the specified goods are subsequently destroyed without the debtor's fault, performance may become impossible.
• Transfer of Ownership: Generally, ownership of the specified goods passes to the creditor at the time of specification, unless otherwise agreed (Supreme Court judgment, June 24, 1960, Minshu 14-8-1528; Supreme Court judgment, November 6, 1969, Hanrei Jiho 579-49).
• Duty of Preservation (Art. 400): The debtor's duty to preserve the goods with the care of a good manager (as discussed for specific things) applies to the now-specified goods.
• Right to Change (Henko-ken 変更権): Because the parties initially focused on the "kind" rather than the individual identity of the items, the debtor (or creditor, if they were the one to specify) may, under certain circumstances and in good faith, have a limited right to change the specified items for other conforming items from the same genus, provided this does not prejudice the other party. This right is not absolute and is judged based on the specifics of the transaction and whether the other party has already relied on the initial specification.

Non-Conformity and Remedies
If the goods selected and tendered for a generic obligation do not conform to the contract in terms of type, quality, or quantity, specification is not considered to have occurred with respect to those non-conforming goods. This constitutes a non-performance (defective performance), and the creditor will have remedies such as demanding subsequent completion (e.g., delivery of conforming goods), claiming damages, or rescinding the contract.

Risk of Loss: A Brief Note

Historically, specification played a more direct role in the transfer of risk of loss for generic goods. However, as mentioned, Article 567(1) of the revised Civil Code (applicable to sales) now states that the risk of loss or damage to sold goods, for causes not attributable to either party, passes to the buyer upon delivery (hikiwatashi) of the goods. For generic goods, the provision clarifies that this rule applies once the goods to be delivered have been specified. Thus, specification remains a critical prerequisite for the risk transfer mechanism under Article 567(1) to operate concerning generic goods, even if delivery is the ultimate trigger.

Conclusion: Practical Implications for Business

The distinction between specific and generic obligations under Japanese law is not merely theoretical; it has tangible consequences for businesses:

• Duty of Care: The debtor's duty of care in preserving goods prior to delivery differs significantly. For specific things, it's the "care of a good manager" for that unique item. For generic goods, this duty arises for the particular items only after specification.
• Quality Standards: For generic goods, understanding the default "medium quality" rule is important if contracts are silent on quality.
• Impossibility of Performance: Performance of a specific thing obligation can become impossible if the item is destroyed. For generic goods, impossibility is rarer but can occur, especially for restricted generic obligations.
• Ownership and Risk Transfer: While ownership of specific things may pass at contract formation, and ownership of generic goods upon specification (subject to agreement), the risk of loss for sold goods now generally passes upon delivery, with prior specification being a key step for generic items.
• Contract Drafting: Contracts should clearly define whether the goods are specific or generic. If generic, specifying quality standards and the method/timing of specification can prevent disputes. If specific, detailing the item and any preservation expectations is advisable.

Navigating these distinctions effectively will enable businesses to better define their obligations, manage expectations, and mitigate risks when contracting for the delivery of goods in Japan.