Civil Code of Japan/Part III

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Civil Code (Japanese: 民法 Minpō)
the Government of Japan, translated by Ministry of Justice, Government of Japan

Source: Civil Code Japanese Law Translation by the Ministry of Justice on April 1, 2009.

Civil Code

  • Law number: Act No. 89 of 1896
  • Last amendment : Act No. 78 of 2006

Part III Claims

Chapter I General Provisions

Section I Subject of Claim

(Subject of Claim)

Article 399 Even a matter that cannot be given an estimated monetary value may be the subject of a claim.

(Duty of Care in cases of Delivery of Specified Things)

Article 400 If the subject of a claim is the delivery of any specified things, the obligor must take custody of such property with due care of a prudent manager until the completion of such delivery.

(Fungible Claim)

Article 401 In cases the subject of the claim is specified only with reference to a type and if the quality of such property cannot be identified due to the nature of the juristic act or intention of the relevant party(ies), the obligor must deliver the property of intermediate quality.

(2) In the case set forth in the preceding paragraph, if the obligor has completed the acts necessary to deliver the Thing, or has identified the Thing he/she is to deliver with the consent of the obligee, such Thing shall thenceforth constitute the subject of the claim.

(Monetary Claim)

Article 402 If the subject of the claim is money, the obligor may, at his/her choice, make the payment in currency of any kind; provided, however, that, this shall not apply to the cases where the delivery of specific kind of currency is identified as the subject of the claim.

(2) If the specific kind of currency that is the subject of the claim is no longer in mandatory circulation at the time of the payment, the obligor must make payment in other currency.

(3) The provisions of the preceding two paragraphs shall apply mutatis mutandis to the cases where the delivery of the currency of a foreign state is the subject of the claim.

Article 403 When the amount of the claim is specified in the currency of a foreign state, the obligor may make the payment in the legal currency of Japan using the foreign exchange rate current in the place of the performance.

(Statutory Interest Rate)

Article 404 Unless the parties otherwise manifest their intention with respect to a claim which bears interest, the rate of such interest shall be 5% per annum.

(Incorporation of Interest into Principal)

Article 405 In cases the payment of interest corresponding to one year or more is delayed, and if the obligor does not pay such interest notwithstanding the demand by the obligee, the obligee may incorporate such interest into the principal.

(Attribution of Right of Choice in cases of Alternative Obligation)

Article 406 If the subject of the claim is to be identified by way of choice among more than one performance, the right to make the choice shall vest in the obligor.

(Exercise of Right of Choice)

Article 407 The right of choice under the preceding Article shall be exercised by manifesting the intention to the counterparty.

(2) The manifestation of intention set forth in the preceding paragraph may not be revoked without the acknowledgment of the counterparty.

(Transfer of Right of Choice)

Article 408 In cases a claim is due and, notwithstanding a demand by the counterparty stipulating a reasonable period of time, the party who holds the right of choice does not exercise the right within such period of time, the right of choice shall be transferred to the counterparty.

(Right of Choice of Third Party)

Article 409 In cases a third party holds the right of choice, such choice shall be made by manifesting its intention to either the obligee or the obligor.

(2) In the case prescribed in the preceding paragraph, if the third party is unable to make the choice or has no intention to make the choice, the right of choice shall be transferred to the obligor.

(Identification of Alternative Obligation due to Impossibility)

Article 410 If any performance which is included in the subject of a claim is impossible from the beginning, or later becomes impossible, the claim shall exist to the extent of the performance which still remains.

(2) If any performance has become impossible due to the negligence of any party who does not have any right of choice, the provision of the preceding paragraph shall not apply.

(Effect of Choice)

Article 411 The choice shall become effective retroactively as of the time of the accrual of the claim; provided, however that this shall not prejudice the rights of a third party.

Section II Effect of Claims

Subsection I Responsibility for Default

(Time for Performance and Delay in Performance)

Article 412 If any specified due date is assigned to the performance of an obligation, the obligor shall be responsible for the delay on and after the time of the arrival of such time limit.

(2) If any unspecified due date is assigned to the performance of a claim, the obligor shall be responsible for the delay on and after the time when he/she becomes aware of the arrival of such time limit.

(3) If no time limit is assigned to the performance of an obligation, the obligor shall be responsible for the delay on and after the time he/she receives the request for performance.

(Obligee's Delay in Acceptance)

Article 413 If the obligee refuses, or is unable, to accept the tender of the performance of any obligation, the relevant obligee shall be responsible for the delay on and after the time of the tender of the performance.

(Enforcement of Performance)

Article 414 If an obligor voluntarily fails to perform any obligation, the obligee may request the enforcement of specific performance from the court; provided, however, that, this shall not apply where the nature of the obligation does not permit such enforcement.

(2) In cases the nature of the obligation does not permit the enforcement of the specific performance, if it is an obligation for an act, the obligee may request the court to cause a third party to perform such act at the expense of the obligor; provided, however, that with respect to any obligation for any juristic act, the manifestation of intention of the obligor may be achieved by a judgment.

(3) With respect to any obligation for an inaction, a request may be made to the court at the expense of the obligor seeking the removal of the outcome of the action performed by the obligor, or an appropriate ruling against any future action.

(4) The provisions of the preceding three paragraphs shall not preclude demanding damages.

(Damages due to Default)

Article 415 If an obligor fails to perform consistent with the purpose of its obligation, the obligee shall be entitled to demand damages arising from such failure. The same shall apply in cases it has become impossible to perform due to reasons attributable to the obligor.

(Scope of Damages)

Article 416 The purpose of the demand for the damages for failure to perform an obligation shall be to demand the compensation for damages which would ordinarily arise from such failure.

(2) The obligee may also demand the compensation for damages which arise from any special circumstances if the party did foresee, or should have foreseen, such circumstances.

(Method of Compensation for Damages)

Article 417 Unless other intention is manifested, the amount of the damages shall be determined with reference to monetary value.

(Comparative Negligence)

Article 418 If the obligee is negligent regarding the failure of performance of the obligation, the court shall determine the liability for damages and the amount thereof by taking such elements into consideration.

(Special Provisions for Monetary Debt)

Article 419 The amount of the damages for failure to perform any obligation for the delivery of any money shall be determined with reference to the statutory interest rate; provided, however, that, in cases the agreed interest rate exceeds the statutory interest rate, the agreed interest rate shall prevail.

(2) The obligee shall not be required to prove his/her damages with respect to the damages set forth in the preceding paragraph.

(3) The obligor may not raise the defense of force majeure with respect to the damages referred to in paragraph 1.

(Liquidated Damages)

Article 420 The parties may agree on the amount of the liquidated damages with respect to the failure to perform the obligation. In such case, the court may not increase or decrease the amount thereof.

(2) The liquidated damages shall not preclude the demand for performance or the exercise of the cancellation right.

(3) Any penalty is presumed to constitute liquidated damages.

Article 421 The provisions of the preceding Article shall apply mutatis mutandis to the cases where the parties agree in advance to allocate anything other than money to the compensation for damages.

(Subrogation for Damages)

Article 422 If an obligee receives the full value of any Thing or right which is the subject of the claim as the compensation for damages, the obligor shall be subrogated to the creditor in relation to such property or right by operation of law.

Subsection II Obligee's Subrogation Right and Obligee's Right to Demand Rescission of Fraudulent Act

(Obligee's Subrogation Right)

Article 423 An obligee may exercise the right vested in the obligor in order to preserve his/her own claim; provided, however, that, this shall not apply to rights which are exclusive and personal to the obligor.

(2) Until exercised by way of subrogation admitted in a judicial proceeding, the obligee may not exercise the right set forth in the preceding paragraph unless and until his/her claim has become due; provided, however, that, this shall not apply to any act of preservation.

(Obligee's Right to Demand the Rescission of Fraudulent Act)

Article 424 An obligee may demand the court to rescind any juristic act which an obligor commits knowing that it will prejudice the obligee; provided, however, that, this shall not apply to the cases where any person who benefits from such act, or any person who succeeds to such benefit, did not know, at the time of such act or succession, the fact that the obligee is to be prejudiced.

(2) The provision of the preceding paragraph shall not apply to a juristic act with a subject other than property rights.

(Effect of Rescission of Fraudulent Act)

Article 425 The rescission pursuant to the provision of the preceding Article shall have an effect for the benefit of all obligees.

(Limitation Period of Obligee's Right to Rescind Fraudulent Act)

Article 426 The right to rescind pursuant to the provision of Article 424 shall be extinguished by operation of prescription if not exercised within two years from the time that the obligee acquired knowledge of the cause of the rescission. The same shall apply if twenty years pass from the time of the act.

Section III Claims and Obligations of Multiple-Parties

Subsection I General Provisions

(Divisible Claims and Divisible Obligations)

Article 427 In cases there are more than one obligee or obligor, unless any other intention is manifested, each obligee or each obligor shall have the equally proportionate rights or obligations.

Subsection II Indivisible Claims and Indivisible Obligations

(Indivisible Claim)

Article 428 In cases the subject of a claim is indivisible by its nature or due to the manifestation of intention of the parties involved, if there are more than one obligees, each obligee may demand the performance for the benefit of all obligees, and the relevant obligor may tender its performance to each obligee for the benefit of all obligees.

(Effect of Circumstances on Particular Circumstance which Arises with respect to One Indivisible Obligee)

Article 429 Even in cases where there is a novation or release between one indivisible obligee and the obligor, other indivisible obligee(s) may request the obligor to tender the entire performance. In such cases, the benefit which would have been allocated to the above-mentioned one indivisible obligee if he/she did not lose his/her right must be reimbursed to the relevant obligor.

(2) Other than as prescribed in the preceding paragraph, any act of one indivisible obligee, or any circumstance which arises with respect to one indivisible obligee shall not have any effect on the other indivisible obligee(s).

(Indivisible Obligation)

Article 430 The provisions of the preceding Article, and the provisions of the following Subsection III (Joint and Several Obligation)(excluding the provisions of Articles 434 to 440 inclusive) shall apply mutatis mutandis to the cases where more than one person bears any indivisible obligation.

(Changing into Divisible Claims or Divisible Obligations)

Article 431 If any indivisible claim becomes a divisible claim, each obligee may request the performance only to the extent of such portion of the claim on which he/she has his/her own right, and if any indivisible obligation becomes a divisible obligation, each obligor shall bear his/her responsibility only to the extent of the portion of the obligation which he/she bears.

Subsection III Joint and Several Obligations

(Request for Performance)

Article 432 If more than one person bears a joint and several obligation, the obligee may request one of the joint and several obligors, or all of such joint and several obligors, simultaneously or successively, to perform the obligation, in whole or in part.

(Invalidity of Juristic Act with respect to One Joint and Several Obligor)

Article 433 Even if there are any grounds for the voidance or rescission of a juristic act with respect to only one joint and several obligor, the validity of the obligation(s) of other joint and several obligor(s) shall not be impaired.

(Request for Performance to One Joint and Several Obligor)

Article 434 A request for performance made to one joint and several obligor shall also be effective with respect to other joint and several obligor(s).

(Novation with One Joint and Several Obligor)

Article 435 If there is any novation between one joint and several obligor and the obligee, the claim shall be extinguished for the benefit of all joint and several obligors.

(Setoffs by One Joint and Several Obligor)

Article 436 In cases one joint and several obligor has a claim vis-a-vis the obligee, if such joint and several obligor invokes a setoff, the claim shall be extinguished for the benefit of all joint and several obligors.

(2) So long as the joint and several obligor who has the claim set forth in the preceding paragraph does not invoke the set-off, other joint and several obligor(s) may invoke the set-off solely to the extent of the portion of the obligation which is borne by such joint and several obligor.

(Releases of One Joint and Several Obligor)

Article 437 A release of an obligation effected for one joint and several obligor shall also be effective for the benefit of other joint and several obligor(s) solely to the extent of the portion of the obligation which is borne by such joint and several obligor.

(Merger with One Joint and Several Obligor)

Article 438 If there is any merger between one joint and several obligor and the relevant obligee, it is deemed that such joint and several obligor has performed his/her obligation.

(Completion of Prescription with respect to One Joint and Several Obligor)

Article 439 If the prescription is completed with respect to one joint and several obligor, the other joint and several obligors also shall be relieved of liability to the extent of the portion of the obligation which is borne by such joint and several obligor.

(Principle of Relative Effect)

Article 440 Except as set forth in Articles 434 to the preceding Article inclusive, any circumstance which arises with respect to one joint and several obligor shall be void vis-a-vis other joint and several obligor(s).

(Commencement of Bankruptcy Procedures for Joint and Several Obligors)

Article 441 When some or all of the joint and several obligors have become subject to the ruling of the commencement of bankruptcy procedures, the obligee may participate in the distribution of each bankruptcy estate with respect to the entire amount of his/her claim.

(Right to Obtain Reimbursement among Joint and Several Obligors)

Article 442 If one joint and several obligor performs the obligation, or has otherwise acquired any common discharge in exchange for his/her own property, such joint and several obligor shall have right to obtain reimbursement from other joint and several obligors to the extent of the respective portion of the obligations which is borne by each of other joint and several obligors.

