Mandatory Provisions for Japanese Contracts

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For the most part, parties have freedom of contract in Japan and are allowed to include, or not include, whatever they want in their contract.  However, there are exceptions to this generally lenient rule and the Japanese Civil Code does set forth some cases which require mandatory provisions for Japanese contracts .

Certain contracts are subject to special mandatory provisions that are automatically inserted into the contract by law.  One example is for contracts governing the lease of land for the purpose of owning a building.  The Land Lease and House Lease Act provides that these contracts shall have a minimum term of 30 years.  Therefore, the parties have freedom to contract for longer than 30 years, but are prohibited from contracting to any smaller period of time.  The setting of a term of less than 30 years shall be void even if the parties agree to such a term.

Another example is for contracts of employment. Japanese labor law provides for mandatory provisions of the Japanese labor laws to be applied to your employment contract. Also, even if your employment contract is governed by a foreign law, if your work place in Japan and you tell your employer that you want the mandatory provision of the Japanese labor laws to be applied to your employment contract, such mandatory provisions will be applied to your employment contract.

Usually these mandatory contract terms are created to protect the weaker contracting party but it is important for both contracting parties to be aware of them.

Agreements that conflict with mandatory provisions are either invalid or are modified in accordance with the mandatory provisions.

If you have any questions about mandatory provisions for Japanese contracts or contracting in Japan in general, please contact our office to set up a legal consultation with our lawyers.