Understanding Japanese Contract Law

Understanding Japanese Contract Law

Contract Formation and Interpretation without an
Offer and Acceptance Paradigm

Ichiro KOBAYASHI∗
Ichiro KOBAYASHI
I. Introduction
II. Contract Formation and the Role of Offer and Acceptance
1. Overview
2. The Offer and Acceptance Approach
3. The Impact of Different Approaches to Contract Formation on Contract Practice
III. Contract Formation and Interpretation in Japan
1. Inclination toward Quasi-Contracts
2. Reluctance to Enforce Standard Terms
3. Reluctance to Use Implied Terms
4. Construction Contracts
5. Software Development Contracts
IV. Conclusion

I. INTRODUCTION1
Japanese contractual practice has traditionally been perceived, as depicted
in “The Legal Consciousness of Contract in Japan” by Takeyoshi
KAWASHIMA,2 as placing less emphasis on written contracts compared to
Western countries. Instead, Japan has been seen as favoring ambiguity in
contractual terms and prioritizing post-contract settlement through negotia-
tion. In recent decades, there has been a significant shift in Japanese corpo-
rate legal affairs toward a greater emphasis on written contracts. Nonethe-

∗ Professor, Hitotsubashi University.

1 This article has been extracted, summarized, and further elaborated upon from the
English translation of I. KOBAYASHI, Nihon no keiyaku jitsumu to keiyaku-hō – Ni-
honteki keiyaku kankō no kenkyū [Contract Law and Practice in Japan] (2024), first
published as: I. KOBAYASHI, A Study of Japanese Contract Law in Practice (1)–(3):
Its Uniqueness in Contract Formation Without an Offer-and-Acceptance Paradigm,
Hitotsubashi Journal of Law and International Studies 22 (2023), (22/1) 1, (22/2)
181, (22/3) 213.
2 T. KAWASHIMA, The Legal Consciousness of Contract in Japan, Law in Japan 7
(1974) 1.
42 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

less, a closer examination of Japanese contract practice and its legal system
reveals distinct characteristics that persist.
One notable peculiarity in Japanese practice is observed in the process of
contract formation. While the contract law of international standards typi-
cally relies on the principles of offer and acceptance to determine contract
formation, Japanese law does not strictly adhere to this mechanism. Instead,
it emphasizes the maturity of the negotiation as a key element in contract
formation. Japanese courts presume that a contract is formed when negotia-
tions have reached a sufficient level of maturity, without necessarily inter-
preting and scrutinizing specific expressions or actions in the negotiation
process as being indicative of an offer or acceptance.
This unique approach to contract formation in Japan, which consequent-
ly severs contract formation from interpretation, has not been extensively
studied in terms of its impact on contractual practice. A hypothesis emerges
that the Japanese courts’ perspective on contract formation and interpreta-
tion may have influenced the development of Japan’s distinct contract prac-
tices, characterized by a tolerance for ambiguity. By examining the impli-
cations of Japan’s specific methods for determining contract formation,
particularly in the context of long-term projects having uncertain prospects
– such as construction and software development – this article aims to offer
a new perspective on Japanese contract interpretation and the understanding
of contract law.3 A comparative study of this aspect of Japanese contract
law could provide valuable insights for the future development of contracts
as an international standard.
This article is also intended to contribute to the ongoing debate on the
significance and limitations of the offer and acceptance model in contract
formation.4 While some criticize this model for not aligning with the reali-
ties of contract negotiations,5 it remains firmly entrenched in international
practice. Understanding Japanese contract practice without relying on the

3 Japanese trade practice, along with Japanese unique corporate governance, has long
been the subject of comparative research. B. ASANUMA, Manufacturer-Supplier Re-
lationship in Japan and the Concept of Relation-Specific Skill, Journal of the Japa-
nese and International Economies 3 (1989) 1; M. AOKI, Toward an Economic Mod-
el of the Japanese Firm, Journal of Economic Literature 28 (1990) 1; R. J. GILSON /
M. J. ROE, Understanding the Japanese Keiretsu: Overlaps Between Corporate
Governance and Industrial Organization, Yale Law Journal 102 (1993) 871.
4 There are some contributions in the field of law and economics in the US, exploring
the fundamentals of the offer and acceptance in contract formation. E.g.,
R. CRASWELL, Offer, Acceptance, and Efficient Reliance, Stanford Law Review 48
(1996) 481; A. W. KATZ, The Economics of Form and Substance in Contract Interpre-
tation, Columbia Law Review 104 (2004) 496; S. J. BAYERN, Offer and Acceptance in
Modern Contract Law: A Needless Concept, California Law Review 103 (2015) 67.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 43

offer and acceptance paradigm may shed light on both the institutional ad-
vantages or disadvantages of the offer and acceptance technique and poten-
tial drawbacks if it were to be abandoned.
This article is structured as follows. Section II provides an overview of the
differences in contract formation mechanisms between Japan and interna-
tional standards, comparing the Japanese approach with the United Nations
Convention on Contracts for the International Sale of Goods (CISG) and An-
glo-American contract law. Section III focuses on long-term subcontracting
transactions to illustrate how Japan’s unique contract formation process
without an explicit offer and acceptance can lead to a narrower contract prac-
tice, potentially hindering contract law’s role as a solution provider for con-
tingencies. Finally, Section IV summarizes the characteristics of Japanese
contract formation and interpretation highlighted in this article.

II. CONTRACT FORMATION AND THE ROLE OF OFFER AND ACCEPTANCE

1. Overview
Under international standards, contracts are typically formed through the
mutual agreement of an offer and acceptance. However, such a specific of-
fer and acceptance approach is not commonly found in Japanese case law.
Yoshio HIRAI, a prominent scholar in Japanese contract law in the 1990s
and 2000s, observed that while the Japanese Civil Code contained provi-
sions on contract formation based on an offer and acceptance, these provi-
sions had lost practical significance over time, with few corresponding
court decisions.6
The 2017 revision of the Japanese Civil Code marked a significant up-
date to Japan’s foundational legal framework governing contracts, but it
maintained a cautious approach towards the concept of offer and accept-
ance, reflecting traditional Japanese legal thought on contract formation.
Article 522 of the revised Civil Code encapsulates the principle that a con-

5 M. A. EISENBERG, Expression Rules in Contract Law and Problems of Offer and

Acceptance, California Law Review 82 (1994) 1127 (arguing that many black-letter
expression rules that emerge from the case law in the law of offer and acceptance
are not congruent with the general principles of interpretation). BAYERN, supra
note 4, 68 (“The notion that contracts require an offer and an acceptance is one of
the last remaining bastions of classical contract law.”). BAYERN claims that the of-
fer and acceptance paradigm fits poorly with modern contracting practice, arguing
that contract formation should be analyzed based on general interpretive inquiry
concerning the intent of contracting parties.
6 Y. HIRAI, Saiken kakuron I (Jō) – keiyaku sōron [The Law of Obligations. Part I –
General Contract Theory] (2008) 150.
44 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

tract is established through the mechanism of offer and acceptance, adher-

ing to a fundamental concept recognized universally in contract law. How-
ever, the revision stopped short of delving into the complexities of contract
interpretation, operational nuances, and detailed guidelines that could ad-
dress the multifaceted nature of modern contractual relationships.
This restraint stems from a deeply ingrained perspective within Japanese
legal culture, valuing flexibility and case-by-case analysis over prescriptive
rule-making in the domain of contract law. Yoshio SHIOMI’s commentary
on the revision highlights a deliberate choice to preserve this aspect of legal
practice, emphasizing the unique approach to contract interpretation in Ja-
pan as predominantly a matter of factual determination rather than strict le-
gal formalism.7
Practitioners’ concerns that detailed codification would lead to rigid con-
tractual practices further influenced the drafting process. The apprehension
was that embedding fixed rules for contract interpretation within the Civil
Code could constrain the adaptability and responsiveness of contractual ar-
rangements to the specificities and evolving dynamics of individual cases.
The distinction between the Japanese approach to contract formation and
that of international standards, such as the UN Convention on Contracts for
the International Sale of Goods (CISG) and the (American) Uniform Com-
mercial Code (UCC), highlights fundamental differences in legal philoso-
phy and practice.8 The CISG and the UCC both provide explicit guidelines
for contract interpretation, focusing on an analysis of the parties’ manifes-
tations of intent through an offer and an acceptance. This framework facili-
tates the identification and interpretation of specific words and conduct that
constitute the contract’s substance, emphasizing the importance of the par-
ties’ explicit terms and agreements.
In contrast, Japanese contract law lacks a similar framework for inter-
preting an offer and acceptance, making it challenging to pinpoint specific
words and conduct subject to contract interpretation. The Japanese ap-
proach emphasizes a comprehensive judgment of the facts, often relying on
a broader, more holistic analysis of the parties’ intentions and the contrac-
tual context. This method may lead to judgments which conclude that a
contract was formed based on reasonable interpretations of the overall cir-
cumstances, without the detailed analysis of individual manifestations of
intent characteristic of the CISG and UCC.9

7 Y. SHIOMI, Shin-saiken sōron I [The New Law of Obligations. General Part I]

(2017) 57.
8 CISG Article 8; UCC § 208.
9 The 2017 revision of the Japanese Civil Code introduced a provision for regulating
standard terms. Initially, practitioners responded negatively to the suggestion of in-
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 45

Yoshio HIRAI’s observation that Japanese courts frequently resort to

broad, generalized statements like “it is reasonable to interpret the contract
in that way”10 underscores this preference for a less granular approach to
contract formation. Japanese courts often eschew specifying the exact mo-
ment of contract conclusion, opting instead to indicate a period in which the
contract was likely formed.11 Additionally, the practice of rejecting the va-
lidity of a contract in the absence of a written agreement, due to industry
customs of formalizing contracts in writing,12 further illustrates the empha-
sis on a collective assessment of contractual exchanges over the detailed
scrutiny of offer and acceptance.13

2. The Offer and Acceptance Approach

Truly, it might be accurate to acknowledge that the traditional notion of
contracts being based solely on an offer and acceptance contains an element

cluding a provision to regulate standard terms within the revised Civil Code. Given
that Japanese contract practice traditionally does not emphasize contract formation
strictly through offer and acceptance, it follows that incorporating standard terms
might clash with established practices.
10 HIRAI, supra note 6.
11 E.g., Tōkyō District Court, 12 February 2020 (Heisei 29 (Wa) No. 43685); Tōkyō
District Court, 22 January 2021 (Heisei 28 (Wa) No. 24946); Tōkyō District Court,
28 May 2021 (Heisei 28 (Wa) No. 43712, Heisei 29 (Wa) No. 43036); Tōkyō District
Court, 20 July 2021 (Reiwa 2 (Wa) No. 32767); Tōkyō District Court, 28 October
2021 (Reiwa 2 (Wa) No. 10893); Tōkyō District Court, 8 November 2021 (Reiwa 2
(Wa) No. 19578); Tōkyō District Court, 24 December 2021 (Reiwa 1 (Wa)
No. 13262); Tōkyō District Court, 31 January 2022 (Reiwa 1 (Wa) No. 13263);
Tōkyō District Court, 4 February 2022 (Reiwa 2 (Wa) No. 22934, Reiwa 3 (Wa)
No. 16439).
12 E.g., Tōkyō District Court, 28 February 2006 (Heisei 16 (Wa) No. 7520); Tōkyō
District Court, 22 February 2022 (Reiwa 2 (Wa) No. 19309); Tōkyō District Court,
28 April 2022 (Heisei 30 (Wa) No. 13351).
13 For instance, Tōkyō District Court, 16 January 2020 (Heisei 29 (Wa) No. 5311)
held that a construction contract was concluded between the client and the contrac-
tor after the client requested during a meeting that “the work should start next
week.” However, it did not specify which action constituted the contractor’s ac-
ceptance. In another instance, Tōkyō District Court, 30 March 2021 (Heisei 31 (Wa)
No. 9077) dealt with a case where the plaintiff offered a server operation and main-
tenance service but argued that a contract had not been concluded due to the lack of
an expression of acceptance. The court indicated that considering the subsequent
communications between the parties, it was clear that a contract had been estab-
lished. Under the offer and acceptance approach, the specifics of the “communica-
tion” exchanged would need to be scrutinized. Conclusions may differ depending
on whether these communications are for the preliminary phase regarding the feasi-
bility of the service or whether they are directly related to the service itself.
46 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

of fiction. In many business dealings, it is more pragmatic to view contrac-

tual agreements as a result of negotiations between the parties. General
provisions regarding contract formation, such as UCC § 2-204, Arti-
cle 1108 of the French Civil Code, and European Principles of Contract
Law § 2-101, do not necessarily confine contractual agreements to the
framework of offer and acceptance. However, to ensure a correct interpreta-
tion of a contract, it is essential to make clear the specifics of how the par-
ties’ understandings were shaped during the negotiation process and how
these understandings were reflected in the final negotiated terms. Even if a
contract is finalized in a written agreement through a formulation-type ne-
gotiation, exploring an element of offer and acceptance embedded within
the written agreement can enrich the interpretation process, allowing for a
deeper exploration of the true intentions of the contracting parties.
As indicated by the European Draft Common Frame of Reference
(DCFR), the offer and acceptance paradigm is the prevailing model for con-
tract formation across all legal systems in European countries.14 Alternative
models that deviate from this framework are generally underregulated in
national legislation throughout Europe, with unresolved issues in case
law.15 It is universally acknowledged within each country that the princi-
ples governing the offer and acceptance model are applied analogously to
other models to the extent feasible and reasonable. 16 Drawing from the
DCFR’s illustration in II 4-211, consider a scenario where two parties con-
vene to draft a contract and agree to accept it within a stipulated timeframe
of two weeks.17 In this context, the draft is construed as an “offer”.18 Should
either party fail to secure acceptance from the other within the designated
timeframe, or if the other party explicitly rejects the offer within the speci-
fied period, no contract is deemed to be established.19 If one party introduc-
es substantial amendments to the draft, it constitutes a rejection of the ini-
tial offer and is regarded as a “new offer.” The exchange of contract drafts
is structured to align with the offer and acceptance framework, ensuring
clarity and consistency in contract formation processes.
The drafters of the CISG assumed that contract formation was not lim-
ited to the offer and acceptance paradigm and that other alternative methods

