My Japanese Counterparty Hasn't Paid: What Specific Facts Must I Prove to Claim Sales Price in a Japanese Court?

Japanese Attorney at Law - Bengoshi L.L.

• 7 min read

The issue of unpaid invoices is a common and frustrating problem in business, and it takes on added complexity in cross-border transactions. If your Japanese counterparty has failed to pay for goods or services rendered under a sales agreement, understanding the specific requirements for pursuing a claim in a Japanese court is paramount. Japanese civil procedure places significant emphasis on "Yokenjijitsu" (要件事実) – the principal facts or factual allegations constituting legal requirements – which are the essential building blocks of any successful claim. This article delves into what a seller must specifically allege and, if disputed, prove to recover an unpaid sales price under Japanese law.

The Sales Contract in Japan: A Consensual Agreement

Under the Japanese Civil Code, a contract for sale (売買契約 - baibai keiyaku) is fundamentally a consensual agreement (dakusei keiyaku - 諾成契約). Article 555 of the Civil Code stipulates: "A sale becomes effective when one of the parties promises to transfer a certain property right to the other party and the other party promises to pay the price for it."

This means that, unlike some contracts that require physical delivery or a specific form, a sales contract in Japan is formed simply by the mutual assent of the parties on these core elements. This principle informs what facts are considered essential when bringing a claim for payment.

Defining the Claim: The "Subject Matter of Litigation" (Soshōbutsu)

Before examining the specific facts, it's important to understand how the claim itself is defined. In a suit for an unpaid sales price, the "subject matter of litigation" (soshōbutsu - 訴訟物) is generally identified as "the right to claim payment of the sales price based on a specific sales contract." To properly specify this soshōbutsu before the court, certain identifying details of the contract are necessary, typically including:

  • The identities of the contracting parties (seller and buyer).
  • The date the contract was concluded.
  • The specific subject matter of the sale (the goods or property).
  • The agreed-upon sales price.

These details ensure clarity and precision in defining what the lawsuit is about.

Essential Factual Allegations (Yokenjijitsu) for the Seller's Claim for Payment (Seikyū Gen'in)

When a seller (plaintiff) sues a buyer (defendant) for the payment of the purchase price, the seller must allege specific facts that establish their entitlement to this payment. These facts, collectively forming the "cause of action" (seikyū gen'in - 請求原因), are the Yokenjijitsu for this type of claim. The core Yokenjijitsu generally include:

  1. The Fact of the Conclusion of the Sales Contract (売買契約の締結 - baibai keiyaku no teiketsu):
    • This requires an allegation that a sales agreement was formed between the specific plaintiff (seller) and the specific defendant (buyer).
    • While the date of the agreement is crucial for identifying the contract, the mere fact of an agreement on a specific date is not, in itself, always a core Yokenjijitsu for the formation of the right to claim payment, but rather for its identification. The key is the existence of mutual assent.
  2. Agreement on the Specific Subject Matter of the Sale (目的物の一致 - mokutekibutsu no itchi):
    • The seller must allege that there was an agreement on the particular goods or property to be sold. The subject matter must be identified with sufficient clarity to distinguish it. For instance, "100 units of Model X widgets" or "the real property located at [address]."
  3. Agreement on the Sales Price (代金額の合意 - daikin gaku no gōi):
    • The seller must allege that a specific price was agreed upon for the subject matter. Alternatively, if a specific price was not fixed, an agreement on a clear method for determining the price must be alleged (e.g., "the market price on [date]").

If these three core sets of facts are alleged by the seller and are either admitted by the buyer or proven by the seller after being disputed, the seller’s right to claim the sales price is, in principle, established.

Facts Generally Not Required for the Seller's Initial Claim (but May Arise as Defenses)

It is equally important to understand what facts are generally not considered part of the seller's initial Yokenjijitsu for a payment claim, even though they might be relevant to the overall transaction or potential defenses:

