Unfortunately, not every contract is completed as promised. Business partners find better deals or decide that they no longer want to perform their obligations. When one side breaks his or her promise a “breach of the contract” occurs and usually the other party can sue them in court to recover their damages. However, Japanese law, like most developed contract law around the world, makes a distinction for parties that didn’t keep their promise because it became impossible to keep.
If one party cannot complete his or her promise because it has become impossible due to reasons beyond his or her control, Japanese law dictates that the damages arising from the broken contract should be split depending on which party agreed to assume the risk. This situation most often arises in shipping contracts where one side will need to accept the risk of the products being lost at sea due to a storm or other natural event.
Furthermore, Japanese law also provides leniency for contracting parties who are only partially at fault for their breach. If a seller can no longer deliver the products he promised to sell because they were burned in a fire he cannot complete his promise. However, most people would agree that it doesn’t seem right to hold him fully responsible for the whole contract if the fire was only partially his fault. Determining whether the breaching party is at fault in these situations, and how much they owe, usually will be determined in court.
If you have any questions about contract law in Japan, please contact our office to set up a legal consultation.