Specified vs. Non-Specified Things in Japanese Contracts: Why Does the Distinction Matter for Obligations?

Japanese Attorney at Law - Bengoshi L.L.

• 10 min read

When parties enter into a contract for the sale or transfer of goods, the nature of those goods – whether they are unique and individually identified, or merely described by type and quantity – has profound legal implications under Japanese law. The Japanese Civil Code (Minpō) distinguishes between obligations concerning "specified things" (tokuteibutsu - 特定物) and "non-specified things" (also commonly referred to as "generic things"; shuruibutsu - 種類物 or futokuteibutsu - 不特定物). This classification impacts various aspects of the contractual relationship, including the debtor's duties of care and delivery, the point at which ownership and risk pass, and the availability of certain remedies. Understanding this distinction is crucial for businesses to effectively manage their contractual rights and obligations in Japan.

Defining the Categories: Specified vs. Generic

1. Specified Things (Tokuteibutsu - 特定物)

An obligation concerns a "specified thing" when its subject matter is a unique item that has been individually identified and agreed upon by the parties at the time the contract is formed. The obligation can only be discharged by the delivery of that exact, specific item.

  • Examples: A contract for the sale of "the painting 'Starry Night' by Van Gogh currently exhibited at Museum X," "the used 2018 Toyota Prius with Vehicle Identification Number (VIN) XYZ123," or "the parcel of land located at 1-1 Chiyoda, Chiyoda-ku, Tokyo."
  • Determination: Whether an item is a "specified thing" is primarily determined by the subjective intent of the parties as expressed in their agreement and the surrounding circumstances. The parties must have focused on the individuality of the particular item.

2. Non-Specified / Generic Things (Shuruibutsu - 種類物 / Futokuteibutsu - 不特定物)

An obligation concerns "non-specified" or "generic" things when its subject matter is defined only by its kind, quality, and quantity, without identifying any particular individual items at the moment of contracting. The debtor can fulfill the obligation by delivering any items that meet the agreed generic description.

  • Examples: A contract to deliver "100 metric tons of No. 1 grade Japanese short-grain rice," "50 units of the latest model ABC laptop," or "1,000 barrels of Brent crude oil."
  • Limited Generic Obligations (Seigen Shuruibutsu - 制限種類物): This is an important sub-category where the generic goods are to be supplied from a specific, limited source or stock. For example, "100 cases of Chardonnay wine from the 2023 vintage of Winery Z's Napa Valley estate," or "10 tons of soybeans currently stored in Silo No. 5 at Port Yokohama." The limitation of the source can have significant implications, particularly regarding impossibility of performance.

Distinction from Fungible/Non-Fungible Things (Daitaibutsu / Fudaitaibutsu - 代替物 / 不代替物)

It's important to distinguish the specified/generic classification from the concept of fungible (daitaibutsu) versus non-fungible (fudaitaibutsu) things.

  • Fungibility refers to the objective characteristic of items being interchangeable with others of the same kind and quality (e.g., a kilogram of sugar is generally fungible with another kilogram of the same type of sugar).
  • The specified/generic distinction, on the other hand, is about the parties' designation in their contract. A fungible item can be the subject of a specified thing obligation if the parties identify a particular unit (e.g., "the specific 1kg bag of sugar currently on shelf A3"). Conversely, unique items are almost always treated as specified things.

The classification of the subject matter as either a specified or generic thing has several critical legal consequences:

1. Debtor's Duties: Care, Quality, and Delivery

For Specified Things (Tokuteibutsu):

  • Duty of Preservation (保存義務 - Hozon Gimu): Until the time of delivery, the debtor (e.g., the seller) has a duty to preserve the specific item with the "diligence of a good manager" (zenryō na kanrisha no chūi - 善良な管理者の注意) (Civil Code Article 400). The precise standard of this care is determined by the cause of the obligation (e.g., the terms of the sales contract, type of lease) and prevailing "transactional common sense" (torihiki-jō no shakai tsūnen). This means the debtor cannot be negligent in looking after the specific item.
  • Duty of Delivery (引渡義務 - Hikiwatashi Gimu): The debtor must deliver the exact item that was specified in the contract. Under the revised Civil Code, this delivery must also conform to the terms of the contract regarding its condition and quality. The old "specific thing dogma" – which suggested that delivering the specified item, even if defective, constituted full performance of the delivery obligation itself (with defects being a separate warranty issue) – has been largely rejected. Now, the quality and condition of the specified thing are integral to the delivery obligation for sales and similar onerous contracts.
  • Special Rule for Gifts (贈与 - Zōyo): In the case of a gift of a specified thing, Article 551, paragraph 1 of the Civil Code presumes that the donor has promised to deliver or transfer the thing or right in the state it was in when it was identified as the subject of the gift. This is a default rule and can be altered by the parties' agreement. This rule reflects the gratuitous nature of gifts, placing a less stringent default obligation on the donor regarding the item's condition compared to a seller.