14 DCFR II 4:211 Notes 1.

15 DCFR II 4:211 Notes 2.
16 DCFR II 4:211 Comments B. Illustration 1.
17 See id.
18 See id.
19 See id.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 47

of contractual agreement were also envisaged.20 However, the CISG aban-

doned explicitly providing such alternative methods.21 To achieve a con-
tractual agreement that is not based on offer and acceptance, it is necessary
to either explicitly exclude the CISG’s provisions on contract formation
(Articles 14 to 24) pursuant to Article 6 CISG, or to incorporate the prac-
tices established between the parties under Article 9(1) CISG. 22 In cases
where neither an express exclusion of the CISG’s contract formation rule
nor incorporation of established practice is applicable, a process of identi-
fying an offer and acceptance is initiated.23

a) Offer
Both the CISG and American contract law detail the criteria for what consti-
tutes a valid offer and acceptance, serving as evidence of intent to form a con-
tract. Article 14 of the CISG mandates that an offer must be “sufficiently def-
inite”24 and demonstrate the offeror’s intent to be bound in the event of ac-
ceptance.25 This requirement clarifies the terms of the offer and the offeror’s
commitment. The process involves a meticulous examination of whether
specific actions or statements from one party meet these two criteria, identi-
fying the offer’s definitive nature and the offeror’s intent to be bound.
Similarly, in American contract law, an offer is recognized as “an ex-
pression by one party of assent to certain definite terms, provided that the
other party involved in the bargaining transaction will likewise express as-

20 See P. SCHLECHTRIEM / I. SCHWENZER, in: Schwenzer / Schroeter (eds.), Commen-

tary on the UN Convention on the International Sale of Goods (CISG) (5th ed., 2022)
288.
21 See C. P. GILLETTE / S. D. WALT, The UN Convention on Contracts for the Interna-
tional Sale of Goods: Theory and Practice (2nd ed., 2016) 86.
22 See id. at 288–289.
23 See id. at 289.
24 The question of whether an offer is “sufficiently definite” under Article 14 of the
CISG arises when there are no clear agreements on the goods or the price. Numer-
ous cases have examined whether an offer is sufficiently definite. Under a two-
stage negotiation process involving bidding and contract execution, the interactions
during the bidding phase do not involve a “sufficiently definite” offer according to
Article 14 of the CISG (Hanwha Corp. v. Cedar Petrochemicals, Inc., 760 F. Supp.
2d 426 (S.D.N.Y. 2011)). A Chinese arbitration decision indicated that the offer
was not recognized due to insufficient specification of the goods involved
(CIETAC Arbitration (China), 25 December 1998).
25 For example, in a case in which a subsidiary issued an invoice at the request of its
parent company, a German court held that an offer was not made under Article 14
of the CISG (Higher Regional Court (OLG) Frankfurt (Germany), 30 August 2000
– 9 U 13/00).
48 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

sent to the same terms.”26 According to the Restatement (Second) of Con-

tracts, an offer is “the manifestation of willingness to enter into a bargain,
so made as to justify another person in understanding that his assent to that
bargain is invited and will conclude it.”27 This definition emphasizes that
for an offer to be valid, it must clearly express the terms of the contract and
invite acceptance in such a way that entering into the contract is justified.
Moreover, even if an intention appears to be an offer, it does not constitute
a contract unless the terms are reasonably certain and the contract’s specif-
ics are sufficiently defined to be enforceable.28
In both legal frameworks, proposals are scrutinized to determine if they
exhibit a clear manifestation of intent that meets the threshold for forming a
contract. Proposals failing to meet this criterion are not considered part of
the contractual agreement. A decision is made on whether a proposal’s con-
tent is binding as a contract by identifying expressions and conduct that
qualify as an offer.29

b) Acceptance
In the realm of international standards, an acceptance requires that a com-
mitment to be bound by the contract be shown30 and that it reach the other
party. The acceptance must be unequivocal and devoid of conditions or al-

26 See A. CORBIN, Corbin on Contracts § 1.11, 1 (2022).

27 Restatement (Second) of Contract § 24.
28 An offer that appears indefinite may be given precision by the usage of trade or
course of dealing. See Restatement (Second) of Contracts § 33. comment a.
29 For instance, the District Court of St. Gallen, Switzerland dealt with a case where, dur-
ing a collaboration aimed at a fashion collection, the arrangement regarding the deliv-
ery of fabrics had proceeded under ambiguous terms until the collaboration ended, and
the issue was whether a purchase contract for the delivered fabrics had been concluded.
The court focused on the conduct expressed in the request to issue an invoice men-
tioned in a letter dated 29 June, determining that it constituted a manifestation of intent
for a binding offer (District Court, St. Gallen (Switzerland) 3 July 1997 – 3PZ 97/18).
30 Article 18(3) of the CISG suggests that performance can be considered as acceptance,
even in cases where the offeree’s action may not be known to the offeror. Examples
from CISG case law include a case where past transactional practices were considered
as the basis for recognizing manufacturing and shipping acts as acceptance under Ar-
ticle 18 of the CISG (Urica, Inc. v. Pharmaplast S.A.E., 2014 U.S. Dist. LEXIS
110015 (2014)), a case where it was determined that the offeror had waived the right
to receive notice of acceptance based on the transaction history (Supreme Court
(OGH) Austria, 13 December 2012 – 10 Ob 62/22y) and a case where silence was
deemed as acceptance under the exception of Article 18 of the CISG, taking into ac-
count a series of events including failure to insist on the delivery of substitute goods in
response to the offer to terminate the contract (Higher Regional Court (OLG) Co-
logne, 22 February 1994 – 22 U 202/93).
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 49

terations to the terms of the offer. Nevertheless, there is a tendency in legal

interpretation to allow for a more flexible acknowledgment of agreement,
considering instances where a slight deviation from the offer should not
preclude the formation of a contract, as well as scenarios where acceptance
might imply performance ambiguously. Within this interpretative frame-
work, two primary forms of acceptance emerge: acceptance by promise and
acceptance by performance or conduct.
In American law, the Restatement (Second) of American Contract Law
clearly distinguishes between acceptance by promise and acceptance by
performance, providing detailed provisions on how acceptance should be
made in different situations. First, it provides that if the form of acceptance
is not clear from the content of the offer, acceptance by the offeree may be
either acceptance by promise or acceptance by performance, as the offeree
chooses.31 It also provides that if the offeror has given the offeree the right
to choose between acceptance by promise and acceptance by performance,
the offeree’s commencement of performance constitutes acceptance by
promise concerning the entire obligation, including the portion not yet
commenced.32
UCC Article 2 similarly includes a provision on the occasions of ac-
ceptance by conduct. First of all, as a precondition, it is stipulated that un-
less there is an obvious indication, an offer can be accepted in a manner and
by a means that is reasonable under the circumstances.33 It then provides
that it is possible to establish the existence of a contract without a written
document showing agreement if there is an act of both parties that approves
the existence of the contract.34 It is understood that the offeree is not con-
strained as to the method of acceptance, as long as the method conveys the
intention of acceptance to the offeree, and that it is permissible to proceed
with performance without necessarily giving an explicit verbal acceptance.
While American contract law gives an offeror the authority to control the
content of the contract through the offer, the expectation and reliance of the
offeree on the offer affect the interpretation of the contract. In the case of
an executory contract with consideration, the expectation of the offeree to-
ward the promise is taken into account in the interpretation. On the other
hand, in the type of agreement that has no consideration, the offeree’s reli-
ance on the promise is taken into account.35 In the United States, the validi-

31 Restatement (Second) of Contract § 32.

32 Restatement (Second) of Contract § 62.
33 UCC Article 2-206.
34 UCC Article 2-207(3).
35 In Anglo-American contract law, the grounds for the promisee’s remedies are clas-
sified into expectation, reliance, and restitution. Remedies based on expectation aim
50 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

ty of the withdrawal of an offer and the extent of protection owed to the of-
feree who relied on the offer have been debated, particularly in the context
of an option contract. These contracts grant the offeree the right to ac-
ceptance by limiting the offeror’s ability to withdraw the offer. In the case
of Drennan v. Star Paving Co., the court ruled that a subcontractor is bound
by its implied promise not to withdraw its bid, as the contractor relied on it
when proceeding with its bid for the general contract.36 This highlights the
importance of protecting a contractor’s reliance on the subcontractor’s bid
conditions in the contractor’s bid for the general contract, considering the
significance of subcontractor selection and the determination of subcon-
tracting conditions for the contractor.

3. The Impact of Different Approaches to Contract Formation on

Contract Practice
It will provide an important perspective in comparative law research on con-
tract formation to clarify (i) why there can be differences in contract interpre-
tation deriving from the differences between the offer and acceptance ap-
proach and the Japanese style of the “maturity of the negotiation” approach
and (ii) what technical problems could arise when a contract is formed without
an offer and acceptance mechanism. In the absence of a framework delineat-
ing the parties’ communications into distinct offers and acceptances, it be-
comes challenging to identify which party’s communications should be pri-
oritized when analyzing a contract for its contents. This will lead to instability
in providing clear guidelines, as there is a prevailing inclination to view con-
tract formation holistically. While a clear, well-defined contract outlining the
parties’ rights and obligations alleviates such issues, difficulties may arise in
the absence of such a document, complicating the handling of the contract.

