Civil Code (Part I, Part II and Part III)
(Act No. 89 of April 27, 1896)
Part I General Provisions
Chapter I Common Provisions(Fundamental Principles)
Article 1 (1) Private rights must be congruent with the public welfare.
(2) The exercise of rights and performance of duties must be done in good faith.
(3) Abuse of rights is not permitted.
(Standards for Construction)
Article 2 This Code must be construed so as to honor the dignity of individuals
and the essential equality of both sexes.
Chapter II Persons
Section 1 Capacity to Hold Rights
Article 3 (1) The enjoyment of private rights commences at birth.
(2) Unless otherwise prohibited by applicable laws, regulations, or treaties,
foreign nationals enjoy private rights.
Section 2 Mental Capacity
Article 3-2 If the person making a juridical act did not have mental capacity
when manifesting the relevant intention, the juridical act is void.
Section 3 Capacity to Act(Age of Majority)
Article 4 The age of majority is 20 years of age.
(Juridical Acts by Minors)
Article 5 (1) A minor must obtain the consent of the minor's legal representative
to perform a juridical act; provided, however, that this does not apply to ajuridical act for merely acquiring a right or being released from an obligation.
(2) A juridical act in contravention of the provisions of the preceding paragraphis voidable.
(3) Notwithstanding the provisions of paragraph (1), a minor may freely dispose1

of property that the legal representative has permitted the minor to dispose offor a specified purpose, to an extent that falls within the scope of that purpose.
The same applies if the minor disposes of property that the legal
representative has permitted the minor to dispose of without specifying apurpose.
(Permission for Minors to Conduct Business)
Article 6 (1) A minor who is permitted to conduct one or multiple types ofbusiness has the same capacity to act as an adult as far as that business isconcerned.
(2) In a case as referred to in the preceding paragraph, if there are grounds thatmake the minor unable to sustain that business, the legal representative may
revoke or limit the permission therefor in accordance with the provisions ofPart IV (Relatives).
(Decisions for Commencement of Guardianship)
Article 7 The family court may decide to commence a guardianship in respect ofa person who constantly lacks the capacity to appreciate the person's own
situation due to a mental disorder, at the request of the person in question,that person's spouse, that person's relative within the fourth degree of kinship,
the person's guardian of a minor, the person's supervisor of a minor's guardian,
the person's curator, the person's curator's supervisor, the person's assistant,the person's assistant's supervisor, or a public prosecutor.
(Adult Wards; Adult Guardians)
Article 8 A person subject to a decision for commencement of guardianshipbecomes an adult ward, and an adult guardian is appointed for that person.
(Juridical Acts by Adult Wards under Guardianship)
Article 9 A juridical act performed by an adult ward is voidable; provided,
however, that this does not apply to the purchase of daily necessities or to any
other act involved in day-to-day life.
(Rescission of Decisions for Commencement of Guardianship)
Article 10 If the grounds prescribed in Article 7 cease to exist, the family court
must rescind the decision for the commencement of guardianship at the requestof the person in question, that person's spouse, that person's relative within
the fourth degree of kinship, the guardian (meaning a minor's guardian or an
adult guardian; the same applies hereinafter), the guardian's supervisor(meaning the supervisor of a minor's guardian or the adult guardian's
supervisor; the same applies hereinafter), or a public pros ecutor.
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(Decisions for Commencement of Curatorship)
Article 11 The family court may decide to commence a curatorship in respect of aperson whose capacity to appreciate their own situation is extremely
inadequate due to a mental disorder, at the request of the person in question,
the person's spouse, the person's relative within the fourth degree of kinship,
the guardian, the guardian's supervisor, the assistant, the assistant's
supervisor, or a public prosecutor; provided, however, that this does not app ly
to a person in respect of whom a cause set forth in Article 7 exists.
(Persons under Curatorship; Curators)
Article 12 A person subject to a decision for commencement of curatorshipbecomes a person under curatorship, and a curator is appointed for that person.
(Acts Requiring Consent of Curator)
Article 13 (1) A person under curatorship must obtain the consent of the curator
in order to perform any of the following acts; provided, however, that this does
not apply to an act provided for in the proviso of Article 9:(i) receiving or using any property producing civil fruit;(ii) borrowing money or guaranteeing an obligation;(iii) performing an act with the purpose of acquiring or losing any right
regarding immovables or other significant property;(iv) suing any procedural act;(v) giving a gift, reaching a settlement, or entering into an arbitrationagreement (meaning an arbitration agreement as provided in Article 2,paragraph (1) of the Arbitration Act (Act No. 138 of 2003));(vi) accepting or renouncing a succession or dividing an estate;(vii) refusing an offer of a gift, renouncing a legacy, accepting an offer of giftwith burden, or accepting a legacy with burden;(viii) constructing a new building, renovating, expanding, or unde rtaking major
repairs;(ix) granting a lease for a term that exceeds the period set forth in Article 602;or(x) performing any of the acts set forth in the preceding items as a legal
representative of a person with qualified legal capacity (meaning a mino r,
adult ward, or person under curatorship or a person under assistance who issubject to a decision as referred to in Article 17, paragraph (1); the same
applies hereinafter).
(2) At the request of a person as referred to in the main clause of Article 11 or
the curator or curator's supervisor, the family court may decide that the person
under curatorship must also obtain the consent of the curator before
3performing an act other than those set forth in each of the items of thepreceding paragraph; provided, however, that this does not apply to an act
provided for in the proviso to Article 9.
(3) If the curator does not consent to an act for which the person under
curatorship must obtain the curator's consent even though it is unlikely toprejudice the interests of the person under curatorship, the family court may
grant permission that operates in lieu of the curator's consent at the request of
the person under curatorship.
(4) An act for which the person under curatorship must obtain the curator'sconsent is voidable if the person performs it without obtaining the curator'sconsent or a permission that operates in lieu of it.
(Rescission of Decisions for Commencement of Curatorship)
Article 14 (1) If the grounds prescribed in the main clause of Article 11 cease toexist, the family court must rescind the decision for the commencement of
curatorship at the request of the person in question, that person's spouse, that
person's relative within the fourth degree of kinship, the guardian of a minor,
the supervisor of a minor's guardian, the curator, the curator's supervisor, or apublic prosecutor.
(2) At the request of a person provided for in the preceding paragraph, the family
court may rescind all or part of the decision referred to in paragraph (2) of thepreceding Article.
(Decisions for Commencement of Assistance)
Article 15 (1) The family court may decide to commence an assistance in respectof a person whose capacity to appreciate their own situation is inadequate due
to a mental disorder, at the request of the person in question, that person's
spouse, that person's relative within the fourth degree of kinship, the guardian,
the guardian's supervisor, the curator, the curator's supervisor, or a publicprosecutor; provided, however, that this does not apply to a person with respect
to whom there are grounds as prescribed in Article 7 or the main clause of
Article 11.
(2) The issuance of a decision for commencement of assistance at the request of aperson other than the person in question requires the consent of the person inquestion.
(3) A decision for commencement of assistance must be made concurrent with adecision as referred to in Article 17, paragraph (1) or a decision as referred toin Article 876-9, paragraph (1).
(Persons under Assistance; Assistants)
Article 16 A person subject to a decision for commencement of assistance4

