When one party breaches a contract by not fulfilling their promise, the other party usually has grounds to sue them for damages. A successful lawsuit will compel a court to award a monetary value that is determined to be equal to the amount of damage the non-breaching party has sustained. The monetary amount of these damage awards can be very subjective and will vary from case to case since wide discretion is given to the judge. The law regarding risk of loss in Japanese contracts may not be the same as the laws of other countries, so it is important to take note of the possible difference. Standard Japanese contract law will apply unless stated otherwise in the contract.
In contracts for the sale of specific goods (such as a specific used car), where the product is damaged or lost through no fault of the seller, the law regarding risk of loss in Japanese contracts dictates that the buyer is responsible for the resulting damage unless otherwise agreed in the contract. In other words, the buyer still has to pay the purchase price to the seller, even though the product was damaged or lost before the buyer received it. This rather obscure rule has been criticized as unfairly placing the risk of loss on a buyer that has no control over the situation. It provides a good example of why parties to a contract should specifically allocate the risk of loss in their written contract.