  • Agreed Payment Due Date (支払期日 - shiharai kijitsu):
    • The seller is generally not required to allege an agreed payment due date or that such a date has passed as part of their primary claim for the existence of the payment obligation. If no specific payment date is agreed upon, the Civil Code and commercial customs may dictate when payment is due (often, in the absence of an agreement, it is due without delay or upon delivery of the goods).
    • If a payment due date was agreed upon and that date has not yet arrived, this would typically form the basis of a defense for the buyer (e.g., a defense of unmatured debt or the benefit of time – 期限の抗弁 kigen no kōben). The burden to allege and prove such a specific due date as a defense would fall on the buyer.
  • Seller's Delivery of the Goods (目的物の引渡し - mokutekibutsu no hikiwatashi):
    • While the buyer's obligation to pay the price is often performed in exchange for the seller's delivery of the goods, the act of delivery itself is not a Yokenjijitsu for the creation of the buyer's payment obligation arising from the sales contract. The obligation to pay stems from the agreement itself.
    • However, if the seller has not delivered the goods (or tendered delivery), the buyer may have a defense of simultaneous performance (同時履行の抗弁権 - dōji rikō no kōbenken) under Article 533 of the Civil Code, allowing the buyer to withhold payment until the seller performs their obligation. This is a defense to be raised by the buyer, not a fact the seller must pre-emptively address to establish their payment claim.
  • Seller's Ownership of the Goods at the Time of Sale (売主の目的物所有権 - urinushi no mokutekibutsu shoyūken):
    • Japanese law permits the formation of a valid sales contract even if the seller does not own the subject matter at the time of contracting (this is known as taninbutsu baibai - 他人物売買, and its effects are partly regulated by articles like Article 561 of the Civil Code concerning the seller's warranty to acquire and transfer title).
    • Therefore, the seller does not need to allege or prove their ownership of the goods as a Yokenjijitsu for the claim for the sales price. If the seller ultimately fails to transfer title because they couldn't acquire it, the buyer might have claims for breach of contract or termination, but this doesn't negate the initial validity of the payment obligation arising from the sales agreement itself.
  • The Fact of Non-Payment by the Buyer (代金の不払いの事実 - daikin no fubarai no jijitsu):
    • The seller’s claim is for the right to receive payment established by the contract. The assertion that the buyer has not paid is implicit in bringing the lawsuit.
    • The act of payment (bensai - 弁済) is a fact that extinguishes the seller's right to claim the price. Therefore, if the buyer asserts they have already paid, this constitutes an affirmative defense (kōben), and the burden of alleging and proving such payment falls on the buyer. The seller does not need to prove a negative (i.e., that payment was not made) as part of their initial case.

Understanding this distinction between what the seller must allege for their claim (請求原因 - seikyū gen'in) and what constitutes a defense for the buyer (抗弁 - kōben) is fundamental in Japanese litigation strategy.

Allocation of Burden of Pleading and Proof

In line with general principles, the seller (plaintiff), who is asserting the right to payment, bears the burden of pleading (shuchō sekinin - 主張責任) and, if these facts are disputed, the burden of proof (risshō sekinin - 立証責任) for the Yokenjijitsu that establish the formation of the sales contract and its essential terms (i.e., the agreement on the subject matter and the price).

The Buyer's (Defendant's) Response

Faced with a claim for payment, the buyer (defendant) has several ways to respond regarding the seller's alleged Yokenjijitsu:

  • Admission (自白 - juhaku): The buyer can admit some or all of the facts alleged by the seller. Admitted facts do not need to be proven.
  • Denial (否認 - hinin): The buyer can deny some or all of the alleged facts. This places the burden of proof for the denied facts on the seller. For example, the buyer might deny that an agreement on the price was ever reached, or that the price was different from what the seller alleges.
  • Affirmative Defenses (抗弁 - kōben): Even if the seller’s Yokenjijitsu are true, the buyer can raise affirmative defenses, alleging additional facts that would legally prevent or extinguish the seller's claim (e.g., payment has been made, the statute of limitations has expired, or a right to withhold payment due to the seller's non-delivery).

Considerations in International Sales Transactions

While this article focuses on the Japanese domestic legal framework, it's worth noting that for international sales of goods contracts, the UN Convention on Contracts for the International Sale of Goods (CISG) may apply if both parties are from contracting states and haven't excluded it. Japan is a contracting state to the CISG. If the CISG applies, its provisions would govern the formation of the contract and the rights and obligations of the buyer and seller. However, procedural matters, including the specific requirements for pleading and proving facts before a Japanese court, would still generally be governed by Japanese procedural law. If the contract explicitly chooses Japanese law, or if Japanese law applies by virtue of private international law rules, then the Yokenjijitsu framework described above becomes directly applicable.

Strategic Preparation for Sales Price Litigation in Japan

Successfully pursuing a claim for an unpaid sales price in Japan requires careful preparation focused on the Yokenjijitsu:

  • Clear Contractual Documentation: Having a clearly written contract that explicitly states the parties, subject matter, price, and other key terms is the best starting point. While oral contracts can be valid, proving their terms is significantly more challenging.
  • Evidence Gathering: The seller should meticulously gather and preserve all evidence that supports each necessary Yokenjijitsu. This includes:
    • Signed contract documents, purchase orders, order confirmations.
    • Invoices and statements of account.
    • Correspondence (emails, letters) discussing the terms of the agreement, the subject matter, and the price.
    • Delivery receipts or shipping documents (though primarily relevant if the buyer raises a defense of non-delivery).
  • Anticipating Defenses: Consider potential denials or defenses the buyer might raise and prepare to counter them.

Conclusion

To successfully claim an unpaid sales price in a Japanese court, a seller must precisely understand and be prepared to allege and prove the core Yokenjijitsu: the conclusion of a sales contract with the buyer, an agreement on the specific subject matter, and an agreement on the price. While other transactional elements like delivery or payment deadlines are important, they often fall outside the seller's initial burden of proof for establishing the payment obligation, instead forming part of potential defenses by the buyer. A clear grasp of these Japanese procedural and substantive requirements is indispensable for any business seeking to enforce its contractual rights in Japan.