to compensate for the promisee’s expectation interest, the loss of the anticipated
benefit resulting from the promisor’s breach, under the doctrine of consideration.
Reliance remedies compensate the promisee for disadvantages incurred by relying
on the promise, such as incurring expenses in anticipation or preparation of its per-
formance. The remedy in this case aims to restore the promisee to the position they
would have been in had the promise not been made and is measured by the promi-
see’s reliance interest. Furthermore, if the promisee has conferred a benefit on the
promisor during the transaction (for example, by providing something to the promi-
sor or enhancing the promisor’s property), courts may seek a remedy through resti-
tution, requiring the return of this benefit to the promisee. See A. FARNSWORTH,
Contracts (4th ed., 2004) at 46.
36 Drennan v. Star Paving Co., 333 P.2d 757 (Cal. 1958). For further discussion on
promissory estoppel as demonstrated in the Drennan decision, see FARNSWORTH,
supra note 35, 186–187. Following the Drennan ruling, the Restatement (Second)
of Contract Law introduced a new provision, § 87(2), regarding option contracts.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 51

a) The Impact on Interpretive Style

As already discussed, the offer and acceptance approach recognizes the
process of contract formation as a legal interpretation of the manifestation
of intent to “make an offer”, whereas the “maturity of the negotiation” ap-
proach is based on a comprehensive evaluation of a bundle of actions to-
ward an agreement, and can be organized as a process that grants a certain
category of contract to them.
The essential differences between the two approaches are as follows.
The offer and acceptance approach is characterized by a strong tendency to
grasp as much as possible of the scope and conditions of the contract from
individual words and conduct that are considered to be an offer, taking into
consideration how the other party understood the offer. This process is not
limited to cases where the exchange of offer and acceptance is externally
evident; rather, it is also practiced even when the verbal and non-verbal ex-
pressions of offer and acceptance are not clearly articulated. In situations
where both parties engage in negotiations to gradually reach an agreement,
the actions of one party at the moment when an agreement is identified are
construed as an “offer.” In contrast, the maturity of the negotiation ap-
proach assesses the alignment of substantive intentions based on the entire-
ty of factual circumstances and then applies the conclusion to decide which
default rules of a particular type of contract should be applied. Consequent-
ly, during the contract formation stage, little analysis is made of how one
party’s conduct is perceived by the other party from the perspective of a
reasonable person of the same kind.
For example, assume that a product development project between a cus-
tomer and a vendor involves the development of a prototype. In developing
the prototype, the executive of the customer says to the vendor, “Please
proceed with the project,” and in response, the vendor begins the develop-
ment of the prototype.37 The offer and acceptance approach would consider
whether the statement, “Please proceed with the project” falls under the le-
gal requirement of an offer. In assessing whether the statement constitutes
an offer, an interpretation is conducted following the rules of interpretation
of manifestation of intent and in accordance with “the understanding that a
reasonable person of the same kind as the other party would have had in the
same circumstances.”38 If the statement can be construed, from the perspec-
tive of a reasonable person of the same kind, as a specific offer, especially
if accompanied by consideration, and as a statement to which one is bound
by acceptance, then the statement is evaluated as an offer. This process for

37 Tōkyō District Court, 27 December 2021 (Heisei 30 (Wa) No. 27570).

38 CISG Article 8(2).
52 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

the analysis of an offer can determine the scope and content of the contract
at the same time. Whether the statement “Please proceed with the project”
should be understood as assuming only prototype work or granting the ven-
dor the right to commercialize the product, or as assuming payment for the
prototype, will be determined according to the understanding of a reasona-
ble counterparty of the same kind.
The offer and acceptance approach is nothing other than the process of
interpreting each act of conduct categorized as an offer or an acceptance as
a manifestation of intent. Through the accumulation of these interpretations
over time, a typology will be developed about what kind of conduct can be
considered as an offer and what kind of terms and conditions will be antici-
pated with the offer. The accumulation of the cases is likely to lead to the
creation of implied terms in law, or a default rule.
In contrast, the Japanese style of a “maturity of the negotiation” ap-
proach lacks a systematic procedure for incorporating the reasonable expec-
tations of the counterparty into the content of the contract at the contract
formation stage. For instance, when the sender of a statement deemed
equivalent to an offer disputes the recipient’s understanding, stating, “That
was not my intention,” it raises doubts regarding the alignment of subjec-
tive intentions, at the very least. However, during the stage of contract for-
mation, the process of interpreting such statements according to the reason-
able standard of the counterpart party is not always sufficiently conducted.
These statements are treated on par with other circumstantial evidence, and
agreement is subject to an overall assessment of factual circumstances.
Consequently, lacking decisive criteria, judges generally tend to interpret
agreements conservatively.
While Japanese courts may aspire to interpret a contract considering the
details of the negotiation process, such efforts are typically carried out in-
dependently after the judgment of contract formation, distinguishing the
process of contract interpretation from contract formation. However, the
lack of legal analysis of the alignment of intentions during the stage of con-
tract formation makes it challenging to find clues for interpretation. Addi-
tionally, once the contract’s scope is narrowly identified during the contract
formation stage, issues excluded from such a narrower scope of the contract
cannot be considered in contract interpretation. The opportunities to inter-
pret particular statements or actions at the contract negotiation stage are
likely to diminish. Consequently, the analysis of how parties reach a con-
tractual agreement is hindered, and the accumulation and categorization of
case lessons are less likely to occur.
This difference in contractual awareness between Japanese and interna-
tional standards can be understood as the difference in that Japanese contract
law separates contract formation from contract interpretation, whereas inter-
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 53

national standards, as presented by the CISG and others, understand contract

formation and interpretation as continuous practice. The offer and acceptance
approach of international standards assumes that it is not desirable to separate
the contract formation from contract interpretation since a contract is a de-
termination of the parties’ agreement at the very time it is concluded.39
Under the offer and acceptance approach, individual expressions during
the negotiation process are interpreted from the perspective of the reasona-
ble counterparty. As a result, the outcome of legal interpretation during the
contract formation process is more likely to be directly reflected in the con-
tent of the contract. In contrast, Japan’s maturity of the negotiation ap-
proach assumes a separation between contract formation and contract inter-
pretation. It tends to have the result that the judgment of contract formation
determines which default rules of a particular type of contract will apply,
thereby making it less likely for the outcome made under the judgment of
contract formation to be reflected in the contract content.
Differences in Contract Formation and Interpretation

b) The Impact on Contract Practice

The offer and acceptance approach evaluates each statement or instance of
conduct of the parties with a legal interpretation, whereas the Japanese-
style maturity of the negotiation approach does not embark upon legal in-

39 There had been an unfavorable view regarding the handling of a “battle of forms”,
criticizing the adoption of the “knockout rule” so as to separate the issues of contract
formation from the interpretation of contract content. The drafting stage of the CISG
took a stance against dividing contract formation and the determination of its content.
P. SCHLECHTRIEM, Kollidierende Geschäftsbedingungen im internationalen Ver-
tragsrecht [Battle of the Forms in International Contract Law], in: Thume (ed.),
Transport- und Vertriebsrecht 2000. Festgabe für Professor Dr. Rolf Herber (1999) 36.
54 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

terpretation of the individual statements of the parties at the contract for-

mation stage. These differences will result in noticeable disparities in con-
tractual practices in business venues.
In standardized contracts using standard terms and conditions (STC), how
STC are incorporated at the contract formation stage, whether through inter-
preting the actions of the parties as legal issues (the offer and acceptance ap-
proach) or as factual issues (the maturity of the negotiation approach), can re-
sult in subtle differences in how STC are integrated. In the offer and ac-
ceptance approach, the act of proposing an STC is considered an independent
legal issue, leading to the accumulation of precedents regarding when the re-
quirements for an offer are met and when they are not. This allows applicants
to expect more stable practices when incorporating STC. Conversely, in the
maturity of the negotiation approach, due to the lack of the notion of the offe-
ror’s superiority or the mirror image rule in the mindset of the parties, ex-
changes of STC are treated as fragmentary communications within the
buildup of negotiations. Disputes focused on the validity of STC are thus less
likely, resulting in less accumulation of precedents.
Similarly, in subcontracting or commissioning transactions, differences
arise when dealing with ex-post changes in circumstances in respect of the
outcome, depending on whether individual statements and actions are inter-
preted as legal issues at the contract formation stage (the offer and ac-
ceptance approach) or recognized as factual agreement content (the maturi-
ty of the negotiation approach). In the offer and acceptance approach, acts
corresponding to an offer and acceptance during the initial negotiation pro-
cess are already interpreted, the result of which serves as the basis for in-
terpretation and a revisiting of the initial agreement, making it more likely
for them to be incorporated into the contract as implied terms. In the ma-
turity of the negotiation approach, by contrast, the parties’ negotiation be-
havior is not interpreted at the contract formation stage, as a result of which
the lack of interpretative material may lead to difficulties in seeking inter-
pretive clues allowing application of the original agreement’s intent to the
ex-post changes in circumstances. Moreover, the separation of the contract
formation process and contract interpretation could potentially close off av-
enues for resolution if a contract is narrowly recognized during the contract
formation stage, thereby limiting the possibilities for resolution through
contract interpretation.
Comparing Japan’s judgment process with that of international stand-
ards, Japan’s contractual practice tends to operate within a narrower scope
of contract law.40 The decisions of Japanese courts often do not adequately

40 Under American law, the boundary between contract law and tort law has been a
subject of debate for a long time. From the 19th to the early 20th century, contract
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 55

analyze what the parties originally intended as a solution to contingencies

arising from anticipated changes in circumstances. Courts are reluctant to
explore the original intent of the parties and instead lean towards evaluating
the parties’ ex-post performance of its extra-contractual duty to cooperate
and negotiate in good faith after a contingency arises from a change in cir-
cumstances.

III. CONTRACT FORMATION AND INTERPRETATION IN JAPAN

As discussed in Section II, the criteria for determining when a contract is
formed vary significantly as between the Japanese model and international
standards. This difference becomes evident during the judicial process,
starting from how the parties present their case and evidence; this, in turn,
leads to notable differences in judicial decision-making. International
standards adopt an approach that focuses on identifying the specific ele-
ments of an offer and acceptance, this along with evaluating the intentions
of the person making the offer and evaluating the expectations or reliance
of the person accepting it. In contrast, the Japanese model emphasizes a
comprehensive understanding of the factual context of the negotiations and
the maturity of those negotiations. This emphasis indicates that Japan’s
unique approach to contract formation may have influenced the develop-
ment of its contractual practices.

1. Inclination toward Quasi-Contracts

Analyzing Japanese case law reveals a tendency to simplify the determina-
tion of contract formation, focusing primarily on whether the parties have
thoroughly negotiated the terms. If a part of the negotiation is well-
developed, it is recognized as forming part of the contract, while the under-
developed sections are often disregarded in terms of contract formation.
This leads to a dichotomy in judicial decisions such that, if any part re-
mains undeveloped, the contract might be considered not fully established,
or only the developed sections are recognized as constituting the contract.
Consequently, there is a strong inclination to seek solutions outside the
contract framework for matters that are not maturely negotiated. A typical

law scholars like Samuel WILLISTON aimed to expand the domain of contract law.
By contrast, Grant GILMORE declared the “death of contract” in his seminal work,
suggesting that contract law was losing its former prominence (G. GILMORE, The
Death of Contract (1974)). There has been ongoing competition between contract
law and tort law, each trying to establish boundaries in their favor. The New York
State Supreme Court, at least in the realm of explicit warranty breach lawsuits, has
shown that contract law is absorbing tort. See FARNSWORTH, supra note 35, 22–23.
56 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

example involves construction contracts where, if clear agreement on

changes during the work process is absent, no additional contractual rela-
tionship is assumed. Instead, a legal structure resembling quasi-contracts in
common law is adopted for problem-solving, as seen in the application of
Article 512 of the Commercial Code. Article 512, which allows a merchant
who has acted for another (in most case without authority) within the scope
of his business to claim reasonable remuneration,41 mirrors the equity prin-
ciple of quantum meruit found in common law, indicating that a contractor
can claim a fair amount for additional work done without explicit negotia-
tion or agreement.
Article 512 is utilized under various rationales in judicial precedents, in-
cluding as a basis for claims arising from quasi-contractual relationships42