(2) The reimbursement pursuant to the provision of the preceding paragraph shall include the compensation of the statutory interest which accrue on or after the day of the performance of the obligation or other discharge, any unavoidable expenses, and other damages.

(Limitation on Reimbursement to Joint and Several Obligor who Failed to give Notice)

Article 443 When one joint and several obligor performs his/her obligation or has otherwise acquired any common discharge in exchange for his/her own property without giving to the other joint and several obligor(s) a notice that there was the request for the performance from the relevant obligee, if any of the other joint and several obligor(s) has any defense vis-a-vis the obligee, such joint and several obligor may raise such defense vis-a-vis the joint and several obligor who acquired the discharge to the extent of the portion of the obligation which is borne by himself/herself. In such case, if any defense vis-a-vis the joint and several obligor who acquired the discharge is raised on the grounds of set-off, the negligent joint and several obligor may request the relevant obligee to perform the obligation which should have been extinguished due to set-off.

(2) When one joint and several obligor performs the obligation or has otherwise acquired any common discharge in exchange for his/her own property and has failed to give notice of such fact to other joint and several obligor(s), and as a result of such failure, any other joint and several obligor acquires discharge by performing the obligation or otherwise in exchange for an act performed for consideration without knowledge, the joint and several obligor who was so discharged shall be entitled to regard his/her act to perform or other act to acquire the discharge as effective.

(Allocation of Portion of Person who does not have Sufficient Financial Resources for Reimbursement)

Article 444 If there is any person among the joint and several obligors who does not have the sufficient financial resources to make the reimbursement, the portion that cannot be reimbursed shall be borne among the person(s) who demand(s) the reimbursement and other person(s) who has/have the financial resources, in proportion to the respective portion which is borne by each of such persons; provided, however, that the person who requests the reimbursement may not demand other joint and several obligor(s) to bear the burden if he/she is negligent.

(Release from Joint and Several Obligations and Allocation of Portion of Burden of Person who does not have Sufficient Financial Resources to Pay)

Article 445 In cases any one joint and several obligor is released from the joint and several obligation, if there is any person among other joint and several obligors who does not have the sufficient financial resources to pay the obligation, the obligee shall bear such portion of the obligation which may not be performed by such person without sufficient financial resources as should have been borne by the person who was released from the joint and several obligation.

Subsection IV Guarantee Obligation

Division I General Provisions

(Responsibility of Guarantor)

Article 446 A guarantor shall have the responsibility to perform the obligation of the principal obligor when the latter fails to perform such obligation.

(2) No contract of guarantee shall be effective unless it is made in writing.

(3) If a contract of guarantee is concluded by electromagnetic record (meaning a record produced by electronic means, magnetic means, or any other means unrecognizable by natural sensory functions that is for computer data-processing use) which records the contents thereof, the contract of guarantee is deemed to be made in writing, and the provision of the preceding paragraph shall apply.

(Scope of Guarantee Obligation)

Article 447 The guarantee obligation shall include interest, penalty and compensation for damages in connection with the principal obligation, and all other charges incidental to such obligation.

(2) A guarantor may stipulate the amount of penalty or compensation for damages with regard to his/her own guarantee obligation only.

(Cases where Burden of Guarantor is More Onerous than That of the Principal Obligor)

Article 448 If the burden of a guarantor is more onerous than that of the principal obligor as to either its subject or its terms, it shall be reduced to the extent of the principal obligation.

(Guarantee of Rescindable Obligation)

Article 449 If a guarantor, who has guaranteed an obligation which may be rescinded by reason of the principal obligor's limited capacity to act, was aware, at the time of entering into a contract guarantee, of the cause for its voidability, such guarantor shall be presumed to have assumed an independent obligation of the same subject in the event of nonperformance by the principal obligor or rescission of the obligation.

(Requirements for Guarantor)

Article 450 Where an obligor has the obligation to furnish a guarantor, such guarantor must:

(i) be a person with capacity to act; and

(ii) have sufficient financial resources to pay the obligation.

(2) If the guarantor ceases to meet the requirement set forth in item (ii) of the preceding paragraph, the obligee may demand that some other person meeting the requirements listed in any item of such paragraph be substituted for such guarantor.

(3) The provisions of the preceding two paragraphs shall not apply in the case the obligee has designated the guarantor.

(Providing Other Security)

Article 451 If the obligor is unable to furnish a guarantor meeting the requirements listed in any item of paragraph 1 of the preceding Article, he/she may furnish other security in lieu thereof.

(Defense of Demand)

Article 452 If an obligee has demanded performance of an obligation from the guarantor, the guarantor may demand the obligee to demand performance of the principal obligor first; provided, however, that, this shall not apply to the cases where the principal obligor has received a ruling for the commencement of bankruptcy procedures or where his/her whereabouts are unknown.

(Defense of Reference)

Article 453 Even after the obligee has made a demand to the principal obligor in accordance with the provision of the preceding Article, the obligee must first execute on the property of the principal obligor if the guarantor has proved that the principal obligor has the financial resource to pay his/her obligation and that the execution would be easily performed.

(Special Provisions for Joint and Several Guarantee)

Article 454 If a guarantor has assumed an obligation jointly and severally with the principal obligor, the guarantor shall not have the rights set forth in the preceding two Articles.

(Effect of Defense of Demand and Defense of Reference)

Article 455 Where demand has been made or proof has been given by a guarantor pursuant to the provisions of Article 452 or Article 453, if the obligee fails to demand or to levy execution and is subsequently unable to obtain full performance from the principal obligor, the guarantor shall be relieved of liability to the extent that the obligee would have received performance if the obligee had immediately demanded or levied execution.

(Cases where More Than One Guarantor Exists)

Article 456 Where there is more than one guarantor for a single obligation, the provision of Article 427 shall apply even if they have assumed their obligations by separate acts.

(Effect of Circumstance which Arises with respect to the Principal Obligor)

Article 457 The nullification of prescription by operation of a demand vis-a-vis the principal obligor or on any other grounds shall also be effective vis-a-vis the guarantor.

(2) A guarantor may raise a defense vis-a-vis the obligee by setting off any claim which the principal obligor may have vis-a-vis the obligee.

(Effect of Circumstance which Arises with respect to Jointly and Severally Liable Guarantor)

Article 458 The provisions of Articles 434 to 440 inclusive shall apply mutatis mutandis to the cases where the principal obligor assumes an obligation jointly and severally with the guarantor.

(Right to Obtain Reimbursement of Guarantor Entrusted by the Principal Obligor)

Article 459 In cases where a guarantor has given a guarantee as entrusted by the principal obligor, if he/she has, without negligence, had a judgment ordering him/her to perform the obligation to the obligee, or has performed the obligation on behalf of the principal obligor, or has otherwise in exchange for his/her own property performed any other act intended to cause the obligation to be extinguished, such guarantor shall have a right to obtain reimbursement from the principal obligor.

(2) The provision of paragraph 2 of Article 442 shall apply mutatis mutandis to the cases set forth in the preceding paragraph.

(Entrusted Guarantor's Right to Obtain Reimbursement in Advance)

Article 460 In cases where a guarantor has given a guarantee as entrusted by the principal obligor, the guarantor may exercise in advance his/her right to obtain reimbursement vis-a-vis the principal obligor if:

(i) the principal obligor is subject to a ruling for the commencement of bankruptcy procedures, and the obligee does not participate in the distribution of the bankruptcy estate;

(ii) the obligation is due; provided, however, that, no extension of time granted by the obligee to the principal obligor after the conclusion of the contract of guarantee may be raised as a defense vis-a-vis the guarantor; and

(iii) ten years have elapsed after the conclusion of the contract of guarantee in the cases where the time for performing the obligation is uncertain and even its maximum duration cannot be ascertained.

(Cases where Principal Obligor Reimburses Guarantor)

Article 461 In cases where a principal obligor reimburses a guarantor pursuant to the provisions of the preceding two Articles, the principal obligor may demand the guarantor to provide security or to obtain the discharge of the principal obligor until and unless the obligee has received the full satisfaction of the entire obligation.

(2) In the case prescribed in the preceding paragraph, the principal obligor may be relieved of liability for reimbursement by making a deposit with an official depository, by providing security, or by procuring the discharge of the liabilities of the guarantor.

(Right to Obtain Reimbursement of Guarantor Not Entrusted by Principal Obligor)

Article 462 If a person, who has become a guarantor without the entrustment of the principal obligor, has performed the obligation or has otherwise in exchange for his/her own property procured the release from liability of the principal obligor, the principal obligor must reimburse the guarantor to the extent that the principal obligor was enriched at the time of such performance of the obligation.

(2) A person who has become a guarantor against the will of the principal obligor shall have the right to obtain reimbursement only to the extent that the principal obligor is actually enriched. In such case, if the principal obligor asserts that he/she had, prior to the day of the demand for reimbursement, grounds for set-off against the obligee, the guarantor may demand that the obligee perform the obligation which would have been extinguished by operation of such set-off.

(Limitation on Reimbursement for Guarantor who Failed to give Notice)

Article 463 The provisions of Article 443 shall apply mutatis mutandis to a guarantor.

(2) In cases where a guarantor has become a guarantor as entrusted by the principal obligor, if he/she performed the obligation or otherwise in exchange for his/her own property performed any act to cause the obligation to be extinguished without knowledge, the provision of Article 443 shall apply mutatis mutandis also with respect to the principal obligor.

(Right to Obtain Reimbursement of Guarantor for Jointly and Several Obligation or Indivisible Obligation)

Article 464 A person who has become a guarantor for one of the jointly and several obligors or for one of the indivisible obligors shall have the right to obtain reimbursement from the other obligors only to the extent of such portion of the obligation which he/she bears.

(Right of Joint Guarantors to Obtain Reimbursement for One Obligation)

Article 465 Where there are several guarantors, if one guarantor has paid the entire amount of the obligation or any amount exceeding the portion which is borne by such guarantor because the principal obligation is indivisible, or because there is a special provision that each guarantor should pay the entire amount, the provisions of Articles 442 to 444 inclusive shall apply mutatis mutandis.

(2) Except in cases provided in the preceding paragraph, if one of the guarantors who are not jointly and severally liable has paid the entire amount or any amount exceeding the portion to be borne by that guarantor, the provisions of Article 462 shall apply mutatis mutandis.

Division II Revolving Guarantee on Loans

(Liability of Guarantor of Contract for Revolving Guarantee on Loans)

Article 465-2 A guarantor to a contract of guarantee the principal obligation of which is one or more unidentified obligations within a certain specified scope (hereinafter referred to as a "contract for revolving guarantee") whereby the scope of such obligation includes any obligation which is incurred as a result of the transaction of lending money or accepting discount of a negotiable instrument (hereinafter referred to as an "loan obligation")(excluding any contract in which the guarantor is a juridical person, hereinafter referred to as a "contract for revolving guarantee on loans") shall be liable for the satisfaction of the amount of the principal of the relevant principal obligation, interest, any penalty and damages in connection with such principal obligation, and all other amounts incidental to such obligation, as well as the amount of any penalty and damages which are agreed on with regard to such guarantee obligation, which liability shall be limited in aggregate, however, to a certain maximum amount which pertains to all of the above-mentioned amounts.

(2) A contract for revolving guarantee on loans shall not be effective unless the maximum amount set forth in the preceding paragraph is stipulated.

(3) The provisions of paragraph 2 and paragraph 3 of Article 446 shall apply mutatis mutandis to the stipulation of a maximum amount in a contract for revolving guarantee on loans provided in paragraph 1.

(Principal Determination Date for Contract for Revolving Guarantee on Loans)

Article 465-3 In the cases where a contract for revolving guarantee on loans provides the date on which the principal of the principal obligation should be determined (hereinafter referred to as the "principal determination date"), if it is provided that such principal determination date shall fall on any day on and or after the day on which five years have elapsed after the day of the conclusion of the relevant contract for the revolving guarantee on loans, such provision for the principal determination date shall not be effective.

(2) In the cases where a contract for revolving guarantee on loans does not provide a principal determination date (including cases where the provision on the principal determination date is not effective pursuant to the provision of the preceding paragraph), the principal determination date thereof shall fall on the day on which three years have elapsed after the day of the conclusion of the relevant contract for revolving guarantee on loans.

(3) In the cases where any change of the principal determination date provided in a contract for revolving guarantee on loans is to be effected, if the principal determination date as changed falls on a day on and or after the day on which five years have elapsed after the day of such change, such change of the principal determination date shall not be effective; provided, however, that, this shall not apply to the cases where the change of the principal determination date is effected within two months immediately preceding the principal determination date, and the principal determination date as changed falls on a day within five years from the original principal determination date.

(4) The provisions of paragraph 2 and paragraph 3 of Article 446 shall apply mutatis mutandis to the provisions of a principal determination date set forth in a contract for revolving guarantee on loans and a change thereof (excluding any provision which provides to the effect that the principal determination date shall fall on a day within three years from the day of the conclusion of such contract for revolving guarantee on loans, and any change which is intended to change the principal determination date to a day preceding the original principal determination date).

