Business law essay

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BUSL377 Japanese Trade Law Week 5: General Principles of Civil Law

Dr Kay-Wah Chan E4A 241 Tel: 9850 7088 Email: [email protected] (2017)

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Note: • A bill has been submitted by the Cabinet (Ministry of Justice) to the National Diet on 31 March 2015 for amendments of the Civil Code. As of 21 March 2017, the bill has not been passed yet.

• Irrespective of the fact whether or not the aforesaid bill will have been passed within this semester (Session 1, 2017), this Unit BUSL377 (Japanese Trade Law) (2017) will be based on the current Civil Code (as of 21 March 2017). In other words, this unit BUSL377 will not take into account of any amendments of the Civil Code which may be adopted from 22 March 2017 to the end of this Session 1, 2017.

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Civil Code

Five Parts/Books • Part I /Book 1: General Provisions (Art. 1 – Art.174-2)

• Part II/Book 2: Real Rights (Art. 175 – Art.398-22)

• Part III/Book 3: Claims (Art.399 – Art.724)

• Part IV/Book 4: Relatives (Art. 725 – Art.881)

• Part V/Book 5: Inheritance (Art.882 – Art.1044)

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Part I /Book 1: General Provisions

• Chapter I – Common Provisions

• Chapter II – Person

• Chapter III – Juridical Persons

• Chapter IV – Things

• Chapter V – Juristic Acts

• Chapter VI – Calculation of Period

• Chapter VII - Prescription

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Part I /Book 1: General Provisions

• Chapter I – Common Provisions (Art.1 – Art.2)

• Chapter II – Person (Art.3 – Art.32-2) • Section 1 – Capacity to hold rights

• Section 2 – Capacity to Act

• Section 3 – Domicile

• Section 4 – Management od Absentee Property and Adjudication of Disappearance

• Section 5 – Presumption of Simultaneous Death

• Chapter V – Juristic Acts

• Chapter VI – Calculation of Period

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Part I /Book 1: General Provisions

• Chapter V – Juristic Acts (Art.90 – Art.137) • Section 1 – General Provisions

• Section 2 – Manifestation of Intention

• Section 3 – Agency

• Section 4 – Nullity and Rescission of Acts

• Section 5 – Conditions and Time Limit

• Chapter VI – Calculation of Period (Art.138 – Art.143)

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Part I /Book 1: General Provisions Chapter I – Common Provisions

• Art.1 (1) Private rights must conform to the public welfare. (2) The exercise of rights and performance of duties must

be done in good faith. (3) No abuse of rights is permitted.

Compared with: Art.90 in Chapter V (Section 1):

“A juristic act with any purpose which is against public policy (or translated as public order and good moral) is void.”

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Part I /Book 1: General Provisions Chapter II – Person

• Art.3 para 1: Enjoyment of private rights commences at birth

• Art.5 para 1: Statutory agent’s consent needed for minor to perform any juristic act, except act merely for receiving a right or being relieved of a duty (Art.5 para 2 – juristic act against Art.5 para 1 can be rescinded)

• Art.4: Age of majority = 20

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Part I /Book 1: General Provisions Chapter II – Person

• Art.30 para 1:

If it is not clear whether the absentee is dead or alive for 7 years, the family court may make the adjudication of disappearance at the request of any interested person.

• Art.30 para 2:

for a person engaged in any war zone, aboard any vessel which later sank, or otherwise exposed to any danger which could be the cause of death, if it is not clear whether such person is dead or alive for one year after the end of the war, after the sinking of the vessel, or after the termination of such other danger (as the case may be)

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Part I /Book 1: General Provisions Chapter II – Person

• Art.31:

A person adjudicated as disappeared pursuant to Art.30 para 1 is deemed to have died upon elapse of the 7 years described in Art.30(1).

A person adjudicated as disappeared pursuant to Art.30 para 2 is deemed to have died upon the termination of the danger.

• Art.32 para 1:

The family court must, at the request of the absentee himself/herself or any interested person, rescind the adjudication of disappearance if there is any proof that an absentee is alive, or that he/she died at a time differing from that provided in Art.31.

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Part I /Book 1: General Provisions Chapter II – Person

• Art.32-2:

When more than one person dies and it is unclear whether one of them survived the other(s), they are presumed to have all died at the same time.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Elements of a juristic act: 1. An act that is directed to cause specific legal effect;

2. Law recognises such act as causing such legal effect; and

3. Manifestation of intention.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Manifestation of intention • Manifestation of intention to a person at a distance shall become effective at the time of the arrival of the notice to the other party (Art.97 para 1)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Null and void juristic acts

Art.90: A juristic act with any purpose which is against public policy is void.

Art.119: An act which is void does not become effective by ratification. BUT: if a party ratifies any act knowing that such act is void, it is deemed that he/she acted de novo (i.e. acted afresh)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Null and void juristic acts

Fictitious Manifestation of Intention (Art.94): (1) Any fictitious manifestation of intention made in collusion

with another party(ies) shall be void. (2) The nullity of the manifestation of intention pursuant to

the provision of the preceding paragraph may not be asserted against a third party without knowledge.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Null and void juristic acts

Mistake (Art.95): Manifestation of intention has no effect (i.e. the juristic act is void) when there is a mistake in any element of the juristic act in question; provided, however, that the person who made the manifestation of intention may not assert such nullity by himself/herself if he/she was grossly negligent.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Null and void juristic acts

Unlawful conditions (Art.132):

Juristic act subject to an unlawful condition is void.