41 As cases where Article 512 of the Commercial Code was used to determine appro-
priate remuneration outside of a contract, see e.g., Tōkyō District Court, 28 August
2015 (Heisei 22 (Wa) No. 41060, Heisei 25 (Wa) No. 11801), Tōkyō District Court,
June 1, 2016 (Heisei 26 (Wa) No. 34677), Tōkyō District Court, 3 October 2016
(Heisei 26 (Wa) No. 32996), and Tōkyō District Court, 26 April 2021 (Heisei 30
(Wa) No. 25014). However, the trend in case law regarding Article 512 is not uni-
form, with some cases utilizing Article 512 as a discretionary provision to fill gaps
in established contracts. For example, Tōkyō District Court, 31 August 2018 (Hei-
sei 29 (Wa) No. 3512) involved a plaintiff engaged in architectural design and su-
pervision services who sought appropriate remuneration based on Article 512 after
the defendant failed to pay for the design services related to the construction of the
defendant’s new home. The court recognized that a contract was concluded based
on the plaintiff’s series of actions following the defendant’s request for building
drawings, and it awarded appropriate contractual remuneration based on Article 512.
Similarly, in Tōkyō District Court, 30 June 2021 (Reiwa 2 (Wa) No. 14171), a case of
an electrical work contract where the work had been completed and there was no
dispute over the contract’s formation, the court deemed the estimate provided by
the plaintiff, which the defendant did not object to, as the remuneration under Arti-
cle 512. In Tōkyō District Court, 10 February 2022 (Reiwa 1 (Wa) No. 33079), a
case where a sub-subcontractor directly claimed remuneration from the project
owner – and not from the contractor – for additional construction work on a build-
ing expansion, the court recognized the right to claim remuneration under Arti-
cle 512, though the theoretical basis was not clear from the judgment. In common
law jurisdictions like the United States, a principle similar to Japan’s Article 512 is
applied through the equity-based doctrine of quantum meruit. This doctrine allows
for relief in cases where there is no explicit agreement on additional or changed
work under a contract, thus acknowledging the existence of quasi-contracts. How-
ever, its application is limited to cases where additional work outside the contract
was performed without an agreed-upon remuneration.
42 See e.g., Tōkyō District Court, 28 August 2015, supra note 41; Tōkyō District
Court, 31 July 2015 (Heisei 24 (Wa) No. 22051, Heisei 24 (Wa) No. 28960). Tōkyō
District Court on 31 July 2015 discusses the legal interpretation of the right to
claim remuneration under Commercial Code Article 512 as jimu kanri, or a case of
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 57

or as a provision to fill gaps in contracts.43 Although its legal positioning is

not definitively established, and its theoretical essence is often difficult to
discern from the context of judgments, the application of Article 512 ap-
pears to be perceived as applying an extrinsic norm to resolve an issue that
cannot be resolved within the framework of the contract itself.44 When the
contract does not explicitly address the issue in dispute, Article 512 is in-
voked to provide a legal basis for fair remuneration, treating these instances
as if they were affairs not governed by the initial agreement.45
The example of a collaboration between a manufacturer and a contractor
for the development and commercialization of a product, contested in the
Tōkyō District Court on 27 December 2021, illustrates the preference for a
quasi-contractual approach in Japanese legal practice.46 In this case, a man-
ufacturer engaged a contractor to work on developing a product with the
goal of mass production. Despite detailed instructions provided by the
manufacturer and joint development efforts, the project did not proceed as
planned, and product development was abandoned. Given the failure to
achieve the major goal of productization and mass production, a contractual
relationship in the development phase was rejected. Since the development
work was not explicitly set as a separate negotiation theme, the court hesi-
tated to recognize the formation of a contract for this phase. Ultimately, the
court decided that no contractual agreement existed regarding the develop-

agency without authority. The court denied the application of Article 512, conclud-
ing that the additional work was not objectively indispensable.
43 Tōkyō District Court, 31 January 2022 (Reiwa 2 (Re) No. 404), recognized the right
to claim reasonable remuneration under Article 512 of the Commercial Code for a
service contract that was established but lacked a specified remuneration amount.
Similarly, Tōkyō District Court, 31 August 2018, supra note 41, acknowledged the
establishment of a design service contract without a defined remuneration amount
and granted reasonable remuneration based on Article 512 of the Commercial Code.
44 For example, Tōkyō District Court, 22 December 2015 (Heisei 25 (Wa) No. 26688,
Heisei 26 (Wa) No. 23343) addressed a case concerning the removal of obstructions
found underground during building construction. While determining that a con-
struction contract had not been established for the removal work, the court recog-
nized the right to claim remuneration under Article 512 of the Commercial Code.
However, the legal nature of this recognition was not explicitly clarified, although it
is inferred from the context that it was treated as jimu kanri, a case of agency with-
out authority.
45 The Japanese practice favors quasi-contractual methods such as Article 512 as the
first choice over traditional methods of contract interpretation. This contrasts sharp-
ly with common law jurisdictions, where the possibility of contract formation
through traditional interpretation is examined in detail before considering the appli-
cation of quantum meruit.
46 Tōkyō District Court, 27 December 2021, supra note 37.
58 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

ment work and applied Article 512 of the Commercial Code to order the
manufacturer to pay reasonable remuneration.
If this case were analyzed through the lens of the offer and acceptance
approach, it would allow for a detailed legal examination of the parties’ re-
lationship during the development phase, interpreting individual actions
and statements implicitly. 47 This method could theoretically explore the
possibility of contract formation based on the subcontractor’s expectations
or any reliance placed in the manufacturer’s actions. In this particular case,
the manufacturer’s oral statement of “Please proceed with the project”
could be interpreted as an offer to proceed with development. However,
such a micro-level analysis does not function as effectively under the Japa-
nese standards. Without a clear negotiation theme and in the absence of a
specific agreement on the burden of development costs, it becomes chal-
lenging to find a theoretical basis to protect the expectations and reliance of
the contract manufacturer as part of the contract.
This highlights a significant divergence between the quasi-contractual
approach favored by Japanese courts and the offer and acceptance model
prevalent in common law and European jurisdictions, reflecting a distinct
judicial attitude toward contract formation in situations where negotiation
themes are not explicitly defined or fully negotiated.

2. Reluctance to Enforce Standard Terms

The Japanese approach to contract formation, particularly regarding the use
of written contracts, reveals a cautious stance toward the acceptance of con-
tractual content that has not been thoroughly negotiated or developed.48 Un-
like in Europe and the United States, where large corporations often leverage
their bargaining power to enforce their standard terms and conditions, this
tactic is less effective in Japan. The strategy of including a company’s stand-
ard terms and conditions in the offer to secure the other party’s implicit ac-
ceptance is not as viable, leading to little occurrence of the battle of the
forms, where parties dispute over whose standard terms should prevail.49

47 In light of the offer and acceptance approach, Tōkyō District Court, 27 December
2021, supra note 37, could be interpreted as a case where the manufacturer’s state-
ment requesting the contractor to proceed with the development could be consid-
ered as an offer to form a contractual relationship for the development phase. Japa-
nese courts tend to be cautious in recognizing such implicit agreements.
48 Recent cases include Tōkyō District Court, 14 September 2021 (Heisei 28 (Wa)
No. 33352).
49 Conflicting terms comprising a so-called battle of the forms rarely occur in contract
formation in Japan. For a discussion of the battle of the forms in the CISG, see e.g.,
SCHLECHTRIEM, supra note 39; K. WILDNER, Art. 19 CISG: The German Approach
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 59

This restraint in leveraging standard contractual forms can be seen posi-

tively, as it contributes to fairness between contracting parties by prevent-
ing dominant parties from imposing their terms unilaterally. However, this
practice also has the unintended consequence of hindering the widespread
use of contract forms in business-to-business (B2B) transactions. Ideally,
the clauses contained in standard contract forms should serve as a founda-
tion for contract interpretation, encouraging the evolution of commercial
practices through the accumulation of case law and precedents. Yet in Ja-
pan, the development of such practices faces challenges due to the cautious
approach to incorporating and relying on written contracts that have not
been fully fleshed out or mutually agreed upon in detail.
This situation underscores a significant difference in the contractual cul-
ture of Japan as opposed to Western countries where standard terms and
conditions play a crucial role in streamlining transactions and reducing ne-
gotiation time. The reluctance to readily accept or enforce standard terms
and conditions without thorough negotiation reflects a broader judicial and
business mindset in Japan, emphasizing mutual agreement and clarity over
convenience or efficiency in contractual relationships.

3. Reluctance to Use Implied Terms

The contrast between international standards and the Japanese approach in
recognizing the conclusion of contracts impacts the utilization of implied
agreements significantly. International standards, particularly in Anglo-
American law, often involve a detailed recognition of contractual agree-
ments. This approach necessitates looking beyond the literal words and ac-
tions of the parties to uncover implied meanings, constructing norms from
typical expressions and behaviors expected in certain factual situations as
understood by a reasonable party.50
Such norms, when elevated to the level of statutory norms, become de-
fault terms in contract law. Prime examples of this in Anglo-American law
are the implied warranties of merchantability and of fitness for a particular
purpose, which pertain to the quality of goods sold. These warranties repre-

to the Battle of the Forms in International Contract Law: The Decision of the Fed-
eral Supreme Court of Germany of 9 January 2002, Pace International Law Review
20 (2008) 1; C. MOCCIA, The United Nations Convention on Contracts for the In-
ternational Sale of Goods and the Battle of the Forms, Fordham International Law
Journal 13 (1989) 649.
50 EISENBERG defines these norms as “black-letter expression rules” or “interpretive
standards”, in contrast to contractual terms derived from the general principles of
contract interpretation, see EISENBERG, supra note 5.
60 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

sent how customary business practices and expectations have been codified
into enforceable legal standards.
In contrast, the method of recognizing implied agreements – interpreting
parties’ words and actions from the perspective of how a reasonable party
would understand them – is less developed in Japan, especially in long-
term transaction contexts like outsourcing and contracting. While Japanese
judicial precedents might use the term “implied” to generally derive agree-
ment content from the overall factual background, this term is less fre-
quently applied to expand and interpret the meanings embedded in the indi-
vidual words and actions of the parties.
This discrepancy indicates a cautious approach in Japanese law towards
inferring and applying broader meanings to specific expressions and behav-
ior in business transactions. The lack of emphasis on developing and apply-
ing implied norms from the parties’ interactions may limit the depth of con-
tractual interpretation and the adaptability of contract law to the nuanced
realities of business practices. Consequently, this might hinder the evolu-
tion of more dynamic and responsive contractual relationships that can ac-
commodate the complexities of modern business transactions. Encouraging
a more proactive approach to identifying and codifying implied meanings
and norms could enhance contract law’s effectiveness and relevance in Ja-
pan, aligning it more closely with international standards.

a) Cases on Replacing Written Agreements with Implied Terms

The concept of implied agreement in Japan, particularly in the context of
contested contract formation, tends to be utilized as a basis for negating the
terms of written contracts. Such instances have traditionally been associat-
ed with reibun kaishaku, a method of interpretation that regards written
agreements as mere non-binding sample templates. Traditionally, when par-
ties are deemed not to have intended to be bound by the terms of pre-made
contracts like standard terms and conditions, these terms are dismissed as
mere reibun or non-binding samples.
Recent Japanese legal practice continues to see cases where the effective-
ness of explicit contract terms is rejected due to a lack of any intent to be
bound by them.51 This interpretation approach, which comprehensively as-

51 The Tōkyō District Court, 15 July 2004 (Heisei 14 (Wa) No. 20722) addressed a
case where the plaintiff, having been awarded a subcontract from the defendant, a
nominated contractor designated by the Tōkyō Metropolitan Waterworks Bureau,
sued the defendant over an alleged unjust termination of the contract and failure to
pay for the construction work. A contract for the subcontract was in place between
the plaintiff and the defendant, using a commercially available contract form and
signed only by the defendant, which stipulated a 40% cap on advance payments of
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 61

sesses the factual circumstances to determine contract formation, is unique to

the Japanese model and would not straightforwardly result from the offer and
acceptance framework commonly found in international standards. Under
such standards, the responsibility might be assigned to the offeror for pre-
senting contract forms without intending to be bound by them, taking into
consideration the offeree’s expectations of and reliance on the offer. Such a
concept is notably lacking in Japanese contract formation judgments.
A recent case, the Tōkyō District Court decision of 14 September 2021,
vividly showcases Japan’s unique stance.52 In this case, X (plaintiff), en-
gaged in landscaping work for a large entertainment facility in Chiba (the
“facility”), contended that the contract for the work was with Y (defend-
ant), the operator of the facility, rather than A, the main contractor. The
plan involved B, a major builder who financed the construction and the
leasing of the completed facility to Y for operation. B had contracted A for
the building work for Yen 162 million, of which X had been paid Yen 10.8
million by A for landscaping and planting work.
The dispute centered on who had contractually commissioned X for the
landscaping work. Given the evidence, including Y’s direction on-site and
their involvement in allocating the budget provided by B, X argued that Y
was the actual client, a stance supported by A as an intervenor in the suit. Y
countered, asserting the written contract for landscaping work was between
X and A and that Y’s role was limited to project planning.

the contract amount before completion. However, actual payments were made fol-
lowing the procedure used in previous similar construction contracts, with monthly
progress payments being made the following month. When additional work was re-
quired six months after the start of the project, the plaintiff invoiced the defendant
for the additional costs along with the progress payment, which the defendant re-
fused to pay, citing the 40% advance payment cap mentioned in the contract, opting
instead to continue the project with another subcontractor. The Tōkyō District
Court ruled that the clause in the contract form stipulating a cap on advance pay-
ments was overly disadvantageous to the plaintiff and, without any evidence of ac-
tions taken based on this clause, deemed the contract terms providing advance
payment cap to be merely an example (reibun).
52 Tōkyō District Court, 14 September 2021, supra note 48.
62 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

The court concluded that Y, tasked with operating the facility and directing
the construction work, was the contractual party for X’s work. This deci-
sion appears to have been made after a comprehensive consideration of the
facts, but it would not easily align with the interpretation method based on
the framework of offer and acceptance that is standard in international con-
texts. The question of why Y, who should merely be the lessee of the com-
pleted facility in the written agreement with B, would bear responsibility
for the landscaping and exterior work is hard to justify without closely ex-
amining the specific interactions between B (the client) and A (the main
contractor) as outlined in the construction contract.53 The court likely in-