(Grounds for Determination of Principal in Contract for Revolving Guarantee on Loans)

Article 465-4 The principal for the principal obligation under a contract for revolving guarantee on loans shall be determined if:

(i) an obligee has filed a petition for compulsory execution or exercise of any security interest with respect to a claim the subject- matter of which is payment of money on any property of the relevant principal obligor or guarantor; provided, however, that this provision shall apply only in cases where the proceedings for the compulsory execution or exercise of the security interest have been commenced;

(ii) the relevant principal obligor or guarantor has become subject to a ruling of the commencement of bankruptcy procedures; or

(iii) the relevant principal obligor or guarantor has died.

(Right to Obtain Reimbursement in Contract for Revolving Guarantees for Loan Obligation in cases where Guarantor is Juridical Person)

Article 465-5 In cases of a contract for revolving guarantee under which the guarantor is a juridical person and the scope of the principal obligation thereof includes an obligation on loans, if the maximum amount provided in paragraph 1 of Article 465-2 is not provided, if the principal determination date is not specified, or if the provision on the determination date or any change thereof would not be effective should the provisions of paragraph 1 or paragraph 3 of Article 465-3 be applied, a contract of guarantee with regard to the right to obtain reimbursement of the guarantor for the contract for revolving guarantee against the principal obligor (excluding cases where the guarantor is a juridical person) shall not be effective.

Section IV Assignment of Claims

(Assignability of Claims)

Article 466 A claim may be assigned; provided, however, that, this shall not apply to the cases where its nature does not permit the assignment.

(2) The provisions of the preceding paragraph shall not apply in cases where the parties have manifested their intention to the contrary; provided, however, that such manifestation of intention may not be asserted against a third party without knowledge.

(Requirement for Assertion of Assignment of Nominative Claim against Third Parties)

Article 467 The assignment of a nominative claim may not be asserted against the applicable obligor or any other third party, unless the assignor gives a notice thereof to the obligor or the obligor has acknowledged the same.

(2) The notice or acknowledgement set forth in the preceding paragraph may not be asserted against a third party other than the obligor unless the notice or acknowledgement is made using an instrument bearing a fixed date.

(Defense of Obligor upon Assignment of Nominative Claim)

Article 468 In the cases where the obligor has given the acknowledgement referred to in the preceding Article without objection, even if there are grounds which could have been raised as a defense against the assignor, he/she may not raise such grounds as a defense against the assignee. In such case, if the obligor has paid any money or delivered anything or assumed a new obligation to or for the benefit of the assignor to obtain the extinction of his/her obligation, the obligor may recover the money paid or other thing delivered, or may deem that the new obligation had not been assumed, as the case may be.

(2) In cases where the assignor has merely given notice of the assignment, the obligor may raise any ground as a defense against the assignee which accrues vis-a-vis the assignor before he/she receives such notice as a defense against the assignee.

(Requirement for Assertion of Assignment of Debt Payable to Order against Third Parties)

Article 469 The assignment of any debt payable to order may not be asserted against the relevant obligor or any other third party unless the certificate representing such claim is tendered to the assignee with the endorsement of the relevant assignment.

(Examination Right of Obligor of Debt Payable to Order)

Article 470 The obligor of any debt payable to order shall have the right, but not the obligation, to examine the authenticity of the identity of the bearer of the relevant certificate and the signature and seal affixed thereon; provided, however, that the performance of the applicable obligation shall be void if the obligor has knowledge or is grossly negligent.

(Examination Right of Obligor of Claim Payable to Obligee or Holder)

Article 471 The provisions of the preceding Article shall apply mutatis mutandis to the cases where any certificate regarding the claim specifies the name of the obligee and note that the payment should be made to the bearer of such certificate.

(Limitation on Defense of Obligor in cases of Assignment of Debt Payable to Order)

Article 472 The obligor of a debt payable to order may not use any grounds which could have been raised as defenses against the obligee before the assignment of the relevant debt payable to order as defenses against an assignee without knowledge, except for the matter specified on the relevant certificate or any result which necessarily arises from the nature of such certificate.

(Limitation on Defense of Obligor in cases of Assignment of Bearer Certificate of Claims)

Article 473 The provisions of the preceding Article shall apply mutatis mutandis to a bearer certificate of claims.

Section V Extinction of Claims

Subsection I Performance

Division I General Provisions

(Performance by Third Parties)

Article 474 The performance of an obligation may be effected by a third party; provided, however, that, this shall not apply in cases where the nature of such obligation does not permit such performance or the parties have manifested their intention to the contrary.

(2) A third party who has no interest in an obligation may not perform the obligation against the will of the obligor.

(Recover of any Property Tendered to Perform Obligation)

Article 475 In cases where a person who performed his/her obligation delivered any property owned by others as the performance of the obligation, the person who made such performance may not recover such property unless he/she effects an effective performance de novo.

Article 476 In cases where any possessor who has limited capacity to act with respect to the act of assignment delivers any property to perform any obligation, and later rescinds such performance, the relevant possessor may not recover such property unless he/she effects an effective performance de novo.

(Effect of Performance in cases Any Property Delivered to Perform Obligation is Consumed or Assigned)

Article 477 In the case referred to in the preceding two Articles, if an obligee without knowledge consumes or assigns any property which he/she received as the performance of the obligation, such performance shall be effective. In such case, if the relevant obligee has received any request for compensation from a third party, he/she shall not be precluded from seeking reimbursement from the person who performed the obligation.

(Performance to a Holder of Quasi-Possession of Claim)

Article 478 Any performance made vis-a-vis a holder of quasi-possession of the claim shall remain effective to the extent the person who performed such obligation acted without knowledge, and was free from any negligence.

(Performance to Person Without Authority to Receive Performance)

Article 479 Except as provided in the preceding Article, any performance made vis-a-vis any person who has no authority to receive the performance shall have the effect only to the extent the relevant obligee is enriched as a result thereof.

(Performance to Bearer of Receipt)

Article 480 A bearer of a receipt is deemed to have the authority to accept performance; provided, however, that, this shall not apply to the cases where the person who made the performance knew, or was negligent in not knowing, that the bearer did not have the authority.

(Performance by Third-party Obligor who had been Ordered to Suspend Payment)

Article 481 If a third-party obligor who has been enjoined from making payment has paid his/her obligation to his/her own obligee, the relevant attaching obligee shall be entitled to request such third-party obligor to make payment de novo to the extent he/she suffered the damages.

(2) The provision of the preceding paragraph shall not preclude the relevant third-party obligor from exercising his/her right to obtain reimbursement from his/her obligee.

(Substitute Performance)

Article 482 If an obligor, in lieu of the performance he/she originally incurred, provided any other type of performance with the acknowledgment of the obligee, such performance shall have the same effect as that of the original performance.

(Delivery of Specific Thing in its Existing State)

Article 483 If the subject of a claim is the delivery of a specific thing, the person who intends to effect any performance must deliver such thing on an "as-is" basis as of the time when the delivery is due.

(Place of Performance)

Article 484 Unless any other intention is manifested with respect to the place where the performance should take place, the delivery of a specific thing must be effected at the place where such thing was located when the relevant claim accrued, and the discharge of any other obligation must be effected at the current domicile of the obligee, respectively.

(Expense of Performance)

Article 485 Unless any other intention is manifested with respect to the expense of performance, such expenses shall be borne by the obligor; provided, however, that, in cases the relevant obligee caused the expense of performance to increase by relocating his/her domicile or taking any other actions, such incremental amount shall be borne by the obligee.

(Request for Issuance of Receipt)

Article 486 Any person who made the performance shall be entitled to request the person who received the performance to issue a receipt.

(Request for Return of Claim Instrument)

Article 487 In the cases where there is any instrument which evidences the claim, if the person who makes the performance has completed his/her entire performance, he/she may demand the return of such instrument.

(Designation of Obligations to be Performed)

Article 488 In the cases where an obligor owes to a single obligee more than one obligations which requires the performance of the same kind, if any performance tendered to discharge the obligation is not sufficient to extinguish all obligations, the person who tenders the performance may, at the time of such tender, designate particular obligations to which such performance should be allocated before any others.

(2) If the person who tenders the performance does not make the designation pursuant to the provision of the preceding paragraph, the person who receives the performance may, at the time of such receipt, designate a particular obligation to which such performance should be allocated before any others; provided, however, that, this shall not apply to the cases where the person who tenders the performance immediately raises his/her objection to such allocation.

(3) The designation of the performance under the preceding two paragraphs shall be effected by manifesting the intention to the counterparty.

(Statutory Allocation)

Article 489 In cases where neither the person who tenders the performance nor the person who receives such performance does not designate the allocation of performance pursuant to the provision of the preceding Article, the allocation shall be effected as stipulated in each of the following items:

(i) if the obligations include those which are due and those which are not due yet, the applicable performance shall be allocated to those which are due;

(ii) if all obligations are due, or none of the obligations are due, the applicable performance shall be allocated in the order of the obligations which shall result in more benefit to the obligor when performed;

(iii) if all obligations would have equal benefit to the obligor when performed, the applicable performance shall be allocated in the order of the obligations which have, or should have, the earliest due date; and

(iv) the performance of obligations which are equal in terms of the matters listed in the preceding two items shall be allocated in proportion to the amount of each obligation.

(Allocation in cases More than One Performance Should be Tendered)

Article 490 In the cases where more than one performance should be tendered to discharge a single obligation, if the person who must perform tenders any performance which is not sufficient to extinguish such obligation in its entirety, the provision of the preceding two Articles shall apply mutatis mutandis.

(Allocation in cases Principal, Interest, and Expenses Should be Paid)

Article 491 In cases where the obligor should pay the principal as well as the applicable interest and expenses with respect to one or more obligation(s), if the person who must perform tenders any performance which is not sufficient to extinguish such obligation in its entirety, such performance must be allocated first to the expense, and then to the interest and principal, in this order.

(2) The provision of Article 489 shall apply mutatis mutandis to the cases set forth in the preceding paragraph.

(Effect of Tender of Performances)

Article 492 Upon tendering the performance, the relevant obligor shall be relieved from any and all responsibilities which may arise from the nonperformance of the obligation.

(Method of Tender of Performances)

Article 493 The tender of the performance must be made actually consistent with the main purport of the obligation; provided, however, that, if the obligee refuses to accept such performance in advance, or any act is required on the part of the obligee with respect to the performance of the obligation, it shall be sufficient if the obligor demands the acceptance thereof by giving a notice that the tender of the performance has been prepared.

Division II Deposit of Subject-Matter of Performance

(Deposit)

Article 494 If an obligee refuses, or is unable, to accept the performance, the person who can make the performance (hereinafter in this Division referred to as the "performer") may be relieved from his/her obligation by depositing the subject-matter of the performance with an official depository. The same shall apply in cases the performer is unable to ascertain the obligee without any negligence on the part of the performer.

(Method of Deposit)

Article 495 The deposit pursuant to the provision of the preceding Article must be made with the official depository having jurisdiction over the district where the relevant obligation must be performed.

(2) In cases where there is no specific provision in the laws and regulations with respect to the official depository, the court must, at the request of the performer, designate the depository and appoint a custodian of the property to be deposited.

(3) A person who has effected a deposit pursuant to the provision of the preceding Article must notify the obligee of the deposit without delay.

(Recovery of Deposited Property)

Article 496 As long as the obligee does not accept the deposit, or the judgment which pronounces that the deposit is effective does not become unappealable, the performer may recover the deposited property. In such case, it is deemed that no deposit has been effected.

(2) The provision of the preceding paragraph shall not apply in cases any pledge or mortgage has been extinguished due to the deposit.

(Property Not Suitable for Deposit)

Article 497 If any subject of the performance is not suitable for deposit, or such property is likely to suffer any loss or damage, the performer may, with the permission of the court, sell such property at public auction and deposit the proceeds of such sales with the official depository. The same shall apply in cases excessive expenses are required for the preservation of such property.

(Requirements for Acceptance of Deposited Property)

Article 498 In cases where the obligor is required to perform in exchange for the performance of the obligee, the obligee may not accept the relevant deposited property unless he/she tenders his/her performance.

Division III Subrogation by Performance

(Voluntary Subrogation)

Article 499 A person who has performed the obligation for the benefit of an obligor may be subrogated to the claim of the obligee by acquiring the acknowledgment of the obligee upon such performance.

(2) The provision of Article 467 shall apply mutatis mutandis to the case set forth in the preceding paragraph.

(Statutory Subrogation)

Article 500 A person who has legitimate interest in effecting performance shall be subrogated by operation of law to the claim of the obligee by effecting performance.

(Effect of Subrogation by Performance)

Article 501 A person who is subrogated to the claim of the obligee pursuant to the provisions of the preceding two articles may exercise any and all rights possessed by such obligee as the effect of, and as a security for, such right to the extent he/she may seek reimbursement under his/her own right; provided, however, that:

(i) unless the fact of subrogation is noted in advance in the register of an applicable statutory lien, pledge of real estate, or mortgage, a guarantor may not be subrogated to the claim of the obligee vis-a-vis any third party acquirer of the real estate which is encumbered by such statutory lien, pledge of real estate, or mortgage;

(ii) a third party acquirer may not be subrogated to the claim of the obligee vis-a-vis the guarantor;

(iii) one of the third party acquirers of the real estate shall be subrogated to the claim of the obligee vis-a-vis other third party acquirers in proportion to the value of each real estate;

(iv) one of the third party pledgors shall be subrogated to the claim of the obligee vis-a-vis other third party pledgors in proportion to the value of each property;

(v) as between a guarantor and a third party pledgor, the subrogation to the claim of the obligee shall be effected depending on the number of such persons involved; provided, however, that, if there are more than one third party pledgor, such persons shall be subrogated to the claim of the obligee in proportion to the value of each property with respect only to the residual amount which remains after deduction of the portion to be borne by the guarantor; and

(vi) in the cases referred to in the preceding item, if the property in question is real estate, the provisions of item 1 shall apply mutatis mutandis.