becomes a person under assistance, and an assistant is appointed for that
person.
(Decisions Requiring Person to Obtain Consent of Assistant)
Article 17 (1) At the request of the person referred to in the main clause of
Article 15, paragraph (1) or the assistant or assistant's supervisor, the family
court may decide that the person under assistance must obtain the consent of
the person's assistant in order to perform a specific juridical act; provided,
however, that the acts that such a decision may establish as those for which
the person must obtain the consent of the assistant are restricted to a part of
the acts provided for in Article 13, paragraph (1).
(2) In order to decide as referred to in the preceding paragraph at the request ofa person other than the person in question requires the consent of the person
in question.
(3) If the assistant does not consent to an act for which the person underassistance must obtain the assistant's consent even though it is unlikely toprejudice the interests of the person under assistance, the family court may
grant permission that operates in lieu of the assistant's consent, at the requestof the person under assistance.
(4) An act for which the person under assistance must obtain the assistant'sconsent is voidable if the person performs it without obtaining the assistance's
consent or a permission that operates in lieu of it.
(Rescission of Decisions for Commencement of Assistance)
Article 18 (1) If the grounds prescribed in the main clause of Article 15,
paragraph (1) cease to exist, the family court must rescind the decision forcommencement of assistance at the request of the person in question, that
person's spouse, that person's relative within the fourth degree of kinship, theguardian of a minor, the supervisor of a minor's guardian, the assistant, theassistant's supervisor, or a public prosecutor.
(2) At the request of a person as prescribed in the preceding para graph, thefamily court may rescind all or part of the decision referred to in paragraph (1)of the preceding Article.
(3) If rescinding the decision referred to in paragraph (1) of the preceding Article
and the decision referred to in Article 876-9, paragraph (1) in their entirety,
the family court must rescind the decision for commencement of assistance.
(Relationship between Decisions)
Article 19 (1) If the family court decides to commence a guardianship and theperson in question is a person under curatorship or a person under assistance,
it must rescind the decision for commencement of the curatorship or5commencement of assistance respecting that person.
(2) The provisions of the preceding paragraph apply mutatis mutandis if thecourt decides to commence a curatorship and the person in question is an adultward or a person under assistance or if the court decides to commence anassistance and the person in question is an adult ward or a person under
curatorship.
(Right to Demand of the Other Party to Dealings Involving a Person with
Qualified Legal Capacity)
Article 20 (1) After a person with qualified legal capacity who is involved indealings with another party becomes a person with the legal capacity to act(meaning a person whose legal capacity to act is not subject to restrictions; thesame applies hereinafter), the other party to those dealings may fix a period of
one month or longer and demand that the person give a definite answer withinthat period of time as to whether the person will ratify an act that the person
may rescind. In such a case, if the person fails to send a definite answer withinthat period of time, the person is deemed to have ratified that act.
(2) The second sentence of the preceding paragraph also applies if, before theperson with qualified legal capacity becomes a person with the legal capacity toact, the other party to dealings involving the person with qualified legal
capacity lodges the demand prescribed in the preceding paragraph with thelegal representative, curator, or assistant of that person with respect to an act
within the scope of their authority, and they fail to send a definite answer
within the fixed period of time referred to in that paragraph.
(3) If a person does not send notice within the period of time set forth in thepreceding two paragraphs indicating that the person has completed any special
formalities that an act requires, the person is deemed to have rescinded thatact.
(4) The other party to dealings involving a person with qualified legal capaci ty
may lodge a demand with a person under curatorship or with a person underassistance who is subject to a decision as referred to in Article 17, paragraph(1) to demand that the person get the curator or assistant to ratify an act
within the fixed period referred to in paragraph (1). In such a case, if theperson under curatorship or person under assistance does not send notice
within that period indicating that the person has gotten the curator or
assistant to ratify the act in question, the person is deemed to have rescindedthat act.
(Use of Fraudulent Means by Persons with Qualified Legal Capacity)
Article 21 If a person with qualified legal capacity uses fraudulent means to
induce another person to believe that the person is a person with legal capa city
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to act, the person may not rescind the act in question.
Section 4 Domicile(Domicile)
Article 22 A person's principal place of daily activity is that person's domicile.
(Residence)
Article 23 (1) If a person's domicile is unknown, the person's residence is deemed
to be the person's domicile.
(2) If a person does not have a domicile in Japan, the person's residence isdeemed to be the person's domicile, regardless of whether the person is aJapanese national or a foreign national; provided, however, that this does not
apply if the law of domicile is to be applied in accordance with the provisions of
the laws that establish the governing law.
(Temporary Addresses)
Article 24 If a temporary address is selected for an act, that temporary a ddress
is deemed to be the domicile as far as that act is concerned.
Section 5 Administration of Absentee Property; Declarations ofDisappearance(Administration of Absentee Property)
Article 25 (1) If a person who has taken leave of the domicile or res idence up
until then (hereinafter referred to as an "absentee") has not appointed anadministrator for the person's property (hereinafter in this Section referred tosimply as an "administrator"), the family court, at the request of an interested
person or a public prosecutor, may order the necessary dispositions with regard
to the administration of that property. The same applies if the administrator's
authority is extinguished during the absence of the absentee.
(2) If an absentee appoints an administrator after an order under the provisionsof the preceding paragraph has been issued, the family court must rescind thatorder at the request of the person's administrator, an interested person, or apublic prosecutor.
(Replacing Administrators)
Article 26 If an absentee has appointed an administrator but it is unclear
whether the absentee is dead or alive, the family court may replace thatadministrator with another at the request of an interested person or a publicprosecutor.
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(Duties of Administrators)
Article 27 (1) An administrator appointed by the family court pursuant to theprovisions of the preceding two Articles must prepare a list of the property thatthe administrator is to administer. In such a case, the expenses incurred arepaid from the property of the absentee.
(2) If it is unclear whether an absentee is dead or alive and an interested person
or a public prosecutor so requests, the family court may also order theadministrator appointed by the absentee to prepare the list referred to in thepreceding paragraph.
(3) Beyond what is provided for in the preceding two paragraphs, the family court
may order the administrator to make the dispositions that the court finds to benecessary to preserve the property of the absentee.
(Administrators' Authority)
Article 28 If an administrator needs to perform an act exceeding the authority
provided for in Article 103, the administrator may perform that act after
obtaining the permission of the family court. The same applies if it is unclear
whether the absentee is dead or alive and the administrator needs to perform
an act exceeding the authority established by the absentee.
(Provision of Security by and Remuneration of Administrators)
Article 29 (1) The family court may require an administrator to provide
reasonable security with respect to the administration and return of theproperty.
(2) The family court may grant reasonable remuneration to the administrator
from the property of the absentee based on the relationship between theadministrator and absentee and other circumstances.
(Declarations of Disappearance)
Article 30 (1) If it has been unclear for seven years whether an absentee is deador alive, the family court may enter a declaration of disappearance at therequest of an interested person.
(2) The provisions of the preceding paragraph also apply if it has been unclear
whether a person who has entered a war zone, was aboard a vessel that has
sunk, or was otherwise exposed to a danger likely to result in a person's death
is dead or alive, for one year after the war has ended, the vessel sank, or suchother danger has passed.
(Effect of Declarations of Disappearance)
Article 31 A person subject to a declaration of disappearance pursuant to the8provisions of paragraph (1) of the preceding Article is deemed to have diedwhen the period of time referred to in that paragraph ended, and a person
subject to a declaration of disappearance pursuant to the provisions ofparagraph (2) of that Article is deemed to have died when that danger had
passed.
(Rescission of Declarations of Disappearance)
Article 32 (1) Having received proof that a missing person is alive or that a
missing person died at a time different from the time set forth in the preceding
Article, the family court, at the request of the missing person or an interested
person, must rescind the declaration of that person's disappearance. In thiscase, the rescission does not affect the validity of any act performed in goodfaith after the declaration of disappearance but before the rescission thereof.
(2) A person who has acquired property due to a declaration of disappearance
loses the rights in question due to its rescission; provided, however, that theperson has the obligation to return that property only to the extent currently
enriched.
Section 6 Presumption of Simultaneous Death
Article 32-2 If more than one person dies and it is unclear whether one of themwas still alive after the death of another, it is presumed that they all died at
the same time.
Chapter III Juridical Persons
Section 1 Incorporation of Juridical Persons(Formation of Juridical Persons)
Article 33 A juridical person is not formed other than pursuant to the provisionsof this Code or other laws.
(Incorporation of Public Interest Corporations)
Article 34 An not-for-profit association or foundation that is involved inacademic activities, art, charity, worship, religion, or any other matter ofpublic interest may be established as a juridical person with the permission of
the competent government agency.
(Restrictions on the Use of Names)
Article 35 A person that is neither an incorporated association nor an
incorporated foundation must not use in its name the characters " 社団法人", "財団法人", or other characters likely to be mistaken for them.
9(Foreign Juridical Persons)
Article 36 (1) With the exception of states, administrative divisions of states,
and commercial companies, the formation of foreign juridical persons is not
permitted; provided, however, that this does not apply to a foreign juridical
persons that is permitted pursuant to the provisions of a law or treaty.
(2) A foreign juridical person permitted pursuant to the provisions of thepreceding paragraph possesses the same private rights as those possessed by ajuridical person of the same kind that has been formed in Japan; provided,
however, that this does not apply to a right that a foreign national is notentitled to enjoy or to any right for which there are special provisions in a law
or treaty.
(Articles of Incorporation)
Article 37 (1) A person seeking to establish an incorporated association must
prepare articles of incorporation and include in it the following particulars:(i) its purpose;(ii) its name;(iii) the locality of its office;(iv) provisions on assets;(v) provisions on the appointment and dismissal of managing administrators;
and(vi) provisions on the acquisition and loss of membership.
(2) If a change has been made to a particular set forth in one of the items of thepreceding paragraph, a registration of the change must be made within three
weeks. In such a case, a change may not be duly asserted against a third party
before its registration.
(3) If an order of provisional disposition suspending the execution of duties by arepresentative or appointing a person to execute duties in place of arepresentative is issued or if a ruling modifying or revoking such an order ofprovisional disposition is issued, it must be registered. In such a case, theprovisions of the second sentence of the preceding paragraph apply mutatis
mutandis.
(4) If something that must be registered pursuant to the provisions of thepreceding two paragraphs occurs in a foreign state, the period for registrationis counted from the day on which notice of this reached the relevant person.
(5) When a foreign juridical person establishes an office in Japan for the firsttime, a third party may decline to recognize that corporation's formation until
it has been registered in the locality of that office.
(6) Having relocated its office, a foreign juridical person must register the
relocation within three weeks in the former locality and register the10