53 The written agreement between A and B indicates that B ordered A to carry out the
landscaping and exterior works. Normally, to assert that A did not accept the land-
scaping and exterior work contract, it would be insufficient to rely solely on the un-
derstanding between A and X; it would also be necessary to consider the intent of
the principal, B, and potentially assume a verbal contract for the landscaping and
exterior works between B and Y. In a situation with complex party relationships
like this case, involving all parties to recognize a contract relationship that contra-
dicts the written contract would be virtually impossible using an interpretation
method that identifies an offer and acceptance. Furthermore, while the payment
from A to X was derived from the construction fee paid by B to A, the court sided
with X’s argument that the entire payment or a part of this payment was not for
construction costs but rather a “construction collaboration fee” intended for project
support, treating it akin to an advance payment for reconciliation between X and Y.
While the decision seems to have been made after careful consideration of the en-
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 63

tended to highlight that Y had impliedly taken on the risk of cost overruns
for the landscaping and exterior work. If so, a more straightforward ap-
proach would have been to acknowledge an implied agreement where Y,
despite the original contract scheme with A, separately assumed the cost
overrun risks.54
Furthermore, the court’s reliance on statements from the representative
of the design firm, which assumed X and Y were the contracting parties, as
a basis for establishing a contract between X and Y is highly unusual from
a comparative law perspective. Such reliance on a third party’s statements
as decisive evidence for contract formation diverges significantly from
standard practices, where direct evidence of agreement between the parties
involved would typically be required.
This case underscores the uniqueness of Japan’s approach to contract
formation, where the broader factual context and the parties’ assumed in-
tentions play a crucial role, distinct from the direct application of the offer
and acceptance principle prevalent in the contract law of international
standards. The reliance on implied understandings and the weight given to
indirect evidence in determining contractual relationships reflect a legal
culture that values the substance of transactions over their formalistic ex-
pressions.

b) Implied Terms to Fill Gaps: Japanese Uniqueness

As a Japanese practice, implied agreements are often applied not to inter-
pret the original contract but to modify the terms of a contract that has al-
ready been entered into. Such modifications often include termination of
the contract or extension of the term of validity, which can be inferred from
the parties’ behavior during the performance phase after the original con-
tract was entered into. Courts tend to be lenient toward contract termina-
tions and extensions of deadlines.55

tire factual context, if such transaction practices or industry customs exist, under
the CISG or U.S. law, proof would likely have been required that similar practices
had been conducted in the industry in the past, and reaching such a conclusion
would probably have been difficult.
54 While the court regarded Y’s issuance of “instructions,” including the allocation of
construction costs, as evidence that a landscaping and exterior construction contract
had been concluded between X and Y, issuing instructions does not necessarily
equate to making an offer, nor does it inherently imply assuming risk. It is also un-
clear which specific actions or statements by Y were intended to indicate ac-
ceptance of the risk of cost overruns for the landscaping and exterior construction.
55 Tōkyō District Court, 29 March 2022 (Heisei 31 (Wa) No. 5697, Reiwa 1 (Wa)
No. 13787) addressed an issue where the delivery deadline in a software develop-
ment contract had been surpassed, yet development was ongoing. The absence of
64 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

Yet, in the realm of construction contracts, many cases have determined

that there is no implied agreement on remuneration for additional or modi-
fication work unless there is an express dialogue about remuneration be-
tween the client and the contractor. While there are instances where implied
norms have been utilized to fill gaps in contracts, such as missing key terms
including price or remuneration,56 this gap-filling approach is generally ap-
proached with caution, especially in transactions like construction contracts
where changes in circumstances during performance are anticipated.57
An illustrative case from the Tōkyō District Court of 27 July 2020, in-
volves a plaintiff, a software developer, who sued for additional remunera-
tion.58 Despite significantly exceeding the initially contracted scope due to

any reprimand or cancellation directive from the client led the court to conclude
that the development contract’s delivery deadline had been implicitly extended.
Similarly, Tōkyō District Court, 28 October 2021 (Reiwa 2 (Wa) No. 10893) dealt
with a dispute regarding electrical works in a commercial facility, where additional
modification work was required. The court recognized an implied agreement to ex-
ecute the additional work at a reasonable price, based on email exchanges about the
costs of these modifications. Another case, Tōkyō District Court, 15 January 2021
(Heisei 31 (Wa) No. 7927) involved a dispute over the validity of a stock purchase
contract between a securities firm and a client. The client demanded the delivery of
stocks based on a sales contract, whereas the securities firm contended that the
transaction had not been formalized due to the client’s failure to pay the advance
payment stipulated in the terms and conditions. The court found that since the issue
of advance payment had never been raised during negotiations, nor had the securi-
ties firm requested such payment from the client, an implied agreement was estab-
lished that the relevant contractual term regarding advance payment would not ap-
ply to this sales contract, ruling that the sale of stocks had indeed been established.
In Tōkyō District Court, 17 September 2021 (Heisei 29 (Wa) No. 32725), it was de-
termined that there was an implied consent to the assignment of contractual rights
and obligations, considering the circumstances where the destination for the pay-
ment of sales commissions was changed midway through.
56 For example, Tōkyō District Court, 22 January 2021 (Heisei 28 (Wa) No. 24946)
ruled on a case where a construction contract was concluded without a stipulated
remuneration amount. The court determined a reasonable remuneration by consider-
ing the contents of the cost estimate and its breakdown. Similarly, Tōkyō District
Court, 30 July 2021 (Heisei 30 (Wa) No. 36695, Reiwa 1 (Wa) No. 23909) found in
a sales transaction that the timeframe for payment of the purchase price was to be
within a reasonable period after the deposit, as was impliedly agreed upon.
57 Implied agreements to fill gaps in contracts are especially common in the field of
employment contracts. In the realm of labor law, the concept of implied agreement
is actively discussed academically, and courts, building on this foundation, engage
in practices that normatively recognize certain types of implied agreements.
58 Tōkyō District Court, 27 July 2020 (Heisei 29 (Wa) No. 23243, Heisei 31 (Wa)
No. 9284). This judgment involves a case where the plaintiff, who was entrusted
with constructing a software system for a nail salon company by the defendant,
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 65

the defendant’s repeated additional requests, the plaintiff had not received
remuneration for the extra work. Initially, a relatively simple software was
expected to be developed within 44 person days, but the scope expanded to
require at least 110 person days. The plaintiff argued for increased remu-
neration based on a clause stipulating that additional remuneration for
changes or extra work was to occur following negotiation, asserting that
additional remuneration should naturally arise.
The court recognized that the software’s detailed specifications were not
fixed at the time of contract signing and were expected to be determined
through subsequent discussions. However, it refrained from making a clear
decision on whether subsequent changes or additional work were anticipat-
ed in the original contract scope, stating that one can hardly explore the
original intention of the parties. It concluded that the plaintiff, having not
indicated that the additional work would incur extra charges at the time of
the additional or changed order, could not claim additional remuneration
from the defendant. The court further concluded that the presence of the
additional remuneration clause precluded the application of Commercial
Code Article 512.
This judgment focused primarily on whether the transaction fell within
the typical contractual categories of “contracting” or “commissioning,”
without delving into the parties’ understanding of the additional remunera-
tion clause. It avoided a substantive decision on the interpretation of the
additional work clause, effectively ruling out the existence of a contractual
relationship for the additional work due to the lack of negotiations.
Under German law, with its well-developed default rules on contracts,
the increase of remuneration corresponding to the additional work would
likely have been approved straightforwardly.59 If a unit price per work vol-
ume was set, adjusting the contract amount for additional work would not
pose a significant obstacle. Similar cases under common law or CISG juris-
diction might also have led to similar outcomes, focusing on the parties’
reasonable understanding of the clause. The situation would be interpreted

primarily sought payment for services and delayed interest based on the service
contract or construction contract, or alternatively, under Article 512 of the Com-
mercial Code, and, secondarily, sought damages under Article 641 of the Civil
Code. The defendant counterclaimed, arguing that the plaintiff refused to complete
the work, thereby breaching the contract, and sought damages for non-performance.
The court ruled that the cancellation of the contract by the defendant was not justi-
fied, allowing the plaintiff to claim damages for the losses incurred due to this can-
cellation under Article 641 of the Civil Code, partially upholding the plaintiff’s
claims and dismissing the defendant’s counterclaim.
59 BGB § 650c (1).
66 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

based on the reasonable expectations of the parties, making it less likely to

resort to quantum meruit for relief.
The case of Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects
in the California Court of Appeal serves as a reference point.60 It involved a
subcontract for hospital renovation and expansion, where it was agreed to
negotiate in good faith to adjust the subcontractor’s compensation if the
project scope significantly changed. Despite the absence of such negotia-
tions, the court recognized the subcontractor’s contractual right to fair and
reasonable compensation for the additional work. This decision applies a
normative element based on the facts, suggesting that a rational party
would understand the situation similarly, thereby affirming the subcontrac-
tor’s right to adequate compensation for additional efforts.61

4. Construction Contracts
The practices surrounding construction contracts, exemplified by long-term
transactions, tend to maintain ambiguity in addressing future contingencies,
compared to international practices. Construction contracts are character-
ized by custom orders, single-item production, and on-site creation. They
inherently contain incompleteness, always bearing a potential for alteration.
They encompass various contingencies like cost overruns, force majeure,
and delays, necessitating frequent changes in the scope of work and dead-
lines. Unlike the international construction market, where contract modifi-
cations follow predefined procedural terms, Japan traditionally relies on
post-agreement negotiations between parties based on mutual trust. This
divergence from international standards is particularly stark in handling ad-
ditional work, adjusting remuneration for such additional work, and ad-
dressing the deadline extensions.

a) Handling Additional Work

The handling of additional work in contracts often presents a complex issue
within Japanese legal practice, where numerous cases resolve the issue of
remuneration for additional work under Article 512 of the Commercial
Code, without clearly defining the contractual status of such additional

60 Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects, 187 Cal. App. 4th
945 (2010).
61 This type of term is categorized as terms implied in law. Under the jurisdiction of
common law countries, implied contract terms are sourced from common law, and
there are two types of implied terms at common law: terms implied in fact and
terms implied in law. Terms are implied “in fact” when the court perceives a fact to
be an unexpressed intention of the parties to the particular contract. See
E. MCKENDRICK, Contract Law (14th ed., 2021) at 424–436.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 67

work. 62 This application of Article 512 shows a rich variety, including a

case where remuneration for additional work carried out by a subcontractor
was claimed directly against the client, bypassing the original contractor,63
and another case where, despite disagreements over the remuneration
amount for additional transport contracts, the court found no implied
agreement, leaving the issue to be resolved by determining the fair re-
numeration under Article 512 without clarifying the existence of any addi-
tional contractual agreement.64
One notable case, the Tōkyō District Court decision of 12 March 2021,
concerned the remuneration and cost-sharing for additional drilling work
for geothermal power generation.65 After the first phase of the project failed
due to force majeure, which neither the client nor the contractor could be
blamed for, a second phase was initiated as a “revenge” project, drilling a
production well near the location of the first phase. The fair remuneration
for this second phase was resolved through the application of Article 512.
This case suggests that the legal theoretical construction around addi-
tional work could lead to fundamentally different conclusions depending on
how it is legally framed in relation to the existing contract. The court found
that no implied agreement exists due to the lack of consensus on terms of
remuneration and cost-sharing for additional work. Although the court
acknowledged that the remuneration aspect should be addressed under Ar-
ticle 512 of the Commercial Code, it found no reason for the client to bear
the costs of the additional equipment because the costs were outside the
scope of Article 512.66 However, considering the essential nature of the ad-
ditional equipment for the second phase of work and the presumption that
the ordering party had previously borne such costs in the first phase, a
comprehensive evaluation of the transaction could arguably necessitate a

