My Japanese Counterparty Is Refusing to Accept Performance: What Is "Creditor's Delay in Acceptance" (Juryo Chitai) and Its Consequences?

In business dealings, performance often requires cooperation from both parties. But what happens when you, as the debtor, are ready and willing to perform your obligations, and your Japanese counterparty (the creditor) refuses to accept your performance or fails to take necessary steps to enable it? This situation, known in Japanese law as "Juryo Chitai" (受領遅滞 – Creditor's Delay in Acceptance), triggers specific legal consequences designed primarily to protect the diligent debtor and reallocate certain risks and burdens.

The Crucial First Step: "Tender of Performance" (Bensai no Teikyo) by the Debtor

Before a creditor can be considered in "delay of acceptance," the debtor must have made a valid "tender of performance" (bensai no teikyo 弁済の提供). A proper tender is the debtor's act of offering to perform their obligation in accordance with its "main purport" (saimu no honshi).

Legal Effect of Proper Tender (Japanese Civil Code Art. 492):
Once a debtor makes a valid tender of performance, they are, from that point onwards, exempted from liability for any non-performance of the obligation (e.g., they cannot be held liable for damages for delay, nor can the creditor typically rescind the contract based on that non-performance). This is a crucial shield for the debtor who has done all they can to perform.

Types of Tender (Japanese Civil Code Art. 493):
The Civil Code recognizes two main types of tender:

1. Actual Tender (Genjitsu no Teikyo 現実の提供): This is the general rule. It involves the debtor actually doing everything necessary for performance that can be done without the creditor's cooperation, and doing so in conformity with the terms of the obligation (Art. 493, main clause).
   • Example: If the contract requires the debtor to deliver goods to the creditor's warehouse on a specific date, arriving at the warehouse on that date with the conforming goods ready for unloading constitutes actual tender. The creditor does not even need to be present for the tender to be valid, as long as the debtor has made the goods available in a receivable state at the agreed time and place.
2. Oral Tender (Koto no Teikyo 口頭の提供): In certain situations, a mere oral tender is sufficient. This applies if:
   • (a) The creditor has previously refused to accept performance.
   • (b) Performance of the obligation requires a prior act on the part of the creditor (e.g., the creditor must first specify a delivery address, provide necessary materials, or take steps to enable access for the debtor's performance), and the creditor has failed to perform this act.
     In these cases, it is sufficient for the debtor to have made preparations for performance and to notify the creditor, urging their acceptance or cooperation (Art. 493, proviso). The debtor must still be ready to make an actual tender immediately if the creditor changes their mind or performs their cooperative act.

When Even Oral Tender May Be Unnecessary:
Japanese case law, invoking the principle of good faith, has recognized situations where even an oral tender by the debtor might be excused. If the creditor's refusal to accept performance is definitive, unequivocal, and persistent, requiring the debtor to go through the motions of an oral tender would be a meaningless formality. For instance, if a lessor (creditor) adamantly refuses to accept rent payments because they wrongly believe the lease has been terminated, the lessee (debtor) may be excused from repeatedly tendering rent to avoid being in default (based on principles from cases like Supreme Court judgment, June 5, 1957, Minshu 11-6-915). However, if the debtor is not actually prepared to perform (e.g., lacks the funds), they cannot rely on the creditor's refusal to excuse their own non-performance.

"Creditor's Delay in Acceptance" (Juryo Chitai) – Article 413

When a debtor has made a proper tender of performance, and the creditor either refuses to accept it or is unable to accept it, preventing the completion of performance, the creditor falls into "Juryo Chitai."

Key Requirements for Juryo Chitai:

1. Proper Tender by the Debtor: As outlined above, the debtor must have made either an actual or a legally sufficient oral tender (or have been excused from tender).
2. Creditor's Refusal or Inability to Accept: The creditor must have then refused to receive the tendered performance or been unable to do so. "Refusal" implies a volitional act, while "inability" can be due to circumstances on the creditor's side (e.g., not being present at the agreed place of delivery, or their facility being unprepared to receive goods).
   • Important Note: For the basic effects of Juryo Chitai under Article 413 to arise (such as reduction of the debtor's duty of care or liability for increased costs), it is not necessary for the creditor's refusal or inability to be attributable to their fault (negligence or intent). The legal consequences flow from the objective state of non-acceptance of a proper tender.

The purpose of the Juryo Chitai doctrine is not primarily to penalize the creditor, but rather to reallocate certain burdens and risks that arise when a diligent debtor is prevented from discharging their obligation due to issues on the creditor's side.

Consequences of Juryo Chitai

Once a creditor is in Juryo Chitai, several legal consequences ensue, primarily for the benefit of the debtor:

1. Reduction of Debtor's Duty of Care for Specific Things (Art. 413, Para. 1)

If the obligation involves the delivery of a specific thing (e.g., a particular piece of equipment, a unique artwork), the debtor's duty of care in preserving that thing is reduced. From the time of proper tender until the eventual (delayed) delivery, the debtor is only required to preserve the item with the same degree of care that they exercise for their own property (jiko no zaisan ni taisuru no to doitsu no chui 自己の財産に対するのと同一の注意).