particulars set forth in the items of paragraph (1) within four weeks in the new
locality.
(7) If a foreign corporation relocates its office within the jurisdictional district of
the same registry office, it is sufficient for it to register its relocation.
(8) If the representative of a foreign juridical person fails to complete theregistration provided for in this Article, the representative is subject t o a civil
fine of not more than 500,000 yen.
Articles 38 to 84 Deleted
Chapter IV Things(Definition)
Article 85 The term "things" as used in this Code means tangible objects.
(Immovables and Movables)
Article 86 (1) Land and any fixtures thereto are immovables.
(2) Things other than immovables are movables.
(Principal Things and Appurtenances)
Article 87 (1) If the owner of a first thing attaches a second thing that the ownerowns to the first thing to serve the ordinary use of the first thing, the thingthat the owner attaches is an appurtenance.
(2) An appurtenance is disposed of together with the principal thing if theprincipal thing is disposed of.
(Natural Fruits and Civil Fruits)
Article 88 (1) Products obtained from the intended use of a thing are its natural
fruits.
(2) Money and other things that may be obtained in exchange for the use of any
thing are civil fruits.
(Ownership of Fruits)
Article 89 (1) The ownership of natural fruits is acquired by the person entitledto obtain them when they are separated from the original thing.
(2) A person acquires civil fruits in proportion to the duration of the right toobtain them, as calculated on a prorated, daily basis.
Chapter V Juridical Acts
Section 1 General Provisions

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(Public Policy)
Article 90 A juridical act that is against public policy is void.
(Manifestations of Intention Inconsistent with Default Rules)
Article 91 If a party to a juridical act manifests an intention that is inconsistent
with the provisions of laws and regulations that are not related to public policy,
that intention prevails.
(Customs Inconsistent with Default Rules)
Article 92 If a custom is inconsistent with the provisions of laws and regulations
that are not related to public policy and it is found that the party to thejuridical act has the intention to abide by that custom, that custom prevails.
Section 2 Manifestations of Intention(Mental Reservations)
Article 93 (1) The validity of a manifestation of intention is not impaired even if
the person making it does so while knowing that it does not reflect that
person's true intention; provided, however, that if the other party knew or
could have known that the manifestation was not the true intention of theperson who made it, that manifestation of intention is void.
(2) The nullity of a manifestation of intention under the provisions of the proviso
to the preceding paragraph may not be duly asserted against a third party ingood faith.
(False Manifestations of Intention)
Article 94 (1) A false manifestation of intention that a person makes in collusion
with another person is void.
(2) The nullity of a manifestation of intention under the provisions of thepreceding paragraph may not be duly asserted against a third party i n goodfaith.
(Mistakes)
Article 95 (1) A manifestation of intention is voidable if it is based on either ofthe following mistakes, and the mistake is material in light of the purpose of
the juridical act and the common sense in the transaction:(i) a mistake wherein the person lacks the intention that corresponds to the
manifestation of intention; or(ii) a mistake wherein the person making the manifestation of intention holds
an understandings that does not correspond to the truth with regard to thecircumstances which the person has taken as the basis for the juridical act.
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(2) A manifestation of intention under the provisions of item (ii) of the preceding
paragraph may be rescinded only if it has been indicated that thecircumstances in question are being taken as the basis for the juridical act.
(3) If a mistake is due to gross negligence on the part of the person making the
manifestation of intention, that person may not rescind a manifestation of
intention as under paragraph (1), except in the following cases:(i) if the other party knew, or did not know due to gross negligence, of themistake on the part of the person making the manifestation of intention; or(ii) if the other party was under the same mistake as the person making the
manifestation of intention.
(4) The rescission of a manifestation of intention under the provisions ofparagraph (1) may not be duly asserted against a third party in good faithacting without negligence.
(Fraud or Duress)
Article 96 (1) A manifestation of intention based on fraud or duress is voidable.
(2) If a third party commits a fraud inducing a first party to make amanifestation of intention to a second party, that manifestation of intention is
voidable only if the second party knew or could have known that fact.
(3) The rescission of a manifestation of intention induced by fraud under theprovisions of the preceding two paragraphs may not be duly asserted against athird party in good faith acting without negligence.
(Timing of Entry into Effect of Manifestations of Intention)
Article 97 (1) A manifestation of intention becomes effective at the time notice
thereof reaches the other party.
(2) If the other party prevents notice of a manifestation of intention fromreaching them without a legitimate reason, the notice is deemed to havereached that party at the time it would have normally reached them.
(3) The effect of a manifestation of intention is not impaired even if the person
making it dies, loses mental capacity, or becomes subject to restrictions on
their legal capacity to act after having sent the notice.
(Manifestation of Intention by Public Notice)
Article 98 (1) A manifestation of intention may be made by means of public
notice if the person making it is unable to ascertain who the other party is or isunable to ascertain the whereabouts thereof.
(2) Public notice as referred to in the preceding paragraph is effected by a noticebeing posted in the posting area of the relevant court and an indication thatthat posting has been made being published in the Official Gazette at least
once, in accordance with the provisions of the Code of Civil Procedure (Act No.
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109 of 1996) on service by publication; provided, however, that if the court
finds it to be suitable, it may order that a notice be posted in the posting areaof the city office, ward office, town hall, or any facility equivalent to these inlieu of the relevant information being published in the Official Gazette.
(3) A manifestation of intention by public notice is deemed to have reached theother party once two weeks have passed since the day when the relevant
information was last published in the Official Gazette or once two weeks havepassed since the day on which the relevant information started to be posted inlieu of being so published; provided, however, that the effect of a manifestationof intention having reached the other party does not arise if the person making
it was negligent in not ascertaining the other party or the whereabouts thereof.
(4) If the person making a manifestation of intention is unable to ascertain who
the other party is, the procedures involved in public notice are under thejurisdiction of the summary court that has jurisdiction over the locality where
the person making the manifestation of intention is domiciled; if the person
making a manifestation of intention is unable to ascertain the whereabouts of
the other party, the procedures involved in public notice are under thejurisdiction of the summary court that has jurisdiction over the locality of thelast known domicile of the other party.
(5) The court must have the person making a manifestation of intention prepay
the expenses associated with a public notice.
(Capacity to Receive Manifestations of Intention)
Article 98-2 Any person may not assert a manifestation of intention against theother party thereto if that other party had no mental capacity or was a minoror an adult ward at the time of receiving it; provided, however, that this does
not apply after either of the following persons learns of the manifestat ion of
intention:(i) the legal representative of the other party; or(ii) the other party, after that other party's mental capacity has been restored
or after that other party has become a person with capacity to act.
Section 3 Agency(Requirements and Effect of Acts of Agency)
Article 99 (1) A manifestation of intention that an agent makes indicating thatthey will be making a manifestation of intention on behalf of the principal
within the scope of the agent's authority binds the principal directly.
(2) The provisions of the preceding paragraph apply mutatis mutandis to amanifestation of intention that a third party makes to an agent.