(Subrogation by Partial Performance)

Article 502 If any performance by subrogation occurs with respect to any portion of a claim, the subrogee shall exercise his/her right together with the obligee in proportion to the value of his/her performance.

(2) In the case set forth in the preceding paragraph, the cancellation of a contract based on the failure to perform the obligation may be effected only by the obligee. In such case, the obligee must reimburse to the subrogee the value of the performance he/she effected plus interest.

(Delivery of Claim Instrument by Obligee)

Article 503 An obligee who has received full performance by way of performance by subrogation must deliver to the subrogee the instruments regarding the claim and any security he/she possesses.

(2) In cases where any performance by subrogation occurs with respect to any portion of a claim, the obligee must enter such subrogation in the instruments regarding the claim and allow the subrogee to supervise the preservation of the security he/she possesses.

(Loss of Security by Obligee)

Article 504 In cases where there exists a person who has the right of subrogation pursuant to the provision of Article 500, if the obligee lost, or diminished, his/her security due to his/her intentional act or negligence, the person who has the right of subrogation shall be relieved to the extent he/she can no longer seek the reimbursement due to such loss or diminution.

Subsection II Set-offs

(Requirements for Set-offs)

Article 505 In cases where two persons mutually owe to the other any obligation with the same kind of purpose, if both obligations are due, each obligor may be relieved from his/her own obligation by setting off each value thereof against the corresponding amount of the obligation of the other obligor; provided, however, that, this shall not apply to the cases where the nature of the obligation does not permit such set-off.

(2) The provisions of the preceding paragraph shall not apply in cases where the relevant party manifests his/her intention to the contrary; provided, however, that such manifestation of intention may not be asserted against a third party without knowledge.

(Method and Effect of Set-offs)

Article 506 Set-offs shall be effected by means of manifestation of one party's intention to the other. In such case, no condition or time limit may be added to such manifestation of intention.

(2) The manifestation of intention set forth in the preceding paragraph shall take effect retroactively as of the time when the obligations of both parties became due and suitable for set-off.

(Set-offs between Obligations with Different Places of Performance)

Article 507 Set-offs may be effected even if the place of performance of both obligations are different. In such case, the party who intends to effect the set-off shall be liable for any damages suffered by the counterparty as result of such set-off.

(Set-offs Intended to Invoke a Claim Extinguished by Prescription )

Article 508 In cases where any claim which was extinguished by a prescription had been suitable for set-off prior to such extinguishment, the relevant obligee may effect the set-off.

(Prohibition of Effecting Set-offs Against Any Claim Arising from Tortious Acts)

Article 509 If any claim arises from a tortious act, the relevant obligor may not assert the set-off against the obligee.

(Prohibition of Set-offs Against Any Claim Immune from Attachment)

Article 510 If any claim is immune from any attachment, the relevant obligor may not assert the set-off against the obligee.

(Prohibition of Set-offs Against Any Claim Subject to Injunction)

Article 511 A third-party obligor who has been enjoined from making payment may not assert the set-off against any after-acquired claim against the relevant attaching obligee.

(Allocation of Set-off)

Article 512 The provisions of Articles 488 to 491 inclusive shall apply mutatis mutandis to the set-off.

Subsection III Novation

(Novation)

Article 513 If the parties conclude a contract which changes any element of an obligation, such obligation shall be extinguished by novation.

(2) It is deemed that an element of obligation has been changed if a conditional obligation is made an unconditional obligation, if a condition is added to an unconditional obligation, or if any condition on an obligation is changed.

(Novation by Substitution of Obligor)

Article 514 A novation by substitution of obligor may be effected between the obligee and a person who becomes the obligor after the novation; provided, however, that, this shall not apply to the cases where it is contrary to the intention of the obligor prior to the novation.

(Novation by Substitution of Obligee)

Article 515 A novation by substitution of obligee may not be asserted against a third party unless it is made using an instrument bearing a fixed date.

Article 516 The provisions of paragraph 1 of Article 468 shall apply mutatis mutandis to the novation by substitution of obligee.

(Cases where Obligations Existing Prior to Novation are not Extinguished)

Article 517 If any obligation which arises by novation is not established or is rescinded on the ground of illegality or due to reasons unknown to the parties, the obligation which existed prior to the novation shall not be extinguished.

(Conversion of Security to Obligation After Novation)

Article 518 To the extent of the purpose of the obligation in effect prior to the novation, the parties to the novation may convert the pledge or mortgage created as the security of such obligation to the obligation in effect after the novation; provided, however, that, in cases where any third party created such security, the acknowledgment of such third party must be obtained.

Subsection IV Release

Article 519 If an obligee manifests his/her intention to release an obligation to the obligor, such obligation shall be extinguished.

Subsection V Merger

Article 520 If a claim and obligation becomes vested in the same person, such claim shall be extinguished; provided, however, that, this shall not apply to the cases where such claim is the subject-matter of the right of a third party.

Chapter 2 Contracts

Section 1 General Provisions

Subsection 1 Formation of Contracts

(Offers that Specify Period for Acceptance)

Article 521 An offer which specifies a period for acceptance may not be revoked.

(2) If an offeror does not receive notice of acceptance of the offer set forth in the preceding paragraph within the period referred to in the same paragraph, the offer shall cease to be effective.

(Late Arrival of Notices of Acceptance)

Article 522 Even in cases where the notice of acceptance of the offer under Paragraph 1 of the preceding Article arrives after the lapse of the period referred to in the same paragraph, if the offeror is in a position to know that the notice was dispatched at a time which, under normal circumstances, would have allowed the notice to arrive within that period, the offeror must dispatch a notice of late arrival to the other party without delay; provided, however, that this shall not apply when the offeror dispatches the notice of delay before the arrival of the notice of acceptance.

(2) When the offeror fails to give the notice of late arrival referred to in the main clause of the preceding paragraph, the notice of acceptance shall be deemed to have arrived within the period referred to in Paragraph 1 of the preceding Article.

(Effect of Delayed Acceptance)

Article 523 The offeror may deem a delayed acceptance to be a new offer.

(Offers that do not Specify Period for Acceptance)

Article 524 An offer made to a person at a distance without specifying a period for acceptance may not be revoked until the lapse of a reasonable period for the offeror to receive a notice of acceptance.

(Offeror's Death or Loss of Capacity to Act)

Article 525 The provisions of Paragraph 2 of Article 97 shall not apply where the offeror expresses his/her intention to the contrary, or the other party has come to know the fact of the offeror's death or loss of capacity to act.

(Time of Formation of Contract between Persons at Distance)

Article 526 A contract between persons at a distance shall be formed upon dispatch of the notice of acceptance.

(2) In cases where no notice of acceptance is required due to the offeror's manifestation of intention or usage of trade, the contract shall be formed upon the occurrence of any fact which ought to be regarded as a manifestation of intention of acceptance.

(Late Arrival of Notices of Revocation of Offer)

Article 527 Even if a notice to revoke an offer arrives after the dispatch of the acceptance notice, if the offeree is in a position to know that the notice was dispatched at a time which, under normal circumstances would have allowed the notice to arrive before the dispatch of the acceptance notice, the offeree must dispatch a notice of the late arrival to the offeror without delay.

(2) If the offeree fails to give the notice of late arrival referred to in the preceding paragraph, it shall be deemed that no contract was formed.

(Acceptances which Modify Offer)

Article 528 If the offeree has accepted the offer by adding any condition or by making any other modification, it shall be deemed that the offeree has refused the offer and has made a new offer.

(Advertisements Offering Prizes)

Article 529 A person who places an advertisement to the effect that any person who performs a defined act will be given a set reward (hereinafter in this Subsection referred to as an "advertiser offering prizes") shall be obligated to give the reward to the person who has performed the act.

(Revocation of Advertisements Offering Prizes)

Article 530 In the case set forth in the preceding Article, the advertiser offering prizes may revoke its advertisement using a method identical to that used for the above advertisement whilst no person has completed the designated act; provided, however, that this shall not apply when a statement to the effect that the offer will not be revoked was made in the advertisement.

(2) Where revocation may not be carried out by the method provided in the main clause of the preceding paragraph, the revocation may be carried out by another method. In such cases, the revocation shall only be effective against persons with knowledge of the revocation.

(3) If the advertiser offering prizes specifies the period during which the designated act must be performed, it shall be presumed that the advertiser has waived its right to revoke.

(Right to Receive Rewards in Advertisements Offering Prizes)

Article 531 If more than one person has performed the act designated in the advertisement, only the person who performed the act first shall be entitled to receive the reward.

(2) Where two or more persons have performed the act set forth in the preceding paragraph simultaneously, each shall be entitled to receive an equal share of the reward; provided, however, that the person entitled to the reward shall be selected by lot if the reward is by nature indivisible, or the advertisement provides that only one person is entitled to receive the reward.

(3) The provisions of the preceding two paragraphs shall not apply if the advertisement expresses any intention to the contrary.

(Advertisement Offering Prizes to Most Outstanding Applicant)

Article 532 If, in cases where two or more persons have performed the act designated in the advertisement, the reward is to be given only to the most outstanding applicant, the advertisement shall be effective only if it specifies the application period.

(2) In the cases of the preceding paragraph, the most outstanding applicant shall be judged by the person specified in the advertisement and if no such person is specified in the advertisement, by the person who places the advertisement.

(3) Applicants may not raise any objection to the judge's decision referred to in the preceding paragraph.

(4) The provision of the second paragraph of the preceding Article shall apply mutatis mutandis to cases where the acts of two or more persons are judged to be equal.

Subsection 2 Effect of Contracts

(Defense for Simultaneous Performance)

Article 533 A party to a bilateral contract may refuse to perform his/her own obligation until the other party tenders the performance of his/her obligation; provided, however, that this shall not apply if the obligation of the other party is not yet due.

(Obligees to Assume Risk)

Article 534 In cases where the purpose of a bilateral contract is the creation or transfer of real rights regarding specified things, if the things have been lost or damaged due to reasons not attributable to the obligor, such loss or damage shall fall on the obligee.

(2) The provisions of the preceding paragraph shall apply to any contract regarding unspecified things from the time when the things have been identified in accordance with the provisions of Paragraph 2 of Article 401.

(Assumption of Risk in Bilateral Contract with Condition Precedent)

Article 535 The provisions of the preceding Article shall not apply where the subject matter of a bilateral contract with conditions precedent is lost whilst the conditions are pending.

(2) If the subject matter of a bilateral contract with conditions precedent has been lost or damaged due to reasons not attributable to the obligor, the loss or damage shall fall on obligee.

(3) In cases where the subject matter of a bilateral contract with conditions precedent has been lost or damaged due to reasons attributable to the obligor, if the condition has been satisfied, the obligee may, at his/her choice, demand performance or exercise the obligee's right to cancel. In such cases, claims for damages shall not be precluded.

(Obligors' Assumption of Risk)

Article 536 Except in the cases provided for in the preceding two Articles, if the performance of any obligation has become impossible due to reasons not attributable to either party, the obligor shall not have the right to receive performance in return.

(2) If the performance of any obligation has become impossible due to reasons attributable to the obligee, the obligor shall not lose his/her right to receive performance in return. In such cases, if the obligor gains any benefit as a result of being released from his/her own obligation, the obligor must reimburse the obligee for the benefit.

(Contracts for the Benefit of Third Parties)

Article 537 If one of the parties promises in a contract that he/she will tender a certain performance to any third party, the third party shall have the right to claim that performance directly from the obligor.

(2) In the cases set forth in the preceding paragraph, rights of the third party shall accrue when the third party has expressed his/her intention to the obligor to enjoy the benefit of the contract under that paragraph.

(Determination of Rights of the Third Party)

Article 538 After rights of the third party have come into existence in accordance with the provisions of the preceding Article, the parties may not modify or extinguish those rights.

(Obligors' Defense)

Article 539 The obligor may raise the defense founded on the contract referred to in Paragraph 1 of Article 537 against a third party who is to enjoy the benefit of the contract.

Subsection 3 Cancellation of Contracts

(Exercise of Right to Cancel)

Article 540 If one of the parties has a right to cancel in accordance with the provisions of the contract or law, the cancellation shall be effected by manifestation of intention to the other party.

(2) The manifestation of intention under the preceding paragraph may not be revoked.

(Right to Cancel for Delayed Performance)

Article 541 In cases where one of the parties does not perform his/her obligations, if the other party demands performance of the obligations, specifying a reasonable period and no performance is tendered during that period, the other party may cancel the contract.

