By default, there is usually a Seller’s warranty in Japanese contracts. This warranty covers a variety of situations that might arise, such as a third party claiming ownership or a latent defect in the goods. However, these warranties are only intended to be default rules and they will not apply if the parties have contracted out of them. For example, if a seller includes a “no warranty” clause in the contract, the default warranty rules will not apply. Therefore it is always important to have a sales contract reviewed by an attorney before signing. Having a lawyer review the contract for potential problems can save time, money and effort compared to dealing with a problem after signing. There are also many different formats of a Seller’s warranty in Japanese contracts and the duration of such warranty may vary, so it is important to ensure that such clause is appropriate and does not invite unnecessary risks or expenses.
When drafting or reviewing a commercial contract including warranty clause for products, it is also important to understand the relating Civil Code and Commercial Code articles which govern such warranties. One example is Article 566 of the Civil Code which sets forth the law regarding “Limitation on Period of Warranty with Respect to Kind or Quality of Subject Matter”. Article 566 states that:
If the subject matter delivered by the seller to the buyer does not conform to the terms of the contract with respect to the kind or quality, and the buyer fails to notify the seller of the non-conformity within one year from the time when the buyer becomes aware of it, the buyer may not demand cure of the non-conformity of performance, demand a reduction of the price, claim compensation for loss or damage, or cancel the contract, on the grounds of the non-conformity;provided, however, that this does not apply if the seller knew or did not know due to gross negligence the non-conformity at the time of the delivery. Japanese Law Translation
This clause sets forth a one year limitation period to notify the seller of a non-conformity from the time when buyer becomes aware of it. Unless an agreement explicitly states that a specific clause of the Civil Code or Commercial Code does not apply and/or that a different rule applies, these laws will generally apply to the interpretation of the agreement.