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(Manifestation of Intention That the Agent Does Not Indicate as Being Madeon Behalf of the Principal)
Article 100 A manifestation of intention that an agent makes without having
indicated that they will be acting on behalf of the principal is deemed to be onethat the agent has made on their own account; provided, however, that if theother party knew or could have known that the agent was acting on behalf ofthe principal, the provisions of paragraph (1) of the preceding Article apply
mutatis mutandis.
(Defects in Acts of Agency)
Article 101 (1) If the validity of a manifestation of intention that an agent has
made to the other party is to be influenced by the absence of intention; by
mistake, fraud, or duress; or by the knowledge of or negligence in not knowingof a particular circumstance; whether or not any such fact was present isdecided as it concerns the agent.
(2) If the validity of a manifestation of intention that the other party has made to
the agent is to be influenced by the recipient's knowledge of or negligence in
not knowing of a particular circumstance, whether or not any such fact waspresent is decided as it concerns the agent.
(3) If an agent who has been entrusted with performing a specific juridical act
performs that act, the principal may not assert that the agent did not know ofany particular circumstance of which the principal knew. The same applies toany circumstance of which the principal did not know due to the principal's
own negligence.
(Agent's Capacity to Act)
Article 102 An act that a person with qualified legal capacity performs as anagent of another person may not be rescinded on the grounds of qualified legal
capacity; provided, however, that this does not apply to an act performed by aperson with qualified legal capacity as a legal representative of another personwith qualified legal capacity.
(Authority of an Agent with No Specifically Defined Authority)
Article 103 An agent who has no specifically defined authority has the authority
to perform the following acts only:(i) acts of preservation; and(ii) acts with the purpose of using or improving a thing or right that is the
subject matter of the agency, to the extent that this does not change thenature of that thing or right.
(Appointment of Subagents by Agents)
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Article 104 An agent appointed by mandate may not appoint a subagent unlessthe authorization of the principal is obtained or there is a compelling reason to
do so.
(Appointment of Subagents by Legal Representatives)
Article 105 A legal representative may appoint a subagent on its own
responsibility. In such a case, if there is a compelling reason to do so, the legal
representative is only liable to the principal for the appointment andsupervision of the subagent.
(Authority of Subagents)
Article 106 (1) A subagent represents the principal with respect to acts within
the scope of the authority thereof.
(2) A subagent has the same rights and obligations as an agent in relation to theprincipal and third parties within the scope of that subagent's authority.
(Abuse of Authority to Represent)
Article 107 If an agent performs an act that falls within the scope of that agent's
authority to represent for the purpose of benefiting the agent's own interests or
the interests of a third party, and the other party knew of or could haveascertained that purpose, that act is deemed to be an act performed by aperson without authority to represent.
(Self-Contracting and Representation of Both Parties)
Article 108 (1) An act that a person performs as an agent of the counterparty or
as agent of both parties for the same juridical act is deemed to be an act
performed by a person without authority to represent; provided, however, that
this does not apply to the performance of an obligation or to an act authorized
by the principal in advance.
(2) Beyond what is provided for in the main clause of the preceding paragrap h,an act for which the interest of the agent conflicts with the interest of theprincipal is deemed to be an act performed by a person without authority torepresent; provided, however, that this does not apply to an act authorized by
the principal in advance.
(Apparent Authority Due to Indication of Grant of Authority to Represent)
Article 109 (1) A person who indicates to a third party that the person granted
certain authority to represent to another person is liable for an act performed
between that other person and that third party within the scope of theauthority to represent; provided, however, that this does not apply if the third
party knew or did not know due to negligence that the other person has not16been granted the authority to represent.
(2) If a person who indicates to a third party that the person granted authority torepresent to another person is, pursuant to the provisions of the preceding
paragraph, liable for acts performed by that other person in relation to thethird party within the scope of the authority to represent, and the other person
performs in relation to the third party an act beyond the scope of the authority
to represent, the person who makes the indication is liable for that act only if
the third party has reasonable grounds for believing that the other person has
authority to represent in that act.
(Apparent Authority of Act Exceeding Authority)
Article 110 The provisions of the main clause of paragraph (1) of the preceding
Article apply mutatis mutandis if an agent performs an act exceeding theagent's authority to represent and a third party has reasonable grounds forbelieving that the agent has the authority as an agent.
(Ground of Extinction of Authority to Represent)
Article 111 (1) The authority to represent ceases to exist upon:(i) death of the principal; and(ii) death of the agent, or being given an order commencing bankruptcy
proceeding or a decision for commencement of guardianship against theagent.
(2) The authority to represent by mandate ceases to exist, other than on the
grounds set forth in the respective items of the preceding paragraph, upon thetermination of the mandate.
(Apparent Authority After Extinction of Authority to Represent)
Article 112 (1) A person that grants authority to represent to another person isliable towards a third party for an act performed between that other person
and the third party within the scope of the authority to represent after theextinction of the authority to represent if that third party does not know thefact that the authority to represent has ceased to exist; provided, however, that
this does not apply if the third party does to not know due to negligence thefact.
(2) If a person that grants authority to represent to another person is, pursuant
to the provisions of the preceding paragraph, liable for an act performed
between that other person and a third party within the scope of the authority
to represent after the extinction of that authority to represent, and the otherperson performs in relation to the third party an act beyond the scope of theauthority to represent, the person that grants authority to represent is liable
for that act only if the third party has reasonable grounds for believing that17