(Right to Cancel for Delayed Performance where Time is of the Essence)

Article 542 In cases where, due to the nature of the contract or a manifestation of intention by the parties, the purpose of the contract cannot be achieved unless the performance is carried out at a specific time and date or within a certain period of time, if one of the parties has failed to perform at the time that period lapses, the other party may immediately cancel the contract without making the demand referred to in the preceding Article.

(Right to Cancel for Impossibility of Performance)

Article 543 If performance has become impossible, in whole or in part, the obligee may cancel the contract; provided, however, that this shall not apply if the failure to perform the obligation is due to reasons not attributable to the obligor.

(Indivisible Nature of Right to Cancel)

Article 544 If one party is constituted of two or more persons, the cancellation of the contract may be effected only by, or against, all of those persons.

(2) In the case set forth in the preceding paragraph, if the right to cancel is extinguished with respect to one of the persons who constitute a party, it shall also be extinguished with respect to the other persons.

(Effect of Cancellation)

Article 545 If one of the parties exercises his/her right to cancel, each party shall assume an obligation to restore the other party to that other party's original position; provided, however, that this shall not prejudice the rights of a third party.

(2) In the case set forth in the main clause of the preceding paragraph, if any monies are to be refunded, interest must accrue from the time of the receipt of those monies.

(3) The exercise of the right to cancel shall not preclude claims for damages.

(Cancellation of Contract and Simultaneous Performance)

Article 546 The provisions of Article 533 shall apply mutatis mutandis to the preceding Article.

(Extinguishment of Right to Cancel by Demand)

Article 547 If no period is provided for the exercise of the right to cancel, the other party may issue a notice of demand to the holder of the right to cancel, specifying a reasonable period, to the effect that the holder of the right to cancel is to give a definite answer as to whether or not the right will be exercised within that period. In such cases, if no notice of cancellation is received within that period, the right to cancel shall be extinguished.

(Extinguishment of Right to Cancel by Acts of Holder of Right to Cancel)

Article 548 The right to cancel shall be extinguished if the holder of the right to cancel has significantly damaged, or has become unable to return, the subject matter of the contract due to his/her act or negligence, or has converted the subject matter into any other kind of thing by processing or alteration.

(2) The right to cancel shall not be extinguished if the subject matter of the contract has been lost or damaged due to reasons not attributable to any act or negligence of the holder of the right to cancel.

Section 2 Gifts

(Gifts)

Article 549 Gifts shall become effective by the manifestation by one of the parties of his/her intention to give his/her property to the other party gratuitously, and the acceptance of the other party thereof.

(Revocation of Gift Not in Writing)

Article 550 Gifts not in writing may be revoked by either party; provided, however, that this shall not apply to any portion of the gift for which performance has been completed.

(Warranty by Donor)

Article 551 The donor shall not be liable for any defect in or absence of the thing or right that is the subject matter of the gift; provided, however, that this shall not apply if the donor has knowledge of the defect or absence and fails to inform the donee thereof.

(2) With respect to encumbered gifts, the donor shall assume a warranty identical to that borne by the seller, to the extent of that encumbrance.

(Periodic Gifts)

Article 552 Periodic gifts shall lose its effect on the death of the donor or the donee.

(Encumbered Gifts)

Article 553 With respect to gifts with burden, in addition to the provisions of this Section, the provisions regarding bilateral contracts shall apply mutatis mutandis, to the extent those provisions are not inconsistent with the nature of gifts with burden.

(Gifts on Donor's Death)

Article 554 With respect to gifts that become effective on the death of the donor, the provisions regarding testamentary gifts shall apply mutatis mutandis, to the extent they are not inconsistent with the nature of gifts that become effective on the death of the donor.

Section 3 Sale

Subsection 1 General Provisions

(Sale)

Article 555 A sale shall become effective when one of the parties promises to transfer a certain real rights to the other party and the other party promises to pay the purchase money for it.

(Pre-contract of Sales Exercisable by One Party)

Article 556 A pre-contract to sell or purchase made by one party shall take the effect of a sale when the other party has manifested his/her intention to complete such sale.

(2) If no period is provided in relation to the manifestation of intention set forth in the preceding paragraph, the other party to the pre-contact may issue a notice of demand to the other party, specifying a reasonable period, to the effect that the other party is to give a definite answer as to whether or not he/she will complete the sale within that period. In such cases, if the other party fails to give a definite answer within that period, the pre-contract of sale by one party shall lose its effect.

(Earnest Money)

Article 557 When the buyer delivers earnest money to the seller, the buyer may cancel the contract by forfeiting his/her earnest money or the seller may cancel the contract by reimbursing twice its amount, until either party commences performance of the contract.

(2) The provisions of Paragraph 3 of Article 545 shall not apply to cases set forth in the preceding paragraph.

(Expenses of Contracts for Sale)

Article 558 The expenses of contracts for sale shall be borne equally by both parties.

(Mutatis Mutandis Application to Contracts for Value)

Article 559 The provisions of this Section shall apply mutatis mutandis to contracts for value other than contracts for sale; provided, however that this shall not apply when it is not permitted by the nature of the contract for value.

Subsection 2 Effect of Sale

(Seller's Obligation when Selling Rights of Others)

Article 560 If the subject matter of the sale is the rights of others, the seller shall assume an obligation to acquire the rights and transfer the same to the buyer.

(Seller's Warranty when Selling Rights of Others)

Article 561 In the cases set forth in the preceding Article, if the seller cannot acquire and transfer to the buyer the rights the seller has sold, the buyer may cancel the contract. In such cases, if the buyer knew, at the time of the contract, that the rights did not belong to the seller, the buyer may not demand compensation for damages.

(Innocent Seller's Right of Cancellation in a Sale of Others' Rights)

Article 562 In cases where the seller, at the moment of the contract, does not know that the rights the seller has sold do not belong to him/her, if the seller cannot acquire the rights and transfer the same to the buyer, the seller may cancel the contract by compensating any damages.

(2) In the cases set forth in the preceding paragraph, if the buyer, at the moment of the contract, knows that the rights the buyer has bought do not belong to the seller, the seller may cancel the contract by simply notifying the buyer to the effect that the seller cannot transfer the rights sold.

(Seller's Warranty where Rights Partially Belonged to Others)

Article 563 If the seller cannot transfer any part of the rights which are the subject matter of the sale because the part of the rights belongs to others, the seller may demand a reduction of the purchase money in proportion to the value of the part in shortage.

(2) In the cases set forth in the preceding paragraph, a buyer in good faith may cancel the contract if the buyer would not have bought the rights if the rights consisted only of the remaining portion.

(3) A demand for the reduction in the purchase money or cancellation of the contract shall not preclude a buyer in good faith from making a claim for damages.

Article 564 The rights under the preceding Article must be exercised within one year from the time when the buyer knew the facts if the buyer was in good faith, or within one year from the time of the contract if the buyer had knowledge, as the case may be.

(Seller's Warranty in Cases of Shortage in Quantity or Partial Loss of Object)

Article 565 The provisions of the preceding two Articles shall apply mutatis mutandis in cases where there is any shortage in the object of a sale made for a designated quantity, or in cases where part of the object was already lost at the time of the contract, if the buyer did not know of the shortage or loss.

(Seller's Warranty in cases of Superficies or Other Rights)

Article 566 In cases where the subject matter of the sale is encumbered with for the purpose of a superficies, an emphyteusis, an easement, a right of retention or a pledge, if the buyer does not know the same and cannot achieve the purpose of the contract on account thereof, the buyer may cancel the contract. In such cases, if the contract cannot be cancelled, the buyer may only demand compensation for damages.

(2) The provisions of the preceding paragraph shall apply mutatis mutandis in cases where an easement that was referred to as being in existence for the benefit of immovable property that is the subject matter of a sale, does not exist, and in cases where a leasehold is registered with respect to the immovable property.

(3) In the cases set forth in the preceding two paragraphs, the cancellation of the contract or claim for damages must be made within one year from the time when the buyer comes to know the facts.

(Seller's Warranty in cases of Mortgage or Other Rights)

Article 567 If the buyer loses his/her ownership of immovable property that is the object of a sale because of the exercise of an existing statutory lien or mortgage, the buyer may cancel the contract.

(2) If the buyer preserves his/her ownership by incurring expenditure for costs, he/she may claim reimbursement of those costs from the seller.

(3) In the cases set forth in the preceding two paragraphs, the buyer may claim compensation if he/she suffered loss.

(Warranty in cases of Compulsory Auctions)

Article 568 The successful bidder at compulsory auction may cancel the contract or demand a reduction from the purchase money against the obligor in accordance with the provisions from Article 561 through to the preceding Article.

(2) In the cases set forth in the preceding paragraph, if the obligor is insolvent, the successful bidder may demand total or partial reimbursement of the proceeds against the obligees who received the distribution of the proceeds.

(3) In the cases set forth in the preceding two paragraphs, if obligors knew of the absence of the object or right and did not disclose the same, or if obligors knew of the absence but demanded an auction, the successful bidder may demand compensation for damages against those persons.

(Seller's Warranty for Claims)

Article 569 If the seller of a claim warrants the solvency of the obligor, it shall be presumed that the seller warranted the solvency as at the time of the contract.

(2) If the seller of a claim which is not due yet warrants the future solvency of the obligor, it shall be presumed that he/she warranted the solvency as at the due date.

(Seller's Warranty against Defects)

Article 570 If there is any latent defect in the subject matter of a sale, the provisions of Article 566 shall apply mutatis mutandis; provided, however, that this shall not apply in cases of compulsory auction.

(Seller's Warranty and Simultaneous Performance)

Article 571 The provisions of Article 533 shall apply mutatis mutandis to the cases set forth from Article 563 through to Article 566 and in the preceding Article.

(Special Agreement Disclaiming Warranty)

Article 572 Even if the seller makes a special agreement to the effect that the seller will not provide the warranties set forth from Article 560 through to the preceding Article, the seller may not be released from that responsibility with respect to any fact that the seller knew but did not disclose, and with respect to any right that the seller himself/herself created for or assigned to a third party.

(Due Date for Payment of Purchase money)

Article 573 If there is a due date for the delivery of the subject matter of the sale, it shall be presumed that the same due date was also agreed for the payment of the purchase money.

(Place of Payment of Purchase money)

Article 574 If the purchase money is to be paid simultaneously with delivery of the subject matter of the sale, the payment must be made at the place of delivery.

(Ownership in Fruit and Payment of Interest on Purchase money)

Article 575 If any subject matter of a sale that is not delivered yet bears any fruit, the fruit shall vest in the seller.

(2) The buyer shall assume an obligation to pay the interest on the purchase money from the day of delivery; provided, however, that, if a due date is provided for the payment of the purchase money, it shall not be necessary to pay the interest until that due date arrives.

(Refusal by Buyer to Pay Purchase money where Loss of Rights is Likely)

Article 576 If the buyer is likely to lose the rights he/she has bought, in whole or in part, due to the existence of persons who assert rights to the subject matter of the sale, the buyer may refuse to pay the purchase money, in whole or in part, in proportion to the extent of that likelihood; provided, however, that this shall not apply if the seller has provided reasonable security.

(Refusal by Buyer to Pay Purchase money in cases of Registered Mortgage)

Article 577 If any mortgage is registered on immovable property that has been purchased, the buyer may refuse to pay the purchase money until the completion of the procedures of the claim for extinguishment of the mortgage. In such cases, the seller may demand that the buyer file the claim for extinguishment of the mortgage without delay.

(2) The provisions of the preceding paragraph shall apply mutatis mutandis to cases where a statutory lien or pledge is registered on the immovable property that has been bought.

(Seller's Demand for Deposit of Purchase money)

Article 578 In the cases of the preceding two paragraphs, the seller may demand that the buyer deposit the purchase money.

Subsection 3 Redemption

(Special Agreement on Redemption)

Article 579 The buyer of immovable property may cancel the sale by refunding the purchase money and costs of the contract paid by the buyer in accordance with a special agreement on redemption executed simultaneously with the contract for sale. In such cases, unless a contrary intention is manifested by the parties, it shall be deemed that the fruit of the immovable property and the interest on the purchase money have been set off against each other.

(Period for Redemption)

Article 580 The period for the redemption may not exceed ten years. If any special agreement provides for any period longer than the above, the period shall be ten years.

(2) If a period for the redemption is agreed, no further extension may be effected subsequently.

(3) If no period for the redemption is agreed, the redemption must be effected within five years.

(Perfection of Special Agreement on Redemption)

Article 581 If the special agreement on redemption is registered simultaneously with the contract for sale, the redemption shall also be effective against third parties.

(2) The rights of a lessee who effected registration can be asserted against the seller while the lease remains effective, limited to a period not exceeding one year; provided, however, that this shall not apply if the lease is entered into with the purpose of harming the seller.

(Exercise of Right of Redemption by way of Subrogation)

Article 582 If an obligee of the seller intends to effect redemption on behalf of the seller in accordance with the provisions of Article 423, the buyer may extinguish the right of redemption by paying the debts of the seller, to the extent of the balance obtained by deducting the amount the seller is to pay from the current value of the immovable property as evaluated by a court-appointed appraiser, and, if any positive balance remains, by refunding the same to the seller.