62 Tōkyō District Court, 8 May 2003 (Heisei 13 (Wa) No. 21999, Heisei 14 (Wa)
No. 1090) (for additional work for software development, the client is obligated to
pay reasonable remuneration even if no clear agreement on the amount of additional
costs has been reached), Tōkyō District Court, 28 August 2015, supra note 41
(finding reasonable remuneration based on office management for additional,
changed work).
63 Tōkyō District Court, 10 February 2022 (Reiwa 1 (Wa) No. 33079).
64 Tōkyō District Court, 27 November 2020 (Heisei 29 (Wa) No. 43678, Heisei 30
(Wa) No. 8016).
65 Tōkyō District Court, 12 March 2021 (Heisei 29 (Wa) No. 2638).
66 For the definition of remuneration under Article 512 of the Commercial Code, see
Tōkyō District Court, 1 June 2016 (Heisei 26 (Wa) No. 34677) (The plaintiff’s ex-
penses, such as travel expenses, transportation costs, and meeting costs, are essen-
tially of an expense nature and thus do not fall under the “remuneration” stipulated
in Article 512 of the Commercial Code.)
68 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

proportional cost burden on the side of the client.67 The court prematurely
dismissed the possibility of an implied agreement for the client to bear ad-
ditional equipment costs, based solely on the surface-level interactions be-
tween the parties. Such an approach to determining the existence of an
agreement on cost bearing, focusing only on explicit interactions, exposes
the contractor to risks, leaving them without recourse if the client simply
refuses.68 Moreover, since the issue of cost-bearing does not fall under the
category of “remuneration,” resolving it through Article 512 becomes chal-
lenging. Addressing the cost-bearing issue of the second phase in conjunc-
tion with the first phase’s cost realities and force majeure risk-sharing
could offer a more coherent and theoretically satisfying approach.69
In scenarios where contracts for smaller parts of a larger project are con-
cluded in a piecemeal fashion, Japanese judicial practice often misses the
opportunity for a holistic interpretation that considers the entire project’s
objectives. In this drilling work case, both the first and second phases of
drilling were parts of a larger project aimed at successful well drilling.
However, the focus only on unresolved terms for the second phase may
lead to hesitation in recognizing a contractual relationship in the second
phase. Treating the first and second phases as separate, the court over-
looked the overarching contractual consistency needed to view the project
comprehensively. In sum, the approach to contract changes in Japan lacks
consideration for the initial risk-sharing envisioned in the contract, opting
instead for piecemeal solutions like Article 512 for areas not thoroughly
negotiated.
This case exemplifies the Japanese legal practice’s cautious stance toward
utilizing implied agreements to fill gaps in contracts, especially in transac-
tions like construction contracts where changes in circumstances during per-

67 In this case, while the judgment does not disclose the factual details, it infers that
the cost of additional cement materials was explicitly included in the remuneration,
whereas there was no such assumption for the additional equipment and materials
costs. Given that the contractor submitted estimates for the equipment and materials
costs of the additional work as needed, it is inferred that the client bore the cost of
equipment and materials in the first phase of the project.
68 The General Terms and Conditions of Contract for the Execution of German Con-
struction Works (VOB/B) establish this concept as a default.
69 In this particular case, it was decided that the failure of the first phase of the project
should result in a risk-shearing between the client and the contractor, with a divi-
sion of 40% assigned to the client and 60% to the contractor. However, this deci-
sion stands in contrast to the subsequent determination that the additional equip-
ment costs for the second phase should be borne entirely by the contractor, display-
ing a lack of consistency in terms of risk bearing. The judgment does not elaborate
on how cost-bearing rules applied during the first phase are linked to the approach
to bearing costs in the second phase.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 69

formance are anticipated. This cautious approach, focusing on explicit

agreements and hesitating to acknowledge contractual relationships in the
absence of clear agreement on terms, highlights a gap between the economic
theories of contract and the practical application of contract law in Japan.

b) Adjusting Remuneration for Additional Work

In Japan, when additional construction work is carried out, there is no spe-
cifically established method for calculating fair remuneration; instead, what
constitutes fair remuneration is often left to the discretion of judges at the
time. In the case related to drilling for production wells as discussed above,
it has, for instance, been determined that remuneration under Article 512 of
the Commercial Code should be set according to the remuneration stand-
ards of the existing subcontracting contract.70 In a case where the remunera-
tion for design services was disputed, fair remuneration was calculated
based on the results of an appraisal conducted during civil mediation before
the trial.71 In many other cases, the amounts listed in estimates or invoices
for additional work are directly recognized as fair.72
Comparatively, the practice in Germany regarding construction subcon-
tracting is well-regulated. The General Conditions of Contract for the Per-
formance of Construction Work (Allgemeine Vertragsbedingungen für die
Ausführung von Bauleistungen: VOB/B), issued by the German Construc-
tion Contract Committee (Deutscher Vergabe- und Vertragsausschuss für
Bauleistungen as it is named today, DVA) in 1926 and periodically updated
since that time has become the standard model for construction subcon-
tracting contracts.73 It addresses key issues such as changes to the contract
content, the setting of remuneration, and extensions of deadlines.
Regarding remuneration for contracted work, the default rule in the
VOB/B is that, unless another method is agreed upon, remuneration amounts

70 Tōkyō District Court, 12 March 2021, supra note 65.

71 Tōkyō District Court, 31 August 2018, supra note 41.
72 E.g., Tōkyō District Court, 28 October 2021, supra note 55; Tōkyō District Court,
30 June 2021 (Reiwa 2 (Wa) No. 14171); Tōkyō District Court, 30 September 2021
(Heisei 29 (Wa) No. 37499, Heisei 30 (Wa) No. 889); Tōkyō District Court,
16 January 2020 (Heisei 29 (Wa) No. 5311).
73 In Germany, construction contracts have traditionally been classified under the Civ-
il Code (BGB) as a type of “contract for work” (Werkvertrag). However, this
framework has been increasingly recognized as inadequate for modern, large-scale
construction projects. To address this, the construction industry in Germany adopt-
ed the VOB/B, a standard contract specifically designed for domestic construction
projects, to fill the gaps left by the legislative framework. See A. ROQUETTE /
D. SCHWEIGER, The New German Construction Law, Construction Law Interna-
tional 12 (2017) 46, 46.
70 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

should be calculated based on the contract unit price and the actual amount of
work performed.74 Contract unit prices are adjusted according to actual work
volume increases or decreases. If the actual amount of work does not exceed
10% of the contract range, the original unit price applies. However, if there is
more than a 10% increase, a new unit price should be agreed upon, consider-
ing the additional or reduced costs.75 If the actual work volume decreases by
more than 10%, an increase in the unit price is required by reallocating the in-
direct costs (such as site overheads) that were distributed over the decreased
work volume to the remaining work volume.76
The VOB/B allows for contract changes by the client, anticipating changes
in work requirements.77 Remuneration for changed work is determined ac-
cording to the unit prices set in the original contract and the special costs in-
curred.78 In contrast, the judgment in the Japanese case of drilling for produc-
tion wells concluded that the client’s burden of specially incurred costs for
additional work could not be recognized without an explicit or implied
agreement for additional work. However, based on the VOB/B, specially in-
curred costs would be included in the calculation of remuneration for
changed work, potentially leading to a different conclusion than in Japan.
This comparison underscores the differences in handling additional con-
struction work and calculating remuneration between Japan and Germany,
with German practice providing a more structured approach through the
VOB/B, which could lead to different outcomes in similar scenarios.

c) Addressing Deadline Extensions

When examining Japanese case law, the practical and judicial approach to
construction deadlines can be seen as flexible, yet it lacks a specific policy
intent behind this flexibility. There is a case where the court recognized the
construction period based on the schedules outlined in the estimated docu-
ment, even though the deadline section in the written contract was left
blank.79 Conversely, there is a case where the court deemed a construction
contract with a blank deadline field as a contract with an indefinite dead-
line, finding that previously provided construction schedules by the con-
tractor were not applied.80 Categorizing such contracts as having no dead-

74 VOB/B § 2(2).
75 VOB/B § 2(3)3.
76 Id.
77 VOB/B § 1(3).
78 VOB/B § 2(5).
79 Tōkyō District Court, 28 January 2021 (Heisei 29 (Wa) No. 8652).
80 Tōkyō District Court, 15 December 2021 (Heisei 30 (Wa) No. 18869, Reiwa 2 (Wa)
No. 5857). Regarding construction periods, the revised Construction Business Act
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 71

lines allows contractors to proceed without being bound by completion

times, potentially obscuring responsibilities for delays. Such a practice
might be contrary to the inherent purpose of construction contracts, which
is to complete the work within a deadline.
The difference becomes apparent when comparing the model contract
terms dealing with delivery delays as between international construction
contracts and domestic Japanese contracts. Article 8.2 of the FIDIC Condi-
tions of Contract for Construction, a model clause for international plant
construction contracts, explicitly stipulates the contractor’s obligation to
adhere to deadlines.81 Article 8.4 lists specific circumstances under which
the contractor may exceptionally extend the deadline subject to the proce-
dures under Article 20.1.82 According to Article 20.1, the contractor must
notify the client as soon as practicable if circumstances arise that justify an
extension, with the contractor bearing the burden of proof for the legitima-
cy of the extension.83
In contrast, Japanese construction contract templates do not explicitly de-
mand that contractors adhere to deadlines. Clause 28 of the General Terms
and Conditions of Construction Contract (2020 Revision) introduced by Ja-
pan’s Private Seven Association Building Contract Committee (the “Private
(Seven Association) Terms and Conditions”) allows the client to request
changes to the construction period as needed without imposing specific re-
quirements on the client, 84 granting rights for additions or changes to the
work and deadlines.85 Clause 30 stipulates that the client can demand penal-
ties for delays according to the number of days delayed if the contractor can-

prohibits excessively short construction periods, and the Central Construction

Council published Standards Regarding Construction Periods (20 July 2020), set-
ting forth considerations for both clients and contractors towards ensuring appropri-
ate construction periods.
81 International Federation of Consulting Engineers (FIDIC), Conditions of Contract
for Construction. For Building and Engineering Works Designed by the Employer
(Red Book) (1999) § 8.2 (Time for Completion).
82 See id., § 8.4 (Extension of Time for Completion).
83 See id., § 20.1 (Contractor’s Claim).
84 Article 28(1) of the Private (Seven Association) Terms and Conditions.
85 Article 28(6) of the Private (Seven Association) Terms and Conditions. Similarly,
the Standard Contract Terms and Conditions for Private Construction Work (Type
A) published by the Ministry of Land, Infrastructure, Transport, and Tourism also
provide a simple clause for changes in the construction period. It states that the cli-
ent may request a change in the construction period if deemed necessary, and apart
from other specific provisions in this contract, the contractor may request an exten-
sion of the construction period deemed necessary by specifying the reasons to the
client, in cases of additional or altered work, force majeure, coordination of related
work, disputes with neighboring residents, or other legitimate reasons (Article 30).
72 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

not deliver within the contract period.86 However, the contractor is not held
responsible if the cause of delay is “not attributable to the contractor.”87
Clause 30’s reference to “not attributable to the contractor” suggests a
concept broader than just force majeure exemptions. This interpretation
implies that not all delays directly result in contractor liability, reflecting a
nuanced approach to obligation fulfillment in Japanese construction con-
tracts, where not merely the outcome but also the element of a party’s fault
in performance are taken into consideration.88
Looking at Germany, the VOB/B, a standard contractual model for con-
struction work, presupposes extensions for construction periods but funda-
mentally demands strict adherence to deadlines. It requires that construc-
tion start, progress, and conclude according to a binding schedule.89 Specif-
ic deadlines within the project timeline are contractually binding only if
explicitly agreed upon. 90 If no start date is agreed upon, the client must
provide the contractor with the expected start date upon request.91 The con-
tractor is expected to begin work within 12 business days of the request92
and notify the client upon starting.93 The contractor must promptly address
any shortages in staff, equipment, scaffolding, materials, or construction el-
ements that might delay execution. 94 If the contractor delays the start or
completion or fails to meet contractual obligations, the client can claim
damages and provide a reasonable grace period for the contractor to fulfill
the contract, with the option to terminate if obligations are not met within