the other person has authority to represent for the act.
(Unauthorized Agency)
Article 113 (1) A contract concluded by a person who acts as the agent of anotherperson but has no authority to represent does not bind the principal unless theprincipal ratifies it.
(2) The ratification or refusal to ratify may not be duly asserted against thecounterparty unless it is made to that counterparty; provided, however, that
this does not apply if the counterparty has come to know the ratification or
refusal to ratify.
(Right to Demand of Counterparty of Unauthorized Agency)
Article 114 In the case referred to in the preceding Article, the counterparty may
demand, by specifying a reasonable period of time, that the principal give adefinite answer on whether or not the principal will ratify within that period oftime. In this case, if the principal fails to give a definite answer within that
period, the principal is deemed to have refused to ratify.
(Right to Rescind of Counterparty of Unauthorized Agency)
Article 115 A counterparty may rescind a contract that a pe rson without theauthority to represent has concluded until the principal ratifies it; provided,
however, that this does not apply if the counterparty knew at the time of theconclusion of the contract that the agent had no authority to represent.
(Ratification of Act of Unauthorized Agency)
Article 116 Ratification is retroactive to the time of the conclusion of thecontract unless a particular intention is manifested; provided, however, that
this may not prejudice the rights of a third party.
(Liability of Unauthorized Agency)
Article 117 (1) A person who concludes a contract as an agent of another person
is liable to the counterparty for the performance of the contract orcompensation for loss or damage, as chosen by the counterparty, unless the
person proves the authority to represent or the principal ratifies the contract.
(2) The provisions of the preceding paragraph do not apply in the following cases:(i) if the counterparty knew that the person who concluded the contract as anagent of the other person had no authority to represent;(ii) if the counterparty was negligent in not knowing that the person who
concluded the contract as an agent of the other person had no authority torepresent; provided, however, that this does not apply if the person who
concluded a contract as an agent of the other person knew themselves to18

have no authority to represent; or(iii) if the legal capacity to act of the person who concluded the contract as anagent of the other person was subject to restrictions.
(Unauthorized Agency in Unilateral Juridical Act)
Article 118 With respect to a unilateral juridical act, the provisions of Articles
113 through the preceding Article apply mutatis mutandis only if thecounterparty, at the time of the act, either agrees for the person holding
themselves out as an agent to act without the authority to represent or does
not contest the authority to represent of that person. The same applies if aperson does a unilateral juridical act vis-a-vis a person without authority torepresent with the consent of that person.
Section 4 Nullity and Rescission(Ratification of Void Acts)
Article 119 A void act does not become effective by ratification; provided,
however, that if a party ratifies an act knowing that the act is void, it isdeemed that the party did a new act.
(Holder of Right to Rescind)
Article 120 (1) An act that is voidable on the grounds of the qualified legal
capacity to act of the person who did the act may be rescinded only by the
person with qualified legal capacity (in the case of an act performed by the
person as a legal representative of another person with limited capacity,
including that other person with limited capacity), or an agent or successor
thereof, or a person who has the authority to give consent thereto.
(2) An act that is voidable on the grounds of a mistake, fraud or duress may be
rescinded only by the person who made the defective manifestation of intention,or an agent or successor thereof.
(Effect of Rescission)
Article 121 An act that has been rescinded is deemed void ab initio.
(Obligation of Restoration)
Article 121-2 (1) A person that has received payment or delivery as theperformance of an obligation based on a void act has an obligation to restore
the other party to the original state.
(2) Notwithstanding the provisions of the preceding paragraph, if a person thatreceives payment or delivery as the performance of an obligation based on avoid gratuitous act did not know that the act was void at the time of receiving
19the payment or delivery (or if the person did not know that the act was
voidable at the time of receiving the payment or delivery in the case of an act
which is deemed void ab initio pursuant to the provisions of the preceding
Article after the receipt of the payment or delivery), has an obligation to returnto the extent currently enriched by the act.
(3) Notwithstanding the provisions of paragraph (1), a person who has no mental
capacity at the time of performing an act has an obligation to return to theextent currently enriched by the act. The same applies to a person who is aperson with qualified legal capacity at the time of performing an act.
(Ratification of Voidable Acts)
Article 122 A voidable act may not be rescinded after the person prescribed in
Article 120 ratifies it.
(Method of Voidance and Ratification)
Article 123 If the counterparty to a voidable act is identified, the voidance or
ratification of that act is made by the manifestation of intention to thecounterparty.
(Requirements for Ratification)
Article 124 (1) The ratification of a voidable act does not become effective unless
it is made after the circumstances that made the act voidable cease to exist andthe person ratifying the act becomes aware of the right to rescind it.
(2) In the following cases, the ratification referred to in the preceding paragraphis not required to be made after the circumstances that made the act voidable
cease to exist:(i) if a legal representative or a curator or assistant of a person with qualified
legal capacity ratifies the act; or(ii) if a person with qualified legal capacity (excluding an adult ward) makes
the ratification with the consent of a legal representative, curator or
assistant.
(Statutory Ratification)
Article 125 If, at or after the time when it becomes possible to ratify an act, anyof the following facts occur with respect to a voidable act, it is deemed that theact has been ratified; provided, however, that this does not apply if an
objection is reserved:(i) full or partial performance;(ii) request for the performance;(iii) novation;(iv) provision of a security;20(v) assignment of a part of or the whole of a right acquired by the voidable act;or(vi) compulsory execution.
(Limitation on Period of Right to Rescind)
Article 126 The right to rescind an act is extinguished by the operation of theprescription if it is not exercised within five years from the time when it
becomes possible to ratify the act. The same applies if 20 years have passed
from the time of the act.
Section 5 Conditions and Time Limits(Effect of Fulfillment of Conditions)
Article 127 (1) A juridical act subject to a condition precedent becomes effective
upon fulfillment of the condition precedent.
(2) A juridical act that is subject to a condition subsequent ceases to be effective
upon fulfillment of the condition subsequent.
(3) If the party manifests an intention to make the effects retroactive to the timeof or any time prior to the time of the fulfillment, that intention prevails.
(Prohibition of Infringement of Interest of Counterparty Pending Fulfillment of
Conditions)
Article 128 While it is uncertain whether or not a condition will be fulfilled, aparty to a juridical act that is subject to a condition may not prejudice theother party's interests that would arise from the juridical act upon fulfillmentof the condition.
(Disposition of Rights Pending Fulfillment of Conditions)
Article 129 While it is uncertain whether or not a condition will be fulfilled, therights and obligations of the party concerned may be disposed of, inherited orpreserved, or a security may be provided therefor, in accordance with thegeneral provisions.
(Prevention of Fulfillment of Conditions)
Article 130 (1) If a party that would suffer a detriment as a result of thefulfillment of a condition intentionally prevents the fulfillment of thatcondition, the counterparty may deem that the condition has been fulfilled.
(2) If a party who would enjoy a benefit as a result of the fulfillment of acondition wrongfully has that condition fulfilled, the counterparty may deemthat the condition has not been fulfilled.

21

(Fulfilled Conditions)
Article 131 (1) If a condition has already been fulfilled at the time of a juridical
act and that condition is a condition precedent, the juridical act constitutes anunconditional juridical act; if that condition is a condition subsequent, thejuridical act is void.
(2) If it has already been established at the time of a juridical act that a
condition will not be fulfilled and that condition is a condition precedent, thejuridical act is void; if that condition is a condition subsequent, the juridical
act constitutes an unconditional act.
(3) In the cases referred to in the provisions of the preceding two paragraphs, theprovisions of Article 128 and Article 129 apply mutatis mutandis until the
relevant party becomes aware that the condition has been or has not been
fulfilled.
(Unlawful Conditions)
Article 132 A juridical act subject to an unlawful condition is void . The same
applies to a juridical act subject to the condition that an unlawful act not be
performed.
(Impossible Conditions)
Article 133 (1) A juridical act subject to an impossible condition precedent isvoid.
(2) A juridical act subject to an impossible condition subsequent is an
unconditional juridical act.
(Potestative Conditions)
Article 134 A juridical act subject to a condition precedent is void if thecondition is dependent only upon the intention of the obligor.
(Effect of Arrival of Assigned Time)
Article 135 (1) If a time of commencement is assigned to a juridical act, theperformance of that juridical act may not be demanded before the arrival ofthat assigned time.
(2) If time of expiration is assigned to a juridical act, that juridical act expires
upon the arrival of that assigned time.
(Benefit of Time and Waiver)
Article 136 (1) The time stipulation is presumed to be provided for the benefit of
the obligor.
(2) The benefit of time stipulation may be waived; provided, however, that thewaiver may not prejudice the interest of the counterparty.
22