(Implementation of Redemption)

Article 583 A seller may not effect redemption unless the seller provides the purchase money and the costs of the contract within the period provided for in Article 580.

(2) If a buyer or subsequent acquirer incurs expenses with respect to immovable property, the seller must reimburse those expenses in accordance with the provisions of Article 196; provided, however, that, with respect to useful expenses, the court may, at the seller's request, grant a reasonable period for the reimbursement.

(Sale of Co-ownership Interest with Special Agreements on Redemption)

Article 584 If one of the co-owners of immovable property sells his/her equity interest with special agreements on its redemption and the immovable property is then divided or subjected to auction, the seller may redeem the portion or purchase money that the buyer receives or is to receive; provided, however, that any division or auction effected without notice to the seller may not be asserted against the seller.

Article 585 In the cases of the preceding Article, if the buyer is the successful bidder at the auction of the immovable property, the seller may effect the redemption by paying the auction price and the costs provided for in Article 583. In such cases, the seller shall acquire full ownership of the immovable property.

(2) If the buyer has become the successful bidder at an auction as the result of the request of division by other joint owner(s), the seller may not effect the redemption with respect only to his/her own share.

Section 4 Exchange

Article 586 An exchange shall become effective by the mutual promises by the parties to transfer any property right other than the ownership of money.

(2) In cases where one of the parties promises to transfer the ownership of money together with other rights, the provisions regarding purchase money for sale contracts shall apply mutatis mutandis to that money.

Section 5 Loans for Consumption

(Loans for Consumption)

Article 587 A loan for consumption shall become effective when one of the parties receives money or other things from the other party by promising that he/she will return by means of things that are the same in kind, quality and quantity.

(Quasi-loans for Consumption)

Article 588 In cases where any person has an obligation to provide money or other things under any arrangement which is not a loan for consumption, if the parties agree to regard such things as the subject matter of a loan for consumption, it shall be deemed that this establishes a loan for consumption.

(Pre-contract of Loans for Consumption and Commencement of Bankruptcy Procedures)

Article 589 The pre-contract of a loan for consumption shall lose its effect if a ruling for the commencement of bankruptcy procedures is subsequently made against one of the parties.

(Lender's Warranty)

Article 590 If there is any latent defect in any borrowed Thing in a loan for consumption with interest, the lender must replace it with another Thing without defect. In such cases, claims for damages shall not be precluded.

(2) In a loan for consumption without interest, the borrower may return the value of a borrowed Thing that is defective. In such cases, the provisions of the preceding paragraph shall apply mutatis mutandis if the lender knew of the defect but did not disclose the same to the borrower.

(Timing of Returns)

Article 591 If the parties do not define the time for return of borrowed Things, the lender may demand their return, specifying a reasonable period.

(2) The borrower may return borrowed Things at any time.

(Reimbursement of Value)

Article 592 If the borrower has become unable to return Things in the same kind, quality and quantity as that of the Things the borrower received from the lender, the borrower must return the current value of the Things; provided, however, that this shall not apply in the cases provided for in Paragraph 2 of Article 402.

Section 6 Loans for Use

(Loans for Use)

Article 593 A loan for use shall become effective when one of the parties receives a defined Thing from the other party by promising that he/she will return the Thing after he/she has gratuitously made use of and taken the profits of the same .

(Borrower's Use and Profit)

Article 594 A borrower must make use of and take the profits of the Thing in compliance with the method of use specified by the contract or by the nature of the Thing which is the subject matter of the contract.

(2) A borrower may not allow third parties to make use of or take the profits of the Thing without obtaining the approval of the lender.

(3) If a borrower has made use of or taken the profits of the Thing in violation of the preceding two paragraphs, the lender may cancel the contract.

(Responsibility for Costs of Borrowed Things)

Article 595 The borrower shall bear the ordinarily necessary costs of borrowed Things.

(2) The provisions of Paragraph 2 of Article 583 shall apply mutatis mutandis to costs other than the ordinarily necessary costs under the preceding paragraph.

(Lender's Warranty)

Article 596 The provisions of Article 551 shall apply mutatis mutandis to loans for use.

(Timing of Returns of Borrowed Things)

Article 597 A borrower must return borrowed Things at the time specified in the contract.

(2) When the parties have not specified a time for return, the borrower must return the borrowed Things when he/she has completed to make use of or take the profits of the same in compliance with the purposes provided for in the contract; provided, however, that the lender may demand the immediate return of the borrowed Things even before the completion of using or taking profits if a period sufficient for using or taking profits has elapsed.

(3) If the parties have not specified the timing of the return and the purposes of the using and taking profits, the lender may demand the return of the borrowed Things at any time.

(Removal by Borrower)

Article 598 A borrower may restore a borrowed Thing to its original condition and remove anything attached to the same.

(Termination of Loan for Use upon Death of Borrower)

Article 599 Loans for use shall lose its effect on the death of the borrower.

(Restriction on Period of Rights to Demand Compensation for Damages and Reimbursement of Costs)

Article 600 Claims for compensation for damages resulting from using or taking profits of the Thing inconsistent with the main purport of the contract, and for the reimbursement of costs incurred by the borrower, must be submitted within one year from the time when the lender receives the return of the borrowed Things.

Section 7 Leases

Subsection 1 General Provisions

(Leases)

Article 601 A lease shall become effective when one of the parties promises to make a certain Thing available for the using and taking the profits by the other party and the other party promises to pay rent for the same.

(Short-term Leases)

Article 602 In cases where a person with limited capacity to act or a person with no authority with respect to the act of disposition makes a lease contract, the leases listed in the following items shall not exceed the terms prescribed respectively in those items:

(i) Leases of forest for the purpose of planting or felling trees: 10 years;

(ii) Leases of land other than the leases listed in the preceding item: 5 years;

(iii) Lease of a building: 3 years; and

(iv) Lease of a movable : 6 months.

(Renewal of Short-term Leases)

Article 603 The terms prescribed in the preceding Article may be renewed; provided, however, that the renewal must be carried out within one year prior to the expiration of the term for land, and within 3 months prior to the expiration of the term for a building, and within 1 month prior to the expiration of the term for a movable.

(Duration of Lease)

Article 604 The duration of a lease may not exceed twenty years. Even if the contract prescribes a longer term, the term shall be 20 years.

(2) The duration of a lease may be renewed; provided, however, that such period may not exceed twenty years from the time of the renewal.

Subsection 2 Effect of Lease

(Perfection of Leasehold)

Article 605 A lease of immovable property, when registered, shall also be effective against a person who subsequently acquires real rights with respect to the immovable property.

(Repairs of Leased Things)

Article 606 A lessor shall assume an obligation to effect repairs necessary for using and taking the profits of the leased Things.

(2) The lessee may not refuse if the lessor intends to engage in any act that is necessary for the preservation of the leased Thing.

(Act to Preserve against the Will of the Lessee)

Article 607 In cases where the lessor intends to engage in an act to preserve the leased Thing against the will of the lessee, if the lessee cannot achieve the purpose of the lease as a result of the same, the lessee may cancel the contract.

(Lessee's Demand for Reimbursement of Costs)

Article 608 If a lessee has defrayed necessary expenses with respect to the leased Thing which ought to be borne by the lessor, the lessee may immediately demand the reimbursement of the same from the lessor.

(2) If the lessee has incurred useful expenses with respect to the leased Thing, the lessor must reimburse those expenses on termination of the lease in compliance with the provisions of Paragraph 2 of Article 196; provided, however, that the court may, at the lessor's request, grant a reasonable period for the reimbursement of the same.

(Demand for Reduction of Rent due to Decrease in Profits)

Article 609 A lessee of land for the purpose of profit making may, if he/she obtains profits less than the rent due to force majeure, demand that the amount of the rent be reduced to the level of the amount of the profits; provided, however, that this shall not apply with respect to leases of residential land.

(Termination due to Decrease in Profits)

Article 610 In the cases of the preceding Article, the lessee referred to in that Article may cancel the contract if he/she has made profits less than the rent for at least two consecutive years due to force majeure.

(Demands for Reduction of Rent due to Partial Loss of Leased Thing)

Article 611 If any part of a leased thing is lost due to reasons not attributable to the negligence of the lessee, the lessee may demand a reduction of the rent in proportion to the value of the lost part.

(2) In the cases set forth in the preceding paragraph, if the lessee cannot achieve the purpose of the lease with the remaining portion only, the lessee may cancel the contract.

(Restrictions on Assignment and Subleasing of Leasehold)

Article 612 A lessee may not assign the lessee's rights or sublease a leased Thing without obtaining the approval of the lessor.

(2) If the lessee allows any third party to make use of or take the profits of a leased Thing in violation of the provisions of the preceding paragraph, the lessor may cancel the contract.

(Effect of Subleases)

Article 613 If a lessee lawfully subleases a leased Thing, the sublessee shall assume a direct obligation to the lessor. In such cases, advance payment of rent may not be asserted against the lessor.

(2) The provisions of the preceding paragraph shall not preclude the lessor from exercising his/her rights against the lessee.

(Timing of Payment of Rent)

Article 614 Rent must be paid at the end of the month with respect to movables, buildings and land for residential purpose, and at the end of the year with respect to other land; provided, however, that, with respect to anything with a harvest season, the rent must be paid without delay after that season.

(Obligation of Lessee to Give Notice)

Article 615 If the leased Thing requires any repair, or if any person asserts rights with respect to the leased Thing, the lessee must notify the lessor without delay; provided, however, that this shall not apply if this is already known to the lessor.

(Mutatis Mutandis Application of Loans for Use)

Article 616 The provisions of Paragraph 1 of Article 594, Paragraph 1 of Article 597 and Article 598 shall apply mutatis mutandis to leases.

Subsection 3 Termination of Leases

(Offers to Terminate Leases with Indefinite Terms)

Article 617 If the parties do not specify the term of a lease, either party may request to terminate it at any time. In such cases, the leases listed in the following items shall terminate on the expiration of the respective periods from the day of the request to terminate prescribed respectively in those items:

(i) Leases of land: one year;

(ii) Leases of buildings: three months; and

(iii) Leases of movables and seating hire facilities: one day.

(2) With respect to leases of land with harvest seasons, the request to terminate must be made after the end of that season and before the next start of cultivation.

(Reservation of Rights to Terminate Leases with Definite Terms)

Article 618 Even if the parties specify the term of a lease, the provisions of the preceding Article shall apply mutatis mutandis if one party reserves, or both parties reserve, the right to terminate during that period.

(Presumption of Renewal of Leases)

Article 619 In cases where a lessee continues to make use or take the profits of the Thing after the expiration of the term of the lease, if a lessor who knows of the same raises no objection, it shall be presumed that a further lease is entered into under conditions identical to those of the previous lease. In such cases, each party may request to terminate in accordance with the provisions of Article 617.

(2) If one of the parties has provided security for the previous lease, the security shall be extinguished upon expiration of the term; provided, however, that this shall not apply to a security deposit.

(Effect of Cancellations of Leases)

Article 620 In cases where a lease is cancelled, the cancellation shall be effective solely toward the future. In such cases, if one of the parties is negligent, claims for damages against that party shall not be precluded.

(Limitation on Periods of Rights to Demand Compensation for Damages and Reimbursement of Costs)

Article 621 The provisions of Article 600 shall apply mutatis mutandis to leases.

Article 622 deleted

Section 8 Employment

(Employment)

Article 623 An employment contract shall become effective when one of the parties promises to the other party that he/she will engage in work and the other party promises to pay remuneration for the same.

(Timing of Payment of Remuneration)

Article 624 An employee may not demand remuneration until the work he/she promised to perform has been completed.

(2) Remuneration specified with reference to a period may be claimed on the expiration of that period.

(Restrictions on Assignment of Employer's Rights)

Article 625 An employer may not assign his/her rights to third parties unless the employer obtains the employee's consent.

(2) An employee may not cause any third party to work on his/her behalf unless the employee obtains the employer's consent.

(3) If an employee causes any third party to work in violation of the provisions of the preceding paragraph, the employer may cancel the contract.

(Cancellation of Employment with Indefinite Term)

Article 626 If the term of employment exceeds five years, or employment is to continue during the life of either party or any third party, either party may cancel the contract at any time after the expiration of five years; provided, however, that said five years shall be ten years with respect to employment for the purpose of apprenticeship in commerce and industry.

(2) If a person intends to cancel a contract under the provisions of the preceding paragraph, he/she must give notice three months in advance.

(Offer to Terminate Employment with Indefinite Term)

Article 627 If the parties have not specified the term of employment, either party may request to terminate at any time. In such cases, employment shall terminate on the expiration of two weeks from the day of the request to terminate.

(2) If remuneration is specified with reference to a period, the request to terminate may be made with respect to the following period of time onward; provided, however, that the request to terminate must be made in the first half of the current period.

(3) If remuneration is specified with reference to a period of six months or more, the request to terminate under the preceding paragraph must be made three months before the termination.

(Cancellation of Employment due to Unavoidable Reasons)

Article 628 Even in cases where the parties have specified the term of employment, if there are unavoidable reasons, either party may immediately cancel the contract. In such cases, if the reasons arise from the negligence of either one of the parties, that party shall be liable to the other party for damages.