86 Article 30(2) of the Private (Seven Association) Terms and Conditions.

87 Article 30(1) of the Private (Seven Association) Terms and Conditions. This article
was amended in 2020 with the revised Article 415 of the Civil Code in mind. Be-
fore the 2017 Civil Code amendment, the clause was simpler, stating that the con-
tractor would not be liable if there were reasons attributable to the contractor.
88 The Ministry of Land, Infrastructure, Transport, and Tourism’s Guidelines for
Compliance with Construction Laws and Regulations between Clients and Contrac-
tors (5th ed., 2023), at 15, states that parties to a construction contract should set an
appropriate construction period at the time of the initial contract conclusion, and the
contractor should manage the construction period properly to endeavor as much as
possible to avoid changes to the construction period. This guideline suggests that
while there is an expectation of the construction period being set appropriately and
managed diligently, there is also an acknowledgment that the construction period
may not be strictly set.
89 VOB/B § 5(1).
90 Id.
91 VOB/B § 5(2).
92 Id.
93 Id.
94 VOB/B § 5(3).
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 73

the timeframe.95 The VOB/B offers sufficient opportunities for deadline ex-
tensions, outlining extensions due to force majeure,96 provided that ordi-
nary foreseeable events are not considered force majeure.97

d) Difference in the Handling of Contingencies in Germany and Japan

In Germany and Japan, there are significant differences in the practical cus-
toms surrounding construction contracts. In German practice, changes to
the construction work are governed by contractual clauses that are prepared
with the possibility of such changes in mind. By contrast, in Japanese prac-
tice, the conditions for additional work tend to be left to the results of rene-
gotiations.98 In practice, when parties renegotiate terms during a project, a
new agreement may be implicitly formed based on their communications.
However, the recognition of such implicit agreements tends to be limited in
scope. Instead of readily acknowledging these implicit agreements, there’s
a strong inclination to fall back on specific legal provisions, such as Arti-
cle 512 of the Commercial Code, to guarantee the outcome’s fairness. This
approach reflects a cautious stance towards expanding the boundaries of
contractual obligations without explicit consensus, ensuring that any ad-
justments or additions to the contract are grounded in a clear legal frame-
work that supports equitable resolutions.
In Germany, on the other hand, the case law surrounding construction
contracts has developed through the interpretation of VOB/B standard con-
tract terms. Drawing on case law accumulated through the use of the
VOB/B, the Federal Court of Justice (Bundesgerichtshof, BGH) has estab-
lished a duty of cooperation in construction contracts. A notable example is
the 1996 BGH decision on additional remuneration claims, where VOB
§ 2(6)1 mandates notification by the contractor, with failure to notify re-
sulting in a loss of the right to additional remuneration. However, the BGH
has indicated that notification is not required if not necessary for protecting
the client’s rights.99 Furthermore, the courts have ruled that parties have a
duty to cooperate in resolving differences of opinion during contract per-
formance. This is an implied norm derived from addressing contingencies
like work changes, remuneration adjustments, and deadline changes as a
part of problem-solving in construction contract disputes.100

95 VOB/B § 5(4).
96 VOB/B § 6(2)1.
97 VOB/B § 6(2)2.
98 Focusing solely on the outcome of renegotiation when determining the contract
terms for additional work may result in losing the opportunity to reconsider what
additional work was originally envisioned as part of the contract.
99 Federal Court of Justice (Germany), 23 May 1996, VII ZR 245/94.
74 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

Contracts not using the VOB/B are governed by the German Civil Code
(BGB), but it had been generally acknowledged that the rules in the BGB
were simply inadequate to address the complexities of today’s construction
projects.101 The German legislature proceeded with a comprehensive review
of the provisions of the BGB related to construction contracts. This led to
amendments of the BGB, which were enacted in 2017 and came into force
in 2018. The new law establishes detailed rules setting additional remunera-
tion for changed orders, including a duty to negotiate based on the contrac-
tor’s submitted price for the change.102 If no agreement is reached within 30
days, the client can proceed with the changed order.103 The price for addi-
tional work is primarily based on the contractor’s actual extra costs plus
overhead,104 but contractors can also refer to the original contract’s rates or
cost estimates.105 This approach contrasts with the VOB/B, which antici-
pates remuneration based on a contractor’s initial price calculation, whereas
the BGB allows contractors to choose between actual additional costs and
initial estimates.106

5. Software Development Contracts

a) Multi-Stage Rollout Contract in Software Development
In the realm of long-term transactions, the practice of waterfall-type soft-
ware development contracts is an area where the uniqueness of Japanese
contract interpretation particularly stands out. Software development prac-
tices are divided into two main methodologies: the waterfall model, which
segments the work process into stages such as requirement definition, de-
sign, and development, managing each phase in sequence; and the agile
model, which assumes specification changes and progresses through trial
and error toward completion.107 Traditionally, the waterfall model has been

100 Federal Court of Justice (Germany), 28 October 1999, VII ZR 292/98.

101 ROQUETTE / SCHWEIGER, supra note 73, 46.
102 BGB § 650b(1).
103 BGB § 650b(2).
104 BGB § 650c(1).
105 BGB § 650c(2).
106 See ROQUETTE /SCHWEIGER, supra note 73, 48.
107 In waterfall-type software development, the process is set up to ensure project com-
pletion, and therefore the process is managed through a fixed price and changed or-
der mechanism. In recent years, the shortcomings and the rigidity of the waterfall
model have been pointed out, leading to the introduction of more flexible agile con-
tracts See e.g., A. HOOLES, How to Contract Successfully for Agile Software De-
velopment, International In-House Counsel Journal 11 (45) (2018) 1, 1; F. MORRIS,
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 75

extensively used, especially in cases involving the construction of core

software systems for companies. There is, however, a trend towards using
the agile model, which minimizes rework and adapts flexibly to specifica-
tion changes and additions, leading to a decrease in the prevalence of the
traditional waterfall model. In software development, choosing the appro-
priate development style and project management method according to the
content and nature of the development is crucial, and the optimal contract
form is sought based on the selected development style.
According to international standards, waterfall software development con-
tracts are evaluated as subcontracting agreements emphasizing job comple-
tion.108 To address various unforeseen circumstances that arise later, contracts
incorporate rules for handling specification changes, additional work, and ad-
justments to remuneration or unit prices, through mechanisms known as
changed orders. Both clients and vendors provisionally set fixed prices and
deadlines, fully anticipating future contract changes. Rules for altering con-
tract conditions, such as specifications and remuneration, are predefined in the
original contract. Even if such changed rules are not explicitly present in the
contract, implied terms can be established through contract law provisions or
the contract interpretation process, and measures are taken accordingly.
In contrast, Japanese practice has popularized a unique contract style
known as the multi-stage contract method. Contracts are individually con-
cluded for stages like requirement definition, design, and development, and
they are viewed as independent service contracts with no inherent obliga-
tion for the vendor to complete the project as a whole.109 According to con-
tract interpretation, individual contracts accumulate as the project progress-
es, with conditions negotiated on the spot.

The Changing Face of Commercial Contracts in the Tech Sector, International In-
House Counsel Journal 11 (43) (2018) 1.
108 In waterfall software development, the customer first takes the time to define the
requirements in detail. Next, the supplier determines how these requirements will
be met, and a contract is negotiated to ensure that these requirements are met within
a predefined time schedule. The terms of the contract are generally fixed price, but
if customer requirements change, the contract is modified through a detailed change
control process that identifies the impact on the project, time schedule, and price.
See MORRIS, supra note 107, 4. In waterfall development, the work in each process
is determined by the deliverables in the process that precedes it. If a problem in the
preceding process is identified in the subsequent process, the cost of “rework” in
the preceding process is significant. Therefore, careful management of the upstream
process is necessary to prevent “rework” from occurring.
109 However, in waterfall style development as a service contract, the vendor is considered
to have a duty of care as a project manager. The duty of due care is assumed to include a
reporting obligation and an explanation obligation. The prevailing view is that it is a fi-
duciary duty that arises regardless of whether or not a contract has been concluded.
76 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

The practice of software development contracts in Japan is characterized

by ambiguity regarding the question of whether parties intend to complete the
project at all costs or proceed with cooperation while accepting the possibility
of project failure. While industry model contract forms suggest that an initial
basic contract appears to be a client’s appointing a vender as a subcontractor,
details are deferred to individual contracts. In light of this contractual setting,
courts tend to be reluctant to recognize the vendor’s obligation to complete the
project.110 Each accumulated contract is presumed to have been established as
“an independent contract in its own right.”111 Courts organize waterfall-type
software development contracts not as subcontracts imposing project comple-
tion obligations on the vendor but as service contracts.112
However, it is not always clear that the service contract relationship was
unequivocally anticipated from the beginning between the parties. Disputes
over the nature of contracts have frequently arisen. Following the conclusion
of a basic project agreement, the parties will subtly shift their tone upon dis-
covering unforeseen cost increases, beginning to argue that there is no obliga-
tion to complete the project and that they can cancel freely at any time. The
approach of treating waterfall software development as a service contract
(without imposing completion obligations on the vendor and allowing the
parties to withdraw at any time) can be evaluated as a default rule created by
courts in response to arguments presented by parties in distress.

b) Lessons from Suruga Bank v. IBM

The Suruga Bank vs. IBM case is evaluated as an instance that highlights
systemic issues arising from multi-stage software development contracts.113

110 E.g., Tōkyō District Court, 28 April 2016, Hanrei Jihō No. 2313, at 29 (the mere
conclusion of a basic contract for system development does not create an obligation
on the part of the vendor to complete the software system).
111 Tōkyō District Court, 28 April 2016, supra note 110.
112 Another case to consider is the Tōkyō District Court decision of 31 January 2007,
which dealt with a software development framework agreement specifying that indi-
vidual contracts or amendments to the contract must be in writing (no oral modification
(NOM) clause). The court determined that individual contracts related to changes in
the contract, based solely on verbal interactions, were not established. While this may
seem to adhere strictly to the terms of the framework agreement, the effectiveness of
NOM clauses is viewed skeptically from comparative law perspectives, often being in-
validated on grounds such as abuse of rights. Especially in this case, the content of the
software development framework agreement was not particularly detailed. The assert-
ed ineffectiveness of oral agreements based on NOM clauses raises doubts about their
enforceability, regardless of whether one considers common law or civil law jurisdic-
tions. Tōkyō District Court, 31 January 2007 (Heisei 15 (Wa) No. 8853).
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 77

IBM, the vendor, entered into a basic agreement with Suruga Bank, the cli-
ent, to develop the bank’s core system using a package called Corebank.
This involved signing individual contracts for requirement definition, basic
design, etc., but the project was eventually discontinued. Suruga Bank
sought damages from IBM, initiating a lawsuit.
In this case, both the first instance and the appellate court recognized the
system development as a type of service contract that allowed either party
to withdraw from the contract relationship at any time. However, it is ques-
tionable whether the transaction could be unequivocally evaluated as a ser-
vice contract based on the contract clauses. The basic agreement signed at
the project’s outset conditionally “guaranteed” IBM’s completion of the
project.114 However, the tone of the final agreement, made during the re-
quirement definition phase, subtly shifted, clarifying that the final agree-
ment had no legally binding force.115 However, it is unclear whether this re-
fers to the completion of the project itself or a tentative agreement on re-
muneration.116 At a minimum, IBM’s commitment to completing the job,
conditionally “guaranteed” in the first agreement, was treated lightly by the
courts. For Suruga Bank, which aimed to overhaul its core banking opera-

113 Suruga Bank v. IBM, Tōkyō District Court, 29 March 2012, Hanrei Taimuzu 1405
(2014) 254 (first instance); Tōkyō High Court of Appeal, 26 September 2013,
Kin’yū Shōji Hanrei 1428 (2013) 6 (on appeal).
114 The initial framework agreement for the construction of a “new management system”,
predicated on the realization of a “development scope”, stipulated that IBM would en-
sure the system’s operation for Yen 9.5 billion, contingent upon 1) an agreement on
role division and the determination of Suruga Bank’s workload and expenses,
2) agreement on the rationalization and efficiency improvement through Suruga
Bank’s “BPR & standardization”, and 3) the execution of all necessary cooperation by
Suruga Bank to carry out the project. No clause negating a legally binding force is
found in the first framework agreement that was signed, suggesting IBM’s commit-
ment to project completion under certain conditions. The subsequent basic agree-
ments 1 and 2, finalized in stages, did not explicitly exclude a legally binding force.
As the requirements definition progressed, the tone between the parties subtly evolved,
highlighting the collaborative nature of the project. The final agreement, which was
later concluded, specifies that it does not have legally binding force. However, it is
unclear whether this non-binding clause applies solely to the contract price or extends
to the (conditional) “commitment” to complete the project. In essence, whether IBM,
the vendor, had an obligation to complete the project, albeit conditionally, based on
the initial intentions of both parties at the project’s outset, was not clearly discernible
from the text. Suruga Bank v. IBM, supra note 113.
115 These are described in the “Memorandum of Understanding on the Basic Manage-
ment of the Project”, exchanged on the same day as the final agreement. Suruga
Bank v. IBM, First Instance, supra note 113.
116 IBM had a business motive to promote the Japanese version of the Corebank, which
was widely used by U.S. financial institutions. Suruga Bank v. IBM, supra note 113.
78 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

tions, the project’s failure was not an option, and there is no doubt they in-
tended IBM to undertake the project’s completion.117
This case exemplifies that the contract structure, which does not impose
a completion obligation on the vendor, fails to provide an efficient opera-
tional foundation to achieve the project goals intended by the parties.118 The
possibility of withdrawing from the project at any time led to the vendor
making overly optimistic proposals in the early stages, and it led to the cli-
ent giving up on adjusting their internal procedure to the standard model.
Both parties averted their eyes from what would happen if the project did
not proceed smoothly. The optimistic outlook that withdrawal was always
an option made contingency planning vague. In reality, many of the cases
that have been contested in court faltered without producing any delivera-
bles, having wandered off course during the requirement definition phase
and having failed to envision a project goal.
The courts could have found that a service contract structure existed,
thus allowing for more flexible and appropriate responses and accounting
for the parties’ failure to establish a detailed contingency plan. However,
the multi-stage contract design ultimately created an extremely inefficient
system foundation for regulating transactions with uncertain futures.
The contract structure of “service contract” that was adopted by the courts
essentially signifies a relinquishment of problem-solving through the con-
tract framework. Indeed, the clauses in the contract hardly contributed to re-
solving any issues, with both the first instance and appellate courts seeking
solutions in tort liability outside the contract. The courts judged that IBM,
having failed to fully grasp the client company’s information in the require-
ment definition phase, could not be blamed. However, at the same time, the
courts indicated that once it became clear that completing the system within
the initially assumed development cost, scope, and duration was difficult,