(Acceleration)
Article 137 The obligor may not assert the benefit of time stipulation if:(i) the obligor has become subject to the order commencing bankruptcy
proceeding;(ii) the obligor has lost, damaged, or diminished the security; or(iii) the obligor fails to provide security when it has the obligation to do so.
Chapter VI Computation of Period of Time
(Common Rules on Computation of Period of Time)
Article 138 The method of computation of a period of time is governed by theprovisions of this Chapter unless otherwise provided in the laws andregulations or a judicial order, or unless otherwise provided for by the relevant
juridical act.
(Commencement of Period)
Article 139 When a period is provided for in hours, the period commences
immediately at the specified time.
Article 140 When a period is provided for in days, weeks, months, or years, thefirst day of the period is not included in the computation; provided, however,that this does not apply when the period commences at twelve midnight.
(Expiration of Period)
Article 141 In the case referred to in the preceding Article, the period expires atthe end of the last day.
Article 142 If the last day of a period falls on a Sunday, a holiday as provided in
the Act on National Holidays (Act No. 178 of 1948), or any other holiday, only
when it is customary not to do business on the relevant day, the period expireson the immediately following day.
(Computation of Period with Reference to Calendar)
Article 143 (1) If a period is provided for in weeks, months, or years, the period
is calculated in accordance to the calendar.
(2) If a period does not commence at the beginning of the week, month, or year,that period expires on the day immediately preceding the day whichcorresponds to the commencement day in the last week, month or year;
provided, however, that if the period is provided for in months or years and thelast month does not contain a corresponding day, the period expires on the last23

day of that month.
Chapter VII Prescription
Section 1 General Provisions(Effect of Prescription)
Article 144 The prescription is retroactive to the commencement day.
(Invocation of Prescription)
Article 145 The court may not make a judicial decision relying on prescription
unless a party (in the case of extinctive prescription, including a guarantor,
third-party collateral provider, third party acquirer, or any other person with alegitimate interest in the extinction of a right) invokes it.
(Waiver of Benefits of Prescription)
Article 146 The benefits of the prescription may not be waived in advance.
(Postponement of Expiry of Prescription Period and Renewal of Prescription
Period on the Ground of Demand by Litigation)
Article 147 (1) If any of the following grounds exists, the period of prescription
does not expire until the ground ceases to exist (if the ground ceases to exist
while the right remains undetermined by a final and binding judgment oranything that has the same effect as a final and binding judgment, until six
months have passed from the time of cessation):(i) demand by litigation;(ii) demand for payment;(iii) settlement referred to in Article 275, paragraph (1) of the Code of Civil
Procedure or mediation under the Civil Conciliation Act (Act No. 222 of 1951)or the Domestic Relations Case Procedure Act (Act No. 52 of 2011); or(iv) participation in bankruptcy proceeding, rehabilitation proceeding or
reorganization proceeding.
(2) In the case referred to in the preceding paragraph, if a right is determined bya final and binding judgment or anything that has the same effect as a final
and binding judgment, a new period of prescription commences to run at thetime when the grounds set forth in the items of that paragraph cease to exist;(Postponement of Expiry of Prescription Period and Renewal of Prescription
Period on the Ground of Compulsory Execution)
Article 148 (1) If any of the following grounds exists, the prescription period
does not expire until those grounds cease to exist (or until six months after
those grounds cease to exist, if they cease to exist due to the withdrawal of a24

petition or the rescission of a petition for failure to comply with the provisionsof the law):(i) compulsory execution;(ii) enforcement of a security right;(iii) auction under the rules of an auction for the enforcement of a security
right prescribed in Article 195 of the Civil Execution Act (Act No. 4 of 1979);
or(iv) asset disclosure procedure prescribed in Article 196 of the Civil Execution
Act.
(2) In the case referred to in the preceding paragraph, a new period ofprescription commences to run at the time when the grounds set forth in theitems of that paragraph cease to exist; provided, however, that this does not
apply if the grounds cease to exist due to the withdrawal of a petition or the
rescission of a petition for the failure to comply with the provisions of the law.
(Postponement of Expiry of Prescription Period on the Ground of Provisional
Seizure)Article 149 If either of the following grounds exists, the prescription period does
not expire until six months have passed from the time when the ground ceases
to exist:(i) provisional seizure; or(ii) provisional disposition.
(Postponement of Expiry of Prescription Period on the Ground of Demand)
Article 150 (1) If a demand is made, the prescription period does not expire until
six months have passed since the time of the demand.
(2) A second demand made during the postponement of expiry of the prescription
period granted on the ground of the first demand does not have the effect of
postponement of expiry of prescription period under the provisions of thepreceding paragraph.
(Postponement of Expiry of Prescription Period on the Ground of Agreement on
Holding Discussion)
Article 151 (1) If an agreement on holding a discussion concerning a right ismade in writing, the prescription period does not expire until the earliest of thefollowing points in time:(i) when one year has passed from the time of the agreement;(ii) if the period during which the parties are to hold a discussion is specified
by the agreement (limited to a period less than one year): when that period
has expired; or(iii) if one of the parties notifies the other party in writing of refusal to25

continue the discussion: when six months have passed from the time of thenotice.
(2) If an agreement referred to in the preceding paragraph is made a second time
during the postponement of expiry of the prescription period granted pursuant
to the provisions of that paragraph, the second agreement has the effect of
postponement of expiry of prescription period under the provisions of thepreceding paragraph; provided, however, that the period of that effect may notexceed five years in total from the time when the prescription period shouldhave expired had the postponement of expiry of the prescription period notbeen granted.
(3) An agreement referred to in paragraph (1) which is made during the
postponement of expiry of the prescription period granted on the ground of ademand does not have the effect of postponement of expiry of prescription
period under the provisions of that paragraph. The same applies to a demand
made during the postponement of expiry of the prescription period granted
pursuant to the provisions of that paragraph.
(4) If an agreement referred to in paragraph (1) is made by means of anelectronic or magnetic record (meaning a record used in computerized
information processing which is created in electronic form, magnetic form, or
any other form that cannot be perceived by the human senses; the same applies
hereinafter), the agreement is deemed to have been made in writing and theprovisions of the preceding three paragraphs apply thereto.
(5) The provisions of the preceding paragraph apply mutatis mutandis to thenotice referred to in paragraph (1), item (iii).
(Renewal of Prescription Period on the Ground of Acknowledgment)
Article 152 (1) If a right is acknowledged, a new period of prescriptioncommences to run at the time of the acknowledgment.
(2) With respect to the disposition of the right of the other party, an
acknowledgment referred to in the preceding paragraph does not require
unlimited capacity to act or authority.
(Scope of Persons Affected by Postponement of Expiry of Prescription Period or
Renewal of Prescription Period)
Article 153 (1) The postponement of the expiry of prescription period or the
renewal of prescription period under the provisions of Article 147 or Article 148
is effective only between the parties with respect to whom grounds to postpone
the expiry of prescription period or to renew prescription period have arisen
and their successors.
(2) The postponement of expiry of prescription period under the provisions ofArticles 149 through 151 is effective only between the parties with respect to26

whom grounds to postpone the expiry of prescription period have arisen andtheir successors.
(3) The renewal of prescription period under the provisions of the preceding
Article is effective only between the parties with respect to whom grounds torenew prescription period have arisen and their successors.
Article 154 If the procedure regarding any of the grounds set forth in the itemsof Article 148, paragraph (1) or the items of Article 149 is not carried out inrelation to a person that is to receive the benefit of prescription, it does nothave an effect of postponement of expiry of prescription period or renewal ofprescription period under the provisions of Article 148 or Article 149 unless the
person is notified of it.
Articles 155 through 157 Deleted(Minor or Adult Ward and Postponement of Expiry of Prescription Period)
Article 158 (1) If a minor or an adult ward has no legal representative during
the period of six months preceding the expiration of the period of prescription,
the prescription period does not expire with respect to that minor or adultward until six months pass from the time when that minor or adult ward
becomes a person with a capacity to act, or a legal representative assumes the
position.
(2) If a minor or an adult ward has a right vis-a-vis the minor's or the adultward's father, mother, or guardian who manages the property, the prescription
period does not expire with respect to that right until six months have passed
from the time when that minor or adult ward becomes a person with capacity
to act, or a succeeding legal representative assumes the position.
(Postponement of Expiry of Prescription Period of Rights Between Husband
and Wife)
Article 159 With respect to rights which the husband or wife has vis-a-vis theother spouse, the prescription period does not expire until six months havepassed from the time of the dissolution of their marriage.
(Postponement of Expiry of Prescription Period Regarding Estate)
Article 160 With respect to an estate, the prescription period does not expire
until six months have passed from the time when the heir is identified, theadministrator is appointed, or commencement of bankruptcy proceeding isordered.
(Postponement of Expiry of Prescription Period Due to Natural Disaster)27