• This is a reduction from the usual standard of "care of a good manager" (zenkan-chui-gimu) that applies to the preservation of specific things before tender (under Art. 400). The rationale is that once the creditor is in delay, the debtor is essentially holding the item for the creditor's benefit under less than ideal circumstances, and their custodial responsibility should be lessened.

2. Creditor Bears Increased Costs of Performance (Art. 413, Para. 2)

The creditor becomes liable to reimburse the debtor for any reasonable additional costs incurred by the debtor due to the delay in acceptance. This can include:

• Storage costs for goods the creditor failed to accept.
• Costs of re-tendering performance if a second attempt at delivery is needed.
• Maintenance costs for an item that had to be kept longer than anticipated.
  This is a claim for reimbursement of actual, increased expenses and is distinct from a claim for damages (which would typically require fault on the creditor's part for breaching a separate duty to cooperate).

3. Risk of Supervening Impossibility Shifts to the Creditor (Art. 413-2, Para. 2)

This is perhaps the most significant consequence. If, during the period of the creditor's delay in acceptance, performance of the obligation becomes impossible due to a cause not attributable to either party (e.g., the specific goods are accidentally destroyed by a natural disaster, a fire not caused by the debtor, or an unforeseeable act of a third party), then that impossibility is deemed to be attributable to the creditor.

• Rationale: The creditor, by failing to accept a proper tender, exposed the performance to risks over a longer period or in circumstances where it otherwise wouldn't have been. Therefore, the law shifts the risk of such supervening, non-fault-based impossibility to the delaying creditor.
• Impact on Bilateral Contracts: This has critical implications for bilateral contracts:
  • Creditor Generally Cannot Rescind: The creditor typically cannot rescind the contract based on this impossibility, as it is now deemed attributable to them (see Japanese Civil Code Art. 543, which prevents rescission if non-performance is due to the creditor's fault).
  • Creditor Generally Must Still Perform Counter-Obligation: The creditor usually remains obligated to perform their own counter-obligation (e.g., pay the price for goods that were destroyed during their delay in acceptance) (see Japanese Civil Code Art. 536, Para. 2). A similar outcome regarding risk transfer is provided specifically for sales contracts by Article 567, Paragraph 2, which states that if the buyer is in delay of accepting goods properly tendered by the seller, and the goods are subsequently lost or damaged without fault of either party, the buyer cannot refuse to pay the price.
  • The debtor, however, must pass on to the creditor any benefit they receive as a result of being excused from their own performance (e.g., if they save costs by not having to complete delivery after the goods are destroyed) (Art. 536, Para. 2, latter part).

4. Debtor's Right to Deposit Performance (Bensai Kyotaku)

While not a direct effect of Juryo Chitai, the creditor's refusal or inability to accept performance is one of the primary grounds upon which a debtor can deposit the subject matter of performance (kyotaku 供託) with an official depository (e.g., the Legal Affairs Bureau). By making a valid deposit, the debtor can be discharged from their obligation (Japanese Civil Code Art. 494 et seq.). This provides the debtor with a definitive way to free themselves from a lingering obligation when the creditor is uncooperative.

Distinction from Breach of a "Duty to Accept" by the Creditor

It's important to distinguish the automatic legal effects of Juryo Chitai under Article 413 (and related provisions like Art. 413-2(2) and Art. 567(2)) from a potential breach of a separate duty to accept performance or cooperate by the creditor.

• The effects described above (reduced duty of care, liability for increased costs, risk shift) arise from the factual situation of a proper tender followed by the creditor's non-acceptance or inability to accept, generally irrespective of whether the creditor was at "fault" or breached a specific "duty" to accept.
• However, in many contractual relationships (particularly sales, contracts for work, or where the principle of good faith implies such an obligation), the creditor may indeed have an affirmative duty to accept conforming performance or to take necessary cooperative actions to enable the debtor to perform.
• If such a duty exists and the creditor breaches it (e.g., by unreasonably refusing conforming goods or failing to provide necessary site access for a service), this breach by the creditor can give rise to separate claims by the debtor for non-performance of that specific duty. These claims could include:
  • Damages beyond mere increased costs (e.g., lost profits if the debtor could have used their resources elsewhere).
  • The right for the debtor to rescind the contract if the creditor's breach of their cooperative duties is sufficiently material.

Thus, a creditor's failure to accept performance might trigger the passive effects of Juryo Chitai (shifting certain risks and costs) and, if it also constitutes a breach of a distinct duty to cooperate, could additionally make the creditor liable for active non-performance remedies.

Conclusion

When a Japanese counterparty refuses or is unable to accept a duly tendered performance, the debtor is not left unprotected. The doctrine of "Creditor's Delay in Acceptance" (Juryo Chitai), triggered by a proper "Tender of Performance" (Bensai no Teikyo), provides significant relief. It lessens the debtor's custodial burdens, shifts increased costs to the creditor, and critically, reallocates the risk of supervening impossibility onto the delaying creditor. For businesses performing obligations in Japan, understanding how to make a proper tender and the subsequent legal effects if acceptance is delayed is crucial for mitigating risks and protecting their own interests when faced with an uncooperative contractual partner.