(Presumption of Renewal of Employment)

Article 629 In cases where an employee continues to engage in his/her work after the expiration of a term of employment, if an employer knows of the same and raises no objection, it shall be presumed that the further employment is entered into under conditions identical to those of the previous employment. In such cases, each party may request to termination under the provisions of Article 627.

(2) If either party has provided security for the previous employment, the security shall be extinguished on the expiration of the term; provided, however, that this shall not apply to fidelity bonds.

(Effect of Cancellation of Employment)

Article 630 The provisions of Article 620 shall apply mutatis mutandis to employment.

(Request to Terminate due to Commencement of Bankruptcy Procedures for Employer)

Article 631 In cases where the employer is subject to a ruling for the commencement of bankruptcy procedures, the employee or the trustee in bankruptcy may request to terminate under the provisions of Article 627 even if the employment is for a definite term. In such cases, neither party may claim compensation from the other party for damages suffered as a result of the termination.

Section 9 Contracts for Work

(Contracts for Work)

Article 632 A contract for work shall become effective when one of the parties promises to complete work and the other party promises to pay remuneration for the outcome of the work.

(Timing of Payment of Remuneration)

Article 633 Remuneration must be paid simultaneously with delivery of the subject matter of work performed; provided, however, that, if no delivery of a Thing is required, the provisions of Article 624(1) shall apply mutatis mutandis.

(Contractor's Warranty)

Article 634 If there is any defect in the subject matter of work performed, the party ordering the work may demand that the contractor repair the defect, specifying a reasonable period; provided, however, that this shall not apply if the defect is not significant and excessive costs would be required for the repair.

(2) The party ordering the work may demand compensation for damages in lieu of, or in addition to, the repair of the defect. In such cases, the provisions of Article 533 shall apply mutatis mutandis.

Article 635 If there is any defect in the subject matter of work performed and the purpose of the contract cannot be achieved because of the defect, the party ordering the work may cancel the contract; provided, however, that this shall not apply to a building or other structure on land.

(No Application of Provisions on Contractor's Warranty)

Article 636 The provisions of the preceding two Articles shall not apply if the defect in the subject matter of the work arises due to the nature of the materials supplied by, or instructions given by, the party ordering the work; provided, however, that this shall not apply if the contractor knew that the materials or instructions were inappropriate but did not disclose the same.

(Duration of Contractor's Warranty)

Article 637 The demand for repair or claim for damages and cancellation of the contract under the preceding three Articles must be made within one year from the time of the delivery of the subject matter of the work.

(2) Where no delivery of the subject matter is required, the period referred to in the preceding paragraph commences to run from the time of the completion of the work.

Article 638 A contractor for a building or other structure on land shall be liable for a warranty against defects in the structure or ground for the period of five years from delivery; provided, however, that the period shall be ten years for structures made of stone, earth, bricks, concrete, steel and other similar structures.

(2) If any structure is lost or damaged due to the defects set forth in the preceding paragraph, the party ordering the work must exercise the rights under the provisions of Article 634 within one year from the time of the loss or damage.

(Extension of Duration of Warranty)

Article 639 The periods set forth in Article 637 and Paragraph 1 of the preceding Article may be extended by contract so long as they do not exceed the period of time provided for the extinctive prescription under the provisions of Article 167.

(Special Agreement of No Warranty)

Article 640 Even if the contractor agrees to a special agreement to the effect that the contractor will not be liable for the warranty provided in Article 634 or Article 635, the contractor may not be released from the contractor's liability with respect to facts the contractor knew and did not disclose.

(Cancellation of Contract by Party Ordering Work)

Article 641 The party ordering work may cancel the contract at any time whilst the contractor has not completed the work by compensating any damages.

(Cancellation on Commencement of Bankruptcy Procedures for Party Ordering Work)

Article 642 In cases where the party ordering work is subject to a ruling for the commencement of bankruptcy procedures, the contractor or the trustee in bankruptcy may cancel the contract. In such cases, the contractor may participate in the distribution of the bankrupt estate with respect to remuneration for the work already performed and any costs not included in that remuneration.

(2) In the cases set forth in the preceding paragraph, claims for damages suffered as a result of the cancellation of the contract shall be permitted only for contractors under contracts cancelled by the trustee in bankruptcy. In such cases, the contractors shall participate in the distribution of the bankrupt estate with respect to such damages.

Section 10 Mandates

(Mandates)

Article 643 A mandate shall become effective when one of the parties mandates the other party to perform a juristic act, and the other party accepts the mandate.

(Duty of Care of Mandatary)

Article 644 A mandatary shall assume a duty to administer the mandated business with the care of a good manager compliance with the main purport of the mandate.

(Reports by Mandatary)

Article 645 A mandatary must, if so requested by the mandator, report the current status of the administration of the mandated business at any time, and must report the process and results without delay upon completion of the mandate.

(Delivery of Received Things by Mandatary)

Article 646 The mandatary must deliver to the mandator monies and other Things that he/she has received during the course of administering the mandated business. The same shall apply to fruits the mandatary has reaped.

(2) The mandatary must transfer to the mandator rights the mandatary has acquired in his/her own name on behalf of the mandator.

(Mandatary's Responsibility for Consumption of Monies)

Article 647 If the mandatary has consumed monies for his/her personal benefit that the mandatary is to deliver to the mandator, or any monies that are to be used for the benefit of the mandator, the mandatary must pay interest for the period from the day of that consumption. In such cases, if any damages still remain, the mandatary shall be liable to compensate for the same.

(Remuneration for Mandatary)

Article 648 In the absence of any special agreements, the mandatary may not claim remuneration from the mandator.

(2) In cases where the mandatary is to receive remuneration, the mandatary may not claim the same until and unless he/she has performed the mandated business; provided, however, that if the remuneration is specified with reference to period, the provisions of Paragraph 2 of Article 624 shall apply mutatis mutandis.

(3) If the mandate terminates during performance due to reasons not attributable to the mandatary, the mandatary may demand remuneration in proportion to the performance already completed.

(Mandatary's Claims for Advance for Costs)

Article 649 If costs will be incurred in administering the mandated business, the mandator must, at the request of the mandatary, pay an advance for those costs.

(Mandatary's Claims for Reimbursement of Expense)

Article 650 If the mandatary has incurred costs found to be necessary for the administration of the mandated business, the mandatary may claim reimbursement of those costs from the mandator and any interest on the same from the day the costs were incurred.

(2) If the mandatary has incurred any obligation found to be necessary for the administration of the mandated business, the mandatary may demand that the mandator perform the obligation on the mandatary's behalf. In such cases, if the obligation has not yet fallen due, the mandatary may require the mandator to tender reasonable security.

(3) If the mandatary suffers any loss due to the administration of the mandated business without negligence in the mandatary, he/she may claim compensation for the loss from the mandator.

(Cancellation of Mandate)

Article 651 A mandate may be cancelled by either party at any time.

(2) If one of the parties cancels a mandate at a time that is detrimental to the other party, the former party must compensate the damages suffered by the other party; provided, however, that this shall not apply if there are unavoidable grounds.

(Effect of Cancellation of Mandate)

Article 652 The provision of Article 620 shall apply mutatis mutandis to mandates.

(Grounds for Termination of Mandate)

Article 653 A mandate shall terminate when:

(i) The mandator or mandatary dies;

(ii) The mandator or mandatary is subject to a ruling for the commencement of bankruptcy procedures;

(iii) The mandatary is subject to an order for the commencement of guardianship.

(Disposition after Termination of Mandate)

Article 654 In cases where a mandate has terminated, if there are pressing circumstances, the mandatary or his/her heir or legal representative must effect necessary dispositions until the time when the mandator or his/her heir or legal representatives is able to take charge of the mandated business.

(Requirement for Perfection of Termination of Mandate)

Article 655 The grounds of termination of mandate may not be asserted against the other party unless the other party was notified of or knew of the same.

(Quasi-Mandate)

Article 656 The provisions of this Section shall apply mutatis mutandis to mandates of business that do not constitute juristic acts.

Section 11 Deposits

(Deposits)

Article 657 A deposit shall become effective when one of the parties receives a certain Thing by promising that he/she will retain it for the other party.

(Use of Deposited Thing and Retention by Third Parties)

Article 658 A depositary may not use, or allow third parties to retain, the Thing deposited without obtaining the consent of the depositor.

(2) The provisions of Article 105 and paragraph 2 of Article 107 shall apply mutatis mutandis to cases where a depositary may allow third parties to retain deposited Things.

(Duty of Care of Gratuitous Depositary)

Article 659 A person who has undertaken a deposit gratuitously shall assume a duty to retain the Thing deposited exercising care identical to that he/she exercises for his/her own property.

(Obligation of Depositary to Give Notice)

Article 660 If a third party asserting rights with respect to the Thing deposited has brought a lawsuit against the depositary, or has effected an attachment, provisional attachment, or provisional disposition, the depositary must notify the depositor of that fact without delay.

(Compensation of Damages by Depositor)

Article 661 The depositor must compensate the depositary for damages that occur due to the nature of or defects in the Thing deposited; provided, however, that this shall not apply if the depositor did not, without negligence, know of such nature or defect, or the depositary knew of the same.

(Depositor's Demand for Return)

Article 662 Even if the parties specify the time for the return of the Thing deposited, the depositor may demand the return of the same at any time.

(Timing of Return of the Thing Deposited)

Article 663 If the parties have not specified the timing of the return of the Thing deposited, the depositary may return the same at any time.

(2) If the timing of the return is specified, the depositary may not return the deposited goods prior to the due date unless there are unavoidable grounds.

(Place of Return of the Thing Deposited)

Article 664 The place for the return of the Thing deposited must be at the place where they are to be retained; provided, however, that, if the depositary has changed the place of retention on reasonable grounds, the return may be made at that current place of retention.

(Mutatis Mutandis Application of Provisions on Mandate)

Article 665 The provisions of Article 646 to Article 650 (excluding Paragraph 3 of this Article) shall apply mutatis mutandis to deposits.

(Deposits for Consumption)

Article 666 The provisions of Section 5 (Loans for Consumption) shall apply mutatis mutandis to cases where a depositary may, under the contract, consume the Thing deposited.

(2) Notwithstanding the provisions of Paragraph 1 of Article 591 which shall apply mutatis mutandis under the preceding paragraph, if the contract referred to in the preceding paragraph does not specify the timing of the return, the depositor may demand the return at any time.

Section 12 Partnerships

(Partnership Contracts)

Article 667 A partnership contract shall become effective when each of the parties promises to engage in joint business by making a contribution.

(2) The subject of the contribution may be services .

(Joint Ownership in Partnership Property)

Article 668 The contributions of the partners and other partnership property shall be jointly owned by all partners.

(Responsibility for Failure to Provide Monetary Contribution)

Article 669 In cases where monies are the subject of the contribution, if any partner fails to contribute his/her share of the contribution, he/she must pay interest on the same and otherwise compensate for damages.

(Method of Business Management)

Article 670 The management of partnership business shall be determined by the majority of the partners.

(2) If more than one person is delegated to manage the business referred to in the preceding paragraph under the partnership contract (referred to in the following paragraph as "Operating Officers"), the same shall be determined by majority.

(3) Notwithstanding the provisions of the preceding two paragraphs, the ordinary business of a partnership may be performed by each partner or each Operating Officer individually; provided, however, that this shall not apply if other partners or Operating Officers raise objections prior to the completion of the business.

(Mutatis Mutandis Application of Provisions on Mandates)

Article 671 The provisions of Article 646 to Article 650 shall apply mutatis mutandis to partners who manage the business of a partnership.

(Resignations and Dismissals of Operating Partners)

Article 672 If one or more partners are delegated to manage partnership business under the partnership contract, those partners may not resign without reasonable grounds.

(2) The partners referred to in the preceding paragraph may be dismissed by the unanimous agreement of the other partners, limited to cases where there are justifiable grounds.

(Inspections by Partners of Condition of Partnership Business and Property)

Article 673 Each partner may inspect the condition of the business and property of the partnership even if he/she does not have the right to manage the business of the partnership.

(Proportions of Partners' Distributions of Profits and Losses)

Article 674 If partners have not specified the proportions of the distributions of the partnership's profits and losses, the proportions shall be determined in proportion to the value of each partner's contribution.

(2) If the proportions of the distributions are specified solely with respect to either profits or losses, it shall be presumed that the proportions are common to profits and losses.

(Exercise of Right of Creditors of the Partnership against Partners)

Article 675 If a creditor of a partnership did not, when his/her claim arose, the proportions of the partners' shares of losses, the creditor may exercise his/her rights against each partner in equal proportions.

(Disposal Partners' Shares and Division of Partnership Property)

Article 676 If a partner disposes of his/her share with respect to the partnership property, the disposal may not be asserted against the partnership and third parties who had dealings with the partnership.

(2) A partner may not seek the division of the partnership property before the same is liquidated.

(No Set-off by Obligor of Partnership)

Article 677 An obligor of a partnership may not set off his/her obligation against his/her claim against the partners.

(Withdrawal of Partners)

Article 678 If a partnership contract does not specify the duration of the partnership, or specifies that the partnership is to continue for the life of a certain partner, each partner may withdraw at any time; provided, however, that, unless there are unavoidable grounds, a partner may not withdraw at a time that is detrimental to the partnership.