Article 161 If it is impossible to carry out the procedure regarding any of thegrounds set forth in the items of Article 147, paragraph (1) or the items of
Article 148, paragraph (1) upon the expiration of the period of prescription due
to a natural disaster or other unavoidable grave incident, the prescription
period does not expire until three months have passed from the time when that
impediment ceases to exist.
Section 2 Acquisitive Prescription(Acquisitive Prescription of Ownership)
Article 162 (1) A person that possesses the property of another for 20 years
peacefully and openly with the intention to own it acquires ownership thereof.
(2) A person that possesses the property of another for 10 years peacefully andopenly with an intention to own it acquires ownership thereof if the person was
acting in good faith and was not negligent at the time when the possession
started.
(Acquisitive Prescription of Property Rights Other Than Ownership)
Article 163 A person that exercises a property right other than ownershippeacefully and openly with the intention to do so on the person's own behalf
acquires that right after the passage of 20 years or 10 years, according to the
distinction provided for in the preceding Article.
(Renewal of Acquisitive Prescription Due to Discontinuation of Possession)
Article 164 The prescription under the provisions of Article 162 is renewed if thepossessor discontinues the possession voluntarily or is deprived of thatpossession by another person.
Article 165 The provisions of the preceding Article apply mutatis mutandis tothe case under Article 163.
Section 3 Extinctive Prescription(Extinctive Prescription of Claims)
Article 166 (1) A claim is extinguished by prescription in the following cases:(i) if the obligee does not exercise the right within five years from the time
when the obligee came to know that it was exercisable; or(ii) if the obligee does not exercise the right within 10 years from the time
when it became exercisable.
(2) A claim or property right other than ownership is extinguished byprescription if not exercised within 20 years from the time when the right28

became exercisable.
(3) The provisions of the preceding two paragraphs do not preclude thecommencement of acquisitive prescription for the benefit of a third party thatpossesses the subject matter of a right with a time of commencement or a rightsubject to a condition precedent, at the time of commencing the possession;
provided, however, that the holder of the right may demand acknowledgmentfrom the possessor at any time to renew the prescription period.
(Extinctive Prescription of Claim for Compensation for Loss or Damage
Resulting from Death or Injury to Person)
Article 167 To apply the provisions of paragraph (1), item (ii) of the preceding
Article to the extinctive prescription of a claim for damages arising from thedeath or injury to persons, the phrase "10 years" in that item is deemed to be
replaced with "20 years".
(Extinctive Prescription of Claims for Periodic Payments)
Article 168 (1) A claim for periodic payments is extinguished by prescription in
the following cases:(i) if the obligee does not exercise each claim for the delivery of things such as
money arising from the claim for periodic payments within 10 years from thetime when the obligee comes to know that each claim is exercisable; or(ii) if the obligee does not exercise each claim prescribed in the preceding item
within 20 years from the time when it becomes exercisable.
(2) The obligee of periodic payments may require its obligor at any time to issue awritten acknowledgment in order to acquire the evidence of the renewal of theprescription period.
(Extinctive Prescription of Right Determined by Judgment)
Article 169 (1) The period of prescription of a right determined by a final andbinding judgment or anything that has the same effect as a final and binding
judgment is 10 years even if a period of prescription shorter than 10 ye ars isprovided for.
(2) The provisions of the preceding paragraph do not apply to a claim which is
not yet due and payable at the time when it is determined.
Articles 170 through 174 Deleted
Part II Real Rights
Chapter I General Provisions(Establishment of Real Rights)
29

Article 175 No real right may be established other than those prescribed by laws
including this Code.
(Creation and Transfer of Real Rights)
Article 176 The creation and transfer of a real right becomes effective solely by
the manifestations of intention of the parties.
(Requirements of Perfection of Changes in Real Rights on Immovables)
Article 177 Acquisitions of, losses of and changes in real rights on immovables
may not be duly asserted against any third parties, unless the same areregistered pursuant to the applicable provisions of the Real Property
Registration Act (Act No. 123 of 2004) and other laws regarding registration.
(Requirements of Perfection of Transfer of Real Rights Concerning Movables)
Article 178 The transfer of a real right on movables may not be duly asserted
against a third party, unless the movables are delivered.
(Merger of Rights)
Article 179 (1) If ownership and another real right on the same thing are
acquired by the same person, the other real right is extinguished; provided,
however, that this does not apply if that thing or the other real right is theobject of the right of a third party.
(2) If a real right other than ownership and another right for which that real
right is the object are acquired by the same person, the other right is
extinguished. In this case, the provisions of the proviso to the preceding
paragraph apply mutatis mutandis.
(3) The provisions of the preceding two paragraphs do not apply to possessory
rights.
Chapter II Possessory Rights
Section 1 Acquisition of Possessory Rights(Acquisition of Possessory Rights)
Article 180 Possessory rights are acquired by possessing a thing with theintention to do so on one's own behalf.
(Possession through Agents)
Article 181 Possessory rights may be acquired through an agent.
(Actual Delivery and Summary Delivery)
Article 182 (1) The transfer of possessory rights is effected by the delivery of the30thing possessed.
(2) If a transferee or the agent of a transferee is actually holding the thing underpossession, the transfer of possessory rights may be effected by the parties'
manifestations of intention alone.
(Constructive Transfer with Retention of Possession)
Article 183 If an agent manifests the intention to thenceforward possess a thing
under the agent's own possession on behalf of the principal, the principal
thereby acquires the possessory rights.
(Transfer of Possession by Instruction)
Article 184 If a thing is possessed through an agent, the principal orders thatagent to thenceforward possess that thing on behalf of a third party, and thatthird party consents thereto, the third party acquires the possessory rights.
(Change in Nature of Possession)
Article 185 If it is assumed, due to the nature of the title, that a possessor does
not have the intention to own, the nature of the possessor's possession does notchange unless that possessor manifests the intention to own to the person that
put the thing under that person's possession, or commences possession under a
new title with an intention to own from that time.
(Presumption Regarding Nature of Possession)
Article 186 (1) A possessor is presumed to possess a thing with the intention toown, in good faith peacefully and openly.
(2) If there is evidence of possession at two different points in time, it ispresumed that possession continued during that interval.
(Succession to Possession)
Article 187 (1) A successor to a possessor may, as the successor chooses, assert
either the successor's own possession only, or the successor's own possession
together with that of the predecessor.
(2) If a person asserts the possession of the predecessor together with theperson's own, that person also succeeds to defects in the same.
Section 2 Effect of Possessory Rights(Presumption of Lawfulness of Rights Exercised with Respect to Possessed
Thing)
Article 188 The possessor is presumed to lawfully have the rights that apossessor exercises with respect to the thing under possession.
31