For Non-Specified/Generic Things (Shuruibutsu):

  • Duty to Procure and Deliver Conforming Goods: The debtor's primary obligation is to procure and deliver goods that match the generic description (type, quantity) agreed upon in the contract.
  • Standard of Quality (if not specified): If the contract does not specify the quality of the generic goods, Article 401, paragraph 1 of the Civil Code mandates that the debtor must deliver goods of "medium quality" (chūtō no hinshitsu - 中等の品質). What constitutes "medium quality" is determined objectively based on the type of goods and common trade understanding. Parties are, of course, free to specify a higher or lower quality standard in their agreement.
  • "Genus Never Perishes" Principle (Generally): For purely generic obligations (not limited generic ones), the traditional principle is that "the genus never perishes" (genus nunquam perit). This means that the destruction of particular items the debtor had intended to use for performance generally does not excuse the debtor from their obligation, as they can, in theory, procure other items of the same kind from the market. Impossibility of performance is thus less common for generic obligations.
    • Limited Generic Obligations: If the obligation is to supply goods from a specific, limited source (e.g., the harvest from a particular field, goods from a specific warehouse), and that source is exhausted or destroyed without the debtor's fault, performance may become impossible.

2. Impossibility of Performance (履行不能 - Rikō Funō)

  • Specified Things: If the individually identified specified thing is destroyed or lost before delivery due to circumstances not attributable to the debtor (and assuming risk has not yet passed to the creditor), the debtor's obligation to deliver that specific thing becomes impossible to perform.
  • Non-Specified/Generic Things: As noted above, mere destruction of items the debtor intended to use for performance usually does not render performance impossible for a generic obligation, unless it's a limited generic obligation and the defined source fails.

3. "Specification" or "Appropriation" (Tokutei - 特定) of Generic Goods

For an obligation involving generic goods to be performed, the particular items that will satisfy the obligation must eventually be identified and segregated from the larger class of goods. This process is known as "specification" or "appropriation" (tokutei - 特定).

Methods of Specification (Civil Code Article 401, Paragraph 2):
The Civil Code provides that specification occurs when:

  1. The debtor, with the creditor's consent, designates the goods to be delivered.
  2. The debtor has done everything necessary on their part to enable the delivery of the goods. What constitutes "everything necessary" depends on the nature of the obligation (e.g., whether it's an obligation to be collected by the creditor at the debtor's premises – toritate saimu - 取り立て債務; an obligation to be delivered by the debtor to the creditor's premises – jisan saimu - 持参債務; or a shipment obligation involving a carrier – sōfu saimu - 送付債務).
    • For a toritate saimu (obligation to be collected), this generally involves selecting and separating the goods and notifying the creditor that they are ready for collection. A landmark Supreme Court case, often called the "Fishery Tar Case" (October 18, 1955), held that merely notifying the buyer of the location and arranging for labor for pick-up was insufficient for specification; actual separation or segregation of the goods was impliedly necessary under the old law's interpretation.
    • For a jisan saimu (debtor to deliver), specification typically occurs when the debtor tenders actual delivery of the conforming goods at the creditor's designated location.
    • For a sōfu saimu (shipment obligation), specification often occurs when the debtor delivers conforming goods to the carrier for shipment to the creditor, if this is what the contract requires.

Parties can also agree on a specific method or timing for specification in their contract.

Effects of Specification:
Once specification has effectively occurred:

  1. The Obligation Focuses: The obligation, which was previously to deliver any goods of a certain kind, now becomes focused on the particular items that have been specified. It begins to take on characteristics similar to an obligation for a specified thing.
  2. Transfer of Ownership: Under Japanese case law, if the contract is for the transfer of ownership (like a sale), ownership of the specified goods may pass to the creditor at the moment of specification, provided other conditions for ownership transfer (e.g., the parties' intent for ownership to pass at that point) are met.
  3. Debtor's Duty of Preservation: After specification, the debtor is generally obliged to preserve the now-specified items with the diligence of a good manager (Article 400), just as with originally specified things.
  4. Debtor's Right to Change (Henkōken - 変更権) – A Nuance: Even after specification, some legal theories and older commentaries suggested that the debtor might, under very limited circumstances (e.g., if it causes no detriment to the creditor and is consistent with good faith), retain a narrow right to substitute other conforming goods for the ones initially specified. However, this "right to change" is not a broadly recognized or easily invoked right and its existence and scope are debated, especially if the creditor has already acted in reliance on the specification. The modern trend is to emphasize the finality of specification once properly made. The discussions during the Civil Code reform process considered but ultimately did not codify a general right to change after specification, suggesting it's a matter best left to specific agreement or exceptional circumstances interpreted under good faith.