Impossible conditions (Art.133(1)):

Juristic act subject to an impossible condition precedent is void.

(Juristic act subject to a condition subsequent which is impossible shall be unconditional. (Art.133(2)))

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Conditions (Section 5 of Chapter V)

Conditions precedent Art.127(1):

A juristic act which is subject to a condition precedent shall become effective upon fulfilment of the condition.

Conditions subsequent Art.127(2):

A juristic act which is subject to a condition subsequent shall become ineffective upon fulfilment of the condition.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Voidable juristic acts

Fraud or duress (Art.96): (1) Manifestation of intention which is induced by any fraud or

duress may be rescinded. (2) In cases any third party commits any fraud inducing any

person to make a manifestation of intention to the other party, such manifestation of intention may be rescinded only if the other party knew such fact.

(3) The rescission of the manifestation of intention induced by the fraud pursuant to the provision of the preceding two paragraphs may not be asserted against a third party without knowledge.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Voidable juristic acts

Art.121: An act which is rescinded is deemed void ab initio.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts

Agency (Section 3 in Chapter V of Part I)

Art.99 – Art.118

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• Two types of agents: 1. Statutory agents;

2. Agents created by agreement (privately appointed agents).

• A statutory agent can appoint sub-agent (Art.106)

• A privately appointed agent cannot appoint sub-agent unless authorization is obtained from the principal or there is an unavoidable reason (Art.104)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• Termination of agency: 1. Death of the principal;

2. Death of the agent;

3. Ruling of the commencement of bankruptcy procedure/guardianship against the agent;

4. (for privately appointed agents only) termination of the agreement that creates the agency.

(Art.111)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• An agent is required to disclose the agency

• and the principal will be bound (Art.99 para 1)

• Otherwise, the act is considered as made by the agent on his/her own behalf and the principal is not bound by the act (Art.100) (N.B. exception provided by the Commercial Code)

• But, no need of such disclosure to bind the principal if the other party knew, or could have known, that the agent is acting on behalf of the principal (Art.100)

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Commercial Code (商法) Book/Part 2

• Covering commercial transactions

• Definitions of ‘commercial transaction’:

Any one of the following 3 categories: • One of the transactions specified in Art.501

• One of the transactions listed in Art.502 if carried out in the course of a business

• Any transaction to which one party is a merchant carrying on business (Art.503)

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Art.501, Commercial Code

Commercial transactions: • Transactions with an aim/object either: (1) to acquire for value movables, immovables or valuable instruments with an intention to dispose them at a profit; or (2) to dispose of/transfer objects so acquired

• Contracts for supply of movables or valuable instruments which are to be acquired from others, and transactions with an aim/object to acquire them for value to carry out the aforesaid contracts

• Transactions conducted on exchanges • Transactions on bills and other commercial securities

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Art.502, Commercial Code

Specifying 13 types of transactions which will be commercial transactions if carried out in the course of a business:

• Transactions with an aim to acquire for value or to hire movables or immovables with an intention to let them, or the letting of objects so acquired or hired

• Transactions concerning the manufacture or processing of articles for other persons

• Transactions concerning transportation/carriage • Exchange and other banking transactions • Insurance • Etc.

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• If a principal has made known to a third party that he/she has granted to person(s) certain authority of agency, he will be bound by that such person’s/persons’ act regarding the third party so long as such act is within the scope of such authority (Art.109) even if there is no such granting of authority in reality

• But this does not apply if the third party knew, or were negligent in not knowing, that there is no such granting of authority in reality (Art.109)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• When an agent acts outside the scope of authority granted by the principal, the principal will still be bound if the third party has reasonable grounds for believing that the agent has the authority (Art.110)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• Contract concluded by an unathorised agent is void vis-à-vis the principal unless ratified by the principal (Art.113 para 1)

• Before the principal ratifies the contract, the counterparty to such contract can rescind the contract (Art.115) but this does not apply if the counterparty knew at the time of the conclusion of the contract that the agent had no authority of agency (Art.115)

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Part I /Book 1: General Provisions Chapter V – Juristic Acts Agency (Section 3 in Chapter V of Part I)

• The unauthorised agent is liable to the counterparty to the contract if there is no ratification by the principal (Art.117 para 1)

• But, the unauthorised agent is not liable if the counterparty knew, or was negligent in not knowing, that the agent had no authority of agency, or if the unauthorised agent had no capacity to act (Art.117 para 2)

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Part I /Book 1: General Provisions Chapter VI – Calculation of Period

Art.138: Chapter VI in Part I of Civil Code applies unless:

• Otherwise provided in laws, regulations or judicial order; or

• Otherwise specified by the juristic act concerned

Art.143(1):

week, month, or year = calendar week, month, or year

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Reference list:

• Civil Code • Commercial Code • ‘Japan Law Digest’ Martindale-Hubbell International Law Digest 2006,

available from LexisNexis. • Hiroshi Oda, Japanese Law, 2nd edition, 1999 and 3rd edition 2009. • Luke Nottage and Leon Wolff, “Japan” in Doing Business in Asia, Vol.

III First Edition, Kluwer 2005.

Sources of information for the above slides are (unless otherwise stated) as follows:

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