Some breached contracts cannot be fixed by having a third party step in and complete the performance. For example, in a contract to tear down a building, it is easy enough for another company to destroy the building if the contracting party refuses. However, what about when a famous painter breaches his contract? Or a singer refuses to perform? In situations where only the contracting party’s performance is acceptable, because only he or she has the required skill or information, the court cannot order substitute performance. Instead, the court will attempt to attach a money value to the service the breaching party should have performed. The breaching party will then have to pay this amount instead of performing the contract.
Even where a court is able to use compulsory performance to forcibly complete the terms of the contract, often the non-breaching party will have suffered some sort of damage due to the delay involved with filing a lawsuit and obtaining a court order. In these cases the court may also order additional compensation to be paid by the breaching party to compensate for the delay. Statutory interest rates regulate how much interest may be charged to compensate for the delay on payment of monetary debts however more creative orders need to be drafted for contracts involving services or transfer of goods.
If you have any questions about contract law in Japan, please contact our office to set up a legal consultation.