(2) Even in cases where the duration of the partnership is specified, each partner may withdraw if there are unavoidable grounds.

Article 679 In addition to the cases referred to in the preceding Article, partners shall withdraw on the following grounds:

(i) The partner dies;

(ii) The partner is subject to a ruling for the commencement of bankruptcy procedures;

(iii) The partner is subject to an order for the commencement of guardianship;

(iv) The partner has been expelled.

(Expulsion of Partners)

Article 680 The expulsion of a partner may be effected by the unanimous agreement of the other partners, limited to cases where there are justifiable grounds; provided, however, that the expulsion may not be asserted against a partner who is expelled unless a notice to that effect is given to that partner.

(Refunds of Shares of Withdrawing Partners)

Article 681 Accounts as between the withdrawing partner and other partners must be settled according to the condition of the partnership property as at the time of the withdrawal.

(2) The share of the withdrawing partner may be refunded in money, regardless of the kind of his/her contribution.

(3) With respect to any matter not yet completed at the time of the withdrawal, accounts may be made up subsequent to the completion of that matter.

(Causes of Dissolution of Partnerships)

Article 682 A partnership shall be dissolved on the successful completion of the business that is its object, or by the impossibility of such successful completion.

(Request for Dissolution of Partnerships)

Article 683 Each partner may request the dissolution of the partnership if there are unavoidable grounds.

(Effect of Cancellation of Partnership Contracts)

Article 684 The provisions of Article 620 shall apply mutatis mutandis to partnership contracts.

(Liquidation of Partnerships and Appointment of Liquidators)

Article 685 When a partnership is dissolved, the liquidation shall be administered jointly by all partners or by a liquidator appointed by the same.

(2) A liquidator shall be appointed by a majority of all partners.

(Method of Management of Liquidators' Business)

Article 686 The provisions of Article 670 shall apply mutatis mutandis to cases where there is more than one liquidator.

(Resignations and Dismissals of Liquidators who are Partners)

Article 687 The provisions of Article 672 shall apply mutatis mutandis to cases where the liquidator is appointed from among the partners under the partnership contract.

(Duties and Authority of Liquidators and Method of Division of Residual Assets)

Article 688 A liquidator shall have the duties to:

(i) conclude the current business

(ii) collect debts and perform obligations; and

(iii) deliver the residual assets.

(2) The liquidator may perform any and all acts in order to perform its duties listed in the respective items of the preceding paragraph.

(3) Residual assets shall be distributed in proportion to the value of the contributions of each partner.

Section 13 Life Annuities

(Life Annuities)

Article 689 Life annuities shall become effective when one of the parties promises to deliver monies or other Things to the other party or a third party periodically until the death of the first party, the other party or the third party.

(Accounting for Life Annuities)

Article 690 Life annuities shall be calculated on a daily basis.

(Cancellation of Contracts for Life Annuities)

Article 691 In cases where the obligor in a life annuity has received the principal for the life annuity, if the obligor fails to pay the life annuity or fails to perform other obligations, the other party may demand the return of the principal. In such cases, the other party must return the amount of the life annuity he/she has already received to the obligor of the life annuity, less the amount of the interest on that principal.

(2) The provisions of the preceding paragraph shall not preclude claims for damages.

(Cancellation of Contracts for Life Annuities and Simultaneous Performance)

Article 692 The provisions of Article 533 shall apply mutatis mutandis to cases referred to in the preceding Article.

(Declaration of Continuation of Claim for Life Annuity)

Article 693 If a death provided for in Article 689 occurs due to grounds attributable to the obligor in a life annuity, the court may, at the request of the obligee in the life annuity or the obligee's heirs, declare that the life annuity claim shall continue for a reasonable period.

(2) The provisions of the preceding paragraph shall not preclude the exercise of the rights provided in Article 691.

(Testamentary Gifts of Life Annuities)

Article 694 The provisions of this Section shall apply mutatis mutandis to testamentary gifts of life annuities.

Section 14 Settlements

(Settlements)

Article 695 A settlement shall become effective when the parties to a dispute promise to settle the dispute through reciprocal concessions.

(Effect of Settlements)

Article 696 In cases where it is admitted at settlement that one of the parties has the rights that are the subject of the dispute, or that the other party did not have the rights, if conclusive evidence is obtained to the effect that the first party did not have the rights in the past, or that the other party did have the rights, the rights are regarded as either transferred to the first party or extinguished at settlement.

Chapter 3 Negotiorum Gestio (Management of Business))

(Negotiorum Gestio (Management of Business))

Article 697 A person who commences the management of a business for another person without being obligated to do so (hereinafter in this Chapter referred to as "Manager") must manage that business (hereinafter referred to as "Management of Business") in accordance with the nature of the business, using the method that best conforms to the interests of that another person (the principal).

(2) The Manager must engage in Management of Business in accordance with the intentions of the principal if the Manager knows, or is able to conjecture that intention.

(Urgent Management of Business)

Article 698 If a Manager engages in the Management of Business in order to allow a principal to escape imminent danger to the principal's person, reputation or property, the Manager shall not be liable to compensate for damages resulting from the same unless he/she has acted in bad faith or with gross negligence.

(Obligation of Managers to Give Notice)

Article 699 A Manager must notify the principal that the Manager has commenced the Management of Business; provided, however, that this shall not apply if the principal already knows of the same.

(Continuation of Management of Business by Managers)

Article 700 A Manager must continue the Management of Business until the principal or his/her heirs or legal representatives can undertake it; provided, however, that this shall not apply in cases where it is evident that the continuation of the Management of Business is contrary to the intentions of the principal, or is disadvantageous to the principal.

(Mutatis Mutandis Application of Provisions on Mandates)

Article 701 The provisions from Article 645 through to Article 647 shall apply mutatis mutandis to the Management of Business.

(Managers' Claims for Reimbursement of Costs)

Article 702 If a Manager has incurred useful expenses for a principal, the Manager may claim reimbursement of those costs from the principal.

(2) The provisions of Paragraph 2 of Article 650 shall apply mutatis mutandis to cases where a Manager has incurred useful obligations on behalf of the principal.

(3) If a Manager has engaged in the Management of Business against the intention of the principal, the provisions of the preceding two paragraphs shall apply mutatis mutandis, solely to the extent the principal is actually enriched.

Chapter 4 Unjust Enrichment

(Obligation to Return Unjust Enrichment)

Article 703 A person who has benefited (hereinafter in this Chapter referred to as "beneficiary") from the property or labor of others without legal cause and has thereby caused loss to others shall assume an obligation to return that benefit, to the extent the benefit exists.

(Obligation of Beneficiaries in Bad Faith to Return)

Article 704 A Beneficiary in bad faith must return the benefit received together with interest thereon. In such cases, if any damages still remain, the Beneficiary shall be liable to compensate for the same.

(Performance knowing of Absence of Obligation)

Article 705 A person who has tendered anything as performance of an obligation may not demand the return of the thing tendered if the person knew, at the time, that the obligation did not exist.

(Performance before Due Date)

Article 706 If an obligor has tendered anything as performance of an obligation that has not yet fallen due, the obligor may not demand the return of the thing tendered; provided, however, that, if the obligor tendered anything by mistake, the obligee must return the benefit gained as a result.

(Performance of Obligations of Others)

Article 707 In cases where a person who is not an obligor has performed an obligation by mistake, if the obligee has, in good faith, allowed the instrument to be lost, damaged the instrument, waived the security or lost the claim by prescription, the person who performed the obligation may not demand the return of the performance.

(2) The provisions of the preceding paragraph shall not preclude the person who performed an obligation from exercising his/her right of subrogation against the obligor.

(Performance for Illegal Causes)

Article 708 A person who has tendered performance of an obligation for an illegal cause may not demand the return of the thing tendered; provided, however, that this shall not apply if the illegal cause existed solely in relation to the Beneficiary.

Chapter 5 Torts

(Damages in Torts)

Article 709 A person who has intentionally or negligently infringed any right of others, or legally protected interest of others, shall be liable to compensate any damages resulting in consequence.

(Compensation for Damages Other than Property)

Article 710 Persons liable for damages under the provisions of the preceding Article must also compensate for damages other than those to property, regardless of whether the body, liberty or reputation of others have been infringed, or property rights of others have been infringed.

(Compensation for Damages to Next of Kin)

Article 711 A person who has taken the life of another must compensate for damages to the father, mother, spouse and children of the victim, even in cases where the property rights of the same have not been infringed.

(Capacity for Liability)

Article 712 In cases where a minor has inflicted damages on others, if the minor does not have sufficient intellectual capacity to appreciate his/her liability for his/her own act, the minor shall not be liable to compensate for that act.

Article 713 A person who has inflicted damages on others while he/she lacks the capacity to appreciate his/her liability for his/her own act due to mental disability shall not be liable to compensate for the same; provided, however, that this shall not apply if he/she has temporarily invited that condition, intentionally or negligently.

(Liability of Person Obligated to Supervise a Person without Capacity)

Article 714 In cases where a person without capacity to assume liability is not liable in accordance with the provisions of the preceding two Articles, the person with the legal obligation to supervise the person without capacity to assume liability shall be liable to compensate for damages that the person without capacity to assume liability has inflicted on a third party; provided, however, that this shall not apply if the person who has the obligation to supervise did not fail to perform his/her obligation or if the damages could not have been avoided even if he/she had not failed to perform his/her obligation.

(2) A person who supervises a person without capacity to assume liability, on behalf of a person who has the obligation to supervise, shall also assume the liability under the preceding paragraph.

(Liability of Employers)

Article 715 A person who employs others for a certain business shall be liable for damages inflicted on a third party by his/her employees with respect to the execution of that business; provided, however, that this shall not apply if the employer exercised reasonable care in appointing the employee or in supervising the business, or if the damages could not have been avoided even if he/she had exercised reasonable care.

(2) A person who supervises the business on behalf of the employer shall also assume the liability under the preceding paragraph.

(3) The provisions of the preceding two paragraphs shall not preclude the employer or supervisor from exercising their right to obtain reimbursement against the employee.

(Liability of Party Ordering Work)

Article 716 A party ordering work shall not be liable for the damages a contractor inflicted on a third party with respect to his/her work; provided, however, that this shall not apply if the party ordering work is negligent in his/her order or instructions.

(Liability of Possessor and Owner of Structure on Land)

Article 717 If any defect in the installation or preservation of any structure on land causes damages to others, the possessor of such structure shall be liable to the victims to compensate for those damages; provided, however, that, if the possessor has used necessary care to prevent the damages arising, the owner must compensate for the damages.

(2) The provisions of the preceding paragraph shall apply mutatis mutandis to cases where there is any defect in the planting or support of bamboos and trees.

(3) In the cases of the preceding two paragraphs, if there is another person who is liable for the cause of the damages, the possessor or owner may exercise their right to obtain reimbursement against such person.

(Liability of Possessor of Animal)

Article 718 A possessor of an animal shall be liable to compensate for the damages that the animal has inflicted on others; provided, however, that this shall not apply if he/she managed the animal with reasonable care according to the kind and nature of the animal.

(2) A person who manages the animal on behalf of the possessor shall also assume the liability under the preceding paragraph.

(Liability of Joint Tortfeasors)

Article 719 If more than one person has inflicted damages on others by their joint tortious acts, each of them shall be jointly and severally liable to compensate for those damages. The same shall apply if it cannot be ascertained which of the joint tortfeasors inflicted the damages.

(2) The provisions of the preceding paragraph shall apply to any person who incited or was an accessory to the perpetrator, by deeming him/her to be one of the joint tortfeasors.

(Self-Defense and Aversion of Present Danger)

Article 720 A person who, in response to the tortious act of another, unavoidably commits a harmful act to protect himself/herself, the rights of a third party, or any legally protected interest, shall not be liable for damages; provided, however, that the victim shall not be precluded from claiming damages against the person who committed the tortious act.

(2) The provisions of the preceding paragraph shall apply mutatis mutandis to cases where a Thing belonging to others is damaged to avoid imminent danger arising from that Thing.

(Fetus' Capacity to Hold Rights regarding the Right to Demand Compensation for Damages)

Article 721 An unborn child shall be deemed to have been already born with respect to the right to demand compensation for damages.

(Method of Damages and Comparative Negligence)

Article 722 The provisions of Article 417 shall apply mutatis mutandis to compensation for damages in tort.

(2) If a victim is negligent, the court may determine the amount of compensation by taking that factor into consideration.

(Recovery in Defamation)

Article 723 The court may, at the request of the victim, order a person who defamed others, to effect appropriate measures to restore the reputation of the victim in lieu of, or in addition to, damages.

(Restriction of Period of Right to Demand Compensation for Damages in Tort)

Article 724 The right to demand compensation for damages in tort shall be extinguished by the operation of prescription if it is not exercised by the victim or his/her legal representative within three years from the time when he/she comes to know of the damages and the identity of the perpetrator. The same shall apply when twenty years have elapsed from the time of the tortious act.

Source[edit]

  • Civil Code Japanese Law Translation by the Ministry of Justice on April 1, 2009.
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