117 Note that Suruga Bank sued the vendor for breach of contract in the first instance
court, but on appeal it reorganized its arguments, framing its case around tort liabil-
ity. Suruga Bank v. IBM, supra note 113.
118 In this regard, it seems that there has been little discussion in Japan as to whether
the contract design itself was not problematic, i.e., whether the multi-stage method
was efficient as a contract design. When we look at international discussions, we
find an argument that the multi-stage “rollout” method is more efficient than the
single-stage “big bang” method in terms of contract design for software develop-
ment. See D. J. WU et al., IT Implementation Contract Design: Analytical and Ex-
perimental Investigation of IT Value, Learning, and Contract Structure, Information
Systems Research 24 (3) (2013) 787. However, this study did not take into account
the information asymmetry between the ordering party and the vendor. In addition,
the study assumes that it is an established practice that vendors are obligated to
complete the project.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 79

IBM should have indicated this to the client and suggested a fundamental re-
view or project discontinuation. The courts focused on the parties’ perfor-
mance after conclusion of the contract, meticulously following what was dis-
cussed in the steering committee meetings, while showing insufficient inter-
est in how the parties initially perceived project risks.
In cases like software development, where information asymmetry be-
tween the vendor and the client becomes more pronounced as the project
progresses, imposing explanation and management duties on the vendor is
crucial. In common law jurisdictions, this could be a situation calling for
application of the misrepresentation doctrine. Yet there was no specific
misrepresentation by IBM. Compared to international standards, the court’s
analysis represents a distinctly different approach to problem-solving.119

IV. CONCLUSION
This article has proposed the hypothesis that the uniqueness of the method
for contract formation in contemporary Japan, especially in the realm of
long-term transactions, might have led to a contractual practice that does
not necessarily advance in the direction of strengthening a contractually
binding force. Within the characteristics of Japanese society, where ambi-
guity is preferred in contractual obligations, the use of an offer and ac-
ceptance analysis to explore the intentions of the parties at the time of con-
tract conclusion has been undervalued as an institutional foundation. In-
stead, the maturity of the negotiation is emphasized in contract formation,
assessing the alignment of substantive intentions based on the entirety of
factual circumstances.

119 Certainly, in the Suruga Bank vs. IBM case, it can be argued that IBM, as the ven-
dor, should have been required to disclose detailed information about the project’s
status, given the relationship with the party involved – a case where non-disclosure
is not permissible. However, the non-disclosure by IBM that is in question pertains
to the subjective evaluation of the project itself (for instance, IBM might have rec-
ognized the challenging situation but believed that with Suruga Bank’s cooperation
in terms of scope reduction and report elimination, there was a possibility to over-
come these challenges). The High Court’s decision can be interpreted as holding IBM
accountable for not providing Suruga Bank with as much information as possible to
make an informed decision. Yet one might argue that a rational customer should ac-
tively seek to gather information and verify the objective situation on their own.
The increase in development costs was to some extent anticipated objectively, and
it could also be presumed that Suruga Bank was not entirely optimistic about the
situation. Considering these factors, at least under the doctrine of misrepresentation
in Anglo-American law, this case might not be construed as one where non-dis-
closure induced the uninformed party to proceed with the transaction erroneously.
80 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

Japanese judicial practice shows a tendency to emphasize situational ex-

post redistribution to resolve unexpected issues after contract conclusion,
while not favoring a return to the original contract’s intent for interpreta-
tion. The emergence of such trends in Japan is intriguing, with one obstruc-
tive factor being the underdevelopment of techniques allowing a revisiting
of the negotiation process to clarify the contract’s intent. Japan’s contract
formation process, while purporting to comprehensively judge the factual
circumstances, in essence prioritizes the maturity of the negotiation, there-
by narrowly capturing the scope of contract law.
An analysis of case law on contract formation in long-term transactions
such as subcontracting and outsourcing reveals that: (i) the protection of the
offeree’s expectations and reliance is not a primary consideration in Japan’s
contract formation process, thus leading to a lack of accumulated cases cap-
turing the offeree’s understanding or expectations within such negotiation
processes; (ii) as a result, implied norms are less likely to accumulate, nar-
rowing the scope of contract formation; (iii) to fill this gap, courts tend to
intervene through norms outside of the contract; (iv) the corollary of this is
that sophisticated parties in commercial transactions are given a strong in-
centive to create clear written contracts that undeniably recognize contract
formation and form an undisputed agreement process; (v) however, the re-
luctance of courts to make decisions based on the parties’ implied intent at
the time of the contract formation has to a certain extent deprived Japanese
contractual practice of the opportunity to share and assimilate the intended
contract norms, resulting in, first, an immature style of contract design, es-
pecially in long-term transactions, such as the multi-stage contract method
in software development, which does not impose a project completion obli-
gation on the vendor, and, second, a lax attitude towards adherence to con-
struction schedules in construction contracts.120
This article has offered a comparative analysis with international stand-
ards, specifically examining Japan’s approach to contract formation, an ap-
proach which does not extensively rely on offer and acceptance. It high-
lights the structural challenges within Japan’s contract law in developing
contract norms from the perspective of a rational participant. The criteria

120 These characteristics are reflected, among other ways, in the simplicity of the pro-
visions on offer and acceptance in the Civil Code, in the lack of clear guidelines on
how agreements with undetermined prices are handled, and in the absence of im-
plied warranties on the quality of goods in sales contracts. Additionally, the role of
non-contractual norms, such as the right to claim remuneration under Article 512 of
the Commercial Code and good faith obligations related to project management in
software development contracts, serve as substitutes for contractual agreements.
Further, the absence of provisions or guidelines on contract interpretation in the re-
vised Civil Code can also be seen as an implicit indication of these attributes.
Nr. / No. 57 (2024) UNDERSTANDING JAPANESE CONTRACT LAW 81

for contract formation and problem-solving methods in Japanese contracts

may be adequate among homogeneous parties within Japanese society, but
it could be perceived as less acceptable internationally. By contrasting Jap-
anese contract formation and interpretation with international standards,
this analysis provides valuable insights into the nature of contract law.

SUMMARY
This article hypothesizes that the uniqueness of contract formation methods in
contemporary Japan, especially in the realm of long-term transactions, might
have led to a contractual practice that does not necessarily serve to strengthen
the binding force of contracts. Given the characteristics of Japanese society,
where ambiguity is preferred in contractual obligations, the use of offer and
acceptance analysis to explore the intentions of the parties at the time of con-
tract conclusion has been undervalued as an institutional foundation. Instead,
the maturity of the negotiation is emphasized in contract formation, whereby
the parties’ substantive intentions are assessed based on the entirety of factual
circumstances.
Japanese judicial practice tends to emphasize situational ex-post redistribu-
tion to resolve unexpected issues arising after the conclusion of a contract; this
practice does not favour interpretation based on a return to the contract’s orig-
inal intent. The protection of the offeree’s expectations and reliance is not a
primary consideration in Japan’s contract formation process, with the result
that there is little case law addressing the offeree’s understanding or expecta-
tions within such negotiation processes. Consequently, implied norms are less
likely to accumulate, narrowing the scope of contract formation. To fill this
gap, courts tend to intervene through reference to norms outside of the con-
tract. The reluctance of courts to make decisions based on the parties’ implied
intent at the time of contract formation has to a certain extent deprived Japa-
nese contractual practice of the opportunity to share and assimilate contract
norms within corporate practice. This has resulted in an immature style of con-
tractual design, especially in long-term transactions. For instance, the multi-
stage contract method in software development does not impose a project com-
pletion obligation on the vendor, and there is a lax attitude towards adherence
to construction schedules in construction contracts.
The contract formation criteria and the problem-solving methods employed
in Japanese contractual practice may be adequate among homogeneous parties
within Japanese society, but they could be perceived as less acceptable interna-
tionally. By contrasting Japanese contract formation and interpretation with
international standards, the present analysis provides valuable insights into the
nature of contract law.
82 ICHIRO KOBAYASHI ZJapanR / J.Japan.L.

ZUSAMMENFASSUNG
Der Beitrag diskutiert die Frage, ob die Eigenheiten beim Abschluss von Ver-
trägen, insbesondere von Dauerschuldverträgen, im japanischen Geschäftsle-
ben, zu einer Vertragspraxis geführt haben, die der Bindungskraft von Verträ-
gen abträglich ist. Die Vorliebe der japanischen Gesellschaft für unscharf ge-
fasste Verträge hat dazu geführt, dass die allgemein übliche Analyse von Ange-
bot und Annahme als Instrument, um den Willen der Vertragsparteien zum
Zeitpunkt des Vertragsschlusses zu ermitteln, in der dortigen Praxis nur eine
geringe Rolle spielt. Stattdessen werden die Absichten der Parteien beim Ver-
tragsschluss anhand der Interpretation der Gesamtheit der Fakten ermittelt.
Die japanische Gerichtspraxis legt den Schwerpunkt in diesem Sinne auf ei-
nen situationsbezogenen ex-post-Ausgleich der Interessen, um unvorhergesehe-
ne Probleme zu lösen, die nach dem Vertragsschluss aufgetreten sind. Diese
Praxis steht einer Interpretation des Vertrages unter Rückgriff auf den ur-
sprünglichen Parteiwillen entgegen. Der Schutz der Erwartungen des Empfän-
gers eines Angebots ist in Japan kein entscheidendes Kriterium bei der Beurtei-
lung des Zustandekommens eines Vertrages, was dazu geführt hat, dass es
kaum Rechtsprechung gibt, die sich mit dem Vertragsverständnis oder den Er-
wartungen des Angebotsempfängers auseinandersetzt. Entsprechend ist es un-
wahrscheinlich, dass sich implizite Regeln entwickeln, was die Gestaltungs-
möglichkeiten bei der Vertragsanbahnung verengt. Um dieses Defizit auszu-
gleichen, tendieren die japanischen Gerichte dazu, auf vertragsfremde Rege-
lungen zurückzugreifen. Die fehlende Bereitschaft der Gerichte, die impliziten
Absichten der Parteien zum Zeitpunkt des Vertragsschlusses zu berücksichti-
gen, hat der japanischen Vertragspraxis bis zu einem gewissen Grad die Mög-
lichkeit genommen, im Geschäftsleben eigenständige vertragliche Regeln zu
entwickeln. Dies hat einen unausgereiften Vertragsstil zur Folge, namentlich
bei Dauerverträgen. So kennt etwa der mehrstufige Vertrag im Bereich der
Softwareentwicklung keine Verpflichtung der Entwickler, das Projekt abzu-
schließen, oder bei Bauverträgen fehlen strikte Bindungen an vertraglich ver-
einbarte Zeitpläne.
Die in der japanischen Vertragspraxis angewandten Kriterien für den Ver-
tragsschluss und die Methoden zur Problemlösung mögen für homogene Ver-
tragsparteien innerhalb der japanischen Gesellschaft angemessen sein, aber
sie dürften international als wenig adäquat eingestuft werden. Mit der Gegen-
überstellung der japanischen Praxis des Vertragsschlusses und der Vertragsin-
terpretation auf der einen Seite und den entsprechenden internationalen Stan-
dards auf der anderen, erlaubt die vorliegende Analyse wertvolle Einsichten in
die Natur des Vertragsrechts.
(Die Redaktion)