FAQ

August 8, 2016

What is the interest rate used by courts in Japan?

The Japanese the Commercial Code specifies a statutory interest rate of 6% annual to be applied between merchants when no interest rate is specified in the contract.  If two business partners agree to a loan in their contract, but neglect to specify an interest rate, the court will automatically set the rate at 6%.
July 19, 2016

What is a Choice of Language clause?

In international business deals the two parties may not share a common language.  In these circumstances, the final contract may be translated into multiple languages and there may be up to two or three different language versions of the same agreement.  Therefore, it is important to specify which language is the “official” version of the contract through a Choice of Language clause.
June 27, 2016

What is a Choice of Law clause?

A choice of law clause, also called a “governing law clause” or “proper law clause,” is a clause used in contracts to identify the type of law that should be applied to interpret the contract.  Since the laws of various countries can differ in how they interpret contracts, without a choice of law clause, a contract may be valid when interpreted under one country’s laws but may be found invalid under the laws of another country.
June 3, 2016

Is it possible to sell rights under a contract to a third party?

In Japan, most contract rights are assignable to third parties.  This general rule is limited to rights that are of an assignable nature (such as collecting payment) and to contracts that do not explicitly prevent assignments.  This means that a party to a contract may assign his right to collect ten million yen over the course of a year, to a third party in exchange for nine million yen immediately.  This rule favoring assignment allows parties to freely contract to suit their needs and ideally should promote the best possible economic outcome for all parties.