4. Transfer of Risk of Loss or Damage (Kiken Iten - 危険の移転)

The distinction between specified and generic things is historically very important for determining when the risk of accidental loss or damage to the goods passes from the seller to the buyer. The revised Civil Code, in Article 567, provides new rules for sales contracts that apply to both specified and (after specification) generic goods:

  • General Rule (Art. 567, Para. 1): If the seller has delivered the subject matter of the sale to the buyer, and the goods are subsequently lost or damaged due to a cause not attributable to either party, the buyer may not make claims against the seller based on such loss or damage (e.g., demand cure, price reduction, damages, or rescind the contract). The buyer, in turn, remains obligated to pay the price. This effectively means risk passes to the buyer upon (or after) "delivery" (hikiwatashi - 引渡し). "Delivery" here is generally understood to mean when the buyer actually receives or takes control of the goods.
  • Buyer's Default in Acceptance (Art. 567, Para. 2): If the seller has tendered delivery of conforming goods but the buyer refuses to accept them or is unable to accept them, and the goods are subsequently lost or damaged due to a cause not attributable to either party, the buyer similarly cannot make claims against the seller and must pay the price. Risk passes due to the buyer's default in acceptance.

Key Points on Risk Transfer under the New Law:

  • "Specification" as a Prerequisite for Generic Goods: For generic goods, they must first be "specified" (i.e., conforming goods identified to the contract) before the risk transfer rules in Article 567 can apply to those particular items. If non-conforming goods are tendered, and the buyer rightly rejects them, risk does not pass.
  • Link to "Delivery" not just "Specification": Unlike some older interpretations or rules in other jurisdictions that might link risk transfer directly to the moment of specification for generic goods, the Japanese Civil Code (Art. 567) links it to "delivery" (or default in acceptance after tender of conforming goods). Specification makes the goods identifiable for risk to pass concerning those goods, but the trigger for the passage is delivery/tender.
  • Rejection of the Old "Specific Thing Dogma" for Warranties: Importantly, the old notion (often called the tokuteibutsu dogma) that delivering a specific thing, even if defective, fulfilled the seller's primary delivery obligation (leaving defects to be addressed only under restrictive warranty rules) has been firmly rejected. Under the revised Civil Code, the seller of both specified and generic goods has an obligation to deliver goods that conform to the contract in terms of type, quality, and quantity. Failure to do so is a breach of the primary delivery obligation.

5. Remedies for Delivery of Non-Conforming Goods

The revised Civil Code has significantly unified the remedies available to a buyer when the delivered goods (whether originally specified or generic goods that have been specified and delivered) do not conform to the contract. If the goods are non-conforming as to type, quality, or quantity, the buyer generally has access to a suite of remedies, including:

  • Demand for Cure (Tsuikan Seikyūken - 追完請求権, Art. 562): This can take the form of repair of the goods, delivery of substitute conforming goods, or delivery of any missing quantity.
  • Demand for Price Reduction (Daikin Gengaku Seikyūken - 代金減額請求権, Art. 563): Under certain conditions, if cure is not provided or is inappropriate.
  • Claim for Damages (Songai Baishō Seikyūken - 損害賠償請求権, Art. 415, referenced by Art. 564).
  • Rescission of the Contract (Keiyaku no Kaijo - 契約の解除, Arts. 541, 542, referenced by Art. 564).

These remedies are generally available irrespective of whether the obligation initially concerned a specified or a generic thing, once it's established that the delivered goods fail to meet contractual requirements.

Practical Implications for Contract Drafting

Given these legal distinctions, parties drafting contracts under Japanese law should consider:

  • Clear Definition of Subject Matter: Explicitly state whether the contract pertains to a specific, unique item (and identify it clearly) or to generic goods. If generic, define the kind, quality, quantity, and any specific source if it's a limited generic obligation.
  • Quality Standards for Generic Goods: If the default "medium quality" is not appropriate, clearly specify the required quality standards or refer to industry benchmarks.
  • Specification Process for Generic Goods: If relevant, agree on the method, timing, and responsibility for specifying generic goods.
  • Risk of Loss or Damage: While Article 567 provides default rules, parties (especially in B2B contracts) are generally free to agree on different terms for when the risk of loss or damage passes (e.g., by using Incoterms in international sales).
  • Conformity and Inspection: Clearly define what constitutes conforming goods and outline procedures for inspection and notification of non-conformities.

Conclusion: A Distinction with Enduring Significance

The distinction between obligations concerning specified things (tokuteibutsu) and non-specified/generic things (shuruibutsu) remains a fundamental concept in Japanese contract law. It dictates the debtor's core duties regarding care and delivery, influences when performance may be deemed impossible, governs the crucial process of specification for generic goods, and plays a key role in determining when the risk of loss or damage passes to the creditor. While the revised Civil Code has modernized and unified many aspects, particularly remedies for non-conforming goods, a clear understanding of this foundational classification is essential for accurately interpreting contractual obligations and managing risks in commercial transactions under Japanese law.