(Acquisition of Fruits by Possessor in Good Faith)
Article 189 (1) A possessor in good faith acquires fruits derived from the thing
under possession.
(2) If a possessor in good faith is defeated in an action on the title that legally
supports the possession, that possessor is deemed to be a possessor in bad faith
as from the time when the action is filed.
(Return of Fruits by Possessors in Bad Faith)
Article 190 (1) A possessor in bad faith has the obligation to return fruits, andreimburse the price of fruits that the possessor has already consumed,
damaged due to negligence, or failed to collect.
(2) The provisions of the preceding paragraph apply mutatis mutandis to aperson who takes possession of a thing through assault or duress or throughconcealment.
(Compensation for Loss or Damage by Possessors)
Article 191 If a possessed thing has been lost or damaged due to grounds
attributable to the possessor, a possessor in bad faith is liable to compensate
the person recovering the thing for the entire loss or damage, and a posses sor
in good faith is liable to compensate that person for the loss or damage to theextent currently enriched as a result of that loss or damage; provided, however,that a possessor that is without the intention to own the thing mustcompensate the person for the entire loss or damage, even if the possessor has
acted in good faith.
(Good Faith Acquisition)
Article 192 A person that commences the possession of movables peacefully andopenly by a transactional act acquires the rights that are exercised withrespect to the movables immediately if the person possesses it in good faith andwithout negligence.
(Recovery of Stolen or Lost Property)
Article 193 In the cases provided for in the preceding Article, if the possessedthing constitutes stolen or lost property, the victim or the person that lost thething may demand the return of that thing from the possessor within two years
from the time of the loss or theft.
Article 194 If a possessor has purchased stolen or lost property in good faith at
an auction, in a public market, or from a merchant that sells similar things,
the victim or the person that lost the thing may not recover the thing without32

reimbursing the possessor for the price paid.
(Acquisition of Rights through Possession of Animals)
Article 195 A person possessing a non-domestic animal bred by another person
acquires the rights to exercise with respect to that animal if the person
possessing it was acting in good faith at the beginning of the possession andthe owner of the animal does not demand its return from that person within
one month from the time when that animal left the possession of its owner.
(Possessors' Claims for Reimbursement of Expenses)
Article 196 (1) If a possessor returns a thing in the possession thereof, thepossessor may have the person recovering the thing reimburse the possessor
for the costs the possessor has paid for its preservation and other necessary
expenses; provided, however, that if the possessor has acquired fruits, ordinary
and necessary expenses are borne by the possessor.
(2) With respect to the costs paid for by a possessor to improve the thing in thepossession thereof and other beneficial expenses, the possessor may have theperson recovering the thing reimburse the possessor for either the costs thepossessor has paid or the amount of the increased value, whichever the person
recovering the thing chooses, but only if there is a current increase in value;
provided, however, that with regard to a possessor in bad faith, the court may,at the request of the person recovering the thing, grant a reasonable period oftime for the same.
(Possessory Actions)
Article 197 A possessor may file a possessory action in accordance with theprovisions of the following Article through Article 202. The same applies to aperson that takes possession on behalf of another person.
(Actions for Maintenance of Possession)
Article 198 If a possessor is obstructed from possession, the possessor may claim
for the discontinuation of the obstruction and compensation for loss or damage
by filing an action for maintenance of possession.
(Actions for Preservation of Possession)
Article 199 If a possessor is likely to be obstructed from possession, thepossessor may demand either the prevention of the obstruction or for thesubmission of security for the compensation for loss or damage by filing anaction for preservation of possession.
(Actions for Recovery of Possession)
33

Article 200 (1) If a possessor is forcibly dispossessed, the possessor may demand
the restitution of the thing and compensation for loss or damage by filing anaction for recovery of possession.
(2) An action for recovery of possession may not be filed against a specificsuccessor of a person that forcibly takes possession; provided, however, that
this does not apply if that successor had knowledge of the fact that the person
has unlawfully taken the possession.
(Periods of Time for Filing Possessory Actions)
Article 201 (1) An action for maintenance of possession must be filed during theobstruction or within one year after the obstruction stops; provided, however,that if the possessed thing has been damaged due to construction work andeither one year has passed from the time when the construction was started or
the construction has been completed, the action may not be filed.
(2) An action for preservation of possession may be filed so long as the danger ofobstruction exists. In this case, the provisions of the proviso to the preceding
paragraph apply mutatis mutandis if the possessed thing is likely to bedamaged by the construction work.
(3) An action for recovery of possession must be filed within one year from thetime when a possessor was forcibly dispossessed.
(Relationship with Actions on Title)
Article 202 (1) A possessory action does not preclude an action on title thatlegally supports the possession, and an action on title does not preclude a
possessory action.
(2) With respect to possessory actions, no judicial decision may be made on
grounds relating to title that legally supports the possession.
Section 3 Extinction of Possessory Rights(Grounds for Extinction of Possessory Rights)
Article 203 Possessory rights are extinguished when the possessor renounces theintention to possess, or loses possession of the possessed thing; provide d,
however, that this does not apply if the possessor files an action for recovery of
possession.
(Grounds for Extinction of Agent's Possessory Rights)
Article 204 (1) If a person possesses a thing through an agent, possessory rights
are extinguished on the grounds set forth below:(i) renunciation by the principal of intention to have agent possess;(ii) manifestation of intention to the principal of an agent to hold the thing34

possessed on behalf of the agent itself or a third party; or(iii) the agent has ceased to hold the thing possessed.
(2) Possessory rights are not extinguished solely as a result of the extinction of
the authority to represent.
Section 4 Quasi-Possession
Article 205 The provisions of this Chapter apply mutatis mut andis if a person
exercises their property rights with the intention to do so on their own behalf.
Chapter III Ownership
Section 1 Extent of Ownership
Subsection 1 Content and Scope of Ownership(Content of Ownership)
Article 206 An owner has the rights to freely use, profit from and dispose of thething owned, within the limits of laws and regulations.
(Scope of Ownership in Land)
Article 207 Ownership in land extends to above and below the surface of theland, within the limits of laws and regulations.
Article 208 Deleted
Subsection 2 Neighboring Relationships(Requests for Use of Neighboring Land)
Article 209 (1) An owner of land may request the use of the neighboring land to
the extent necessary for constructing or repairing walls or buil dings on or in
the vicinity of the boundary; provided, however, that the owner may not enter
the dwelling house of the neighbor without the approval of the same.
(2) In the case referred to in the preceding paragraph, if the neighbor sustained
damage, the neighbor may claim compensation.
(Right-of-Way over Other Land for Access to Public Roads)
Article 210 (1) An owner of land that is surrounded by other land and has noaccess to a public road may pass through the other land that surrounds thatowner's land to reach a public road.
(2) The preceding paragraph also applies if an owner cannot reach a public roadwithout passing over a pond, lake, river, waterway, or sea, or if there is anextreme difference in height between the land and the public road on account35

of a cliff.
Article 211 (1) In the cases referred to in the preceding Article, the location andmethod of passage must be chosen so as to meet the needs of the person that isentitled to the right-of-way under the provisions of that Article and cause theleast damage to the other land.
(2) A person that holds the right-of-way under the provisions of the preceding
Article may construct a road if necessary.
Article 212 A person that is entitled to the right-of-way under the provisions ofArticle 210 must pay compensation for damage caused to the other land thatthe same person passes through; provided, however, that except for damage
arising from the construction of a road, compensation may be paid on anannual basis.
Article 213 (1) If the partition of land creates a parcel of land that has no accessto public roads, the owner of that parcel of land may pass to the public roads
only through the lands owned by another person that participated in thepartition. In this case, it is necessary to pay compensation.
(2) The provisions of the preceding paragraph apply mutatis mutandis if theowner of land transfers part of the land to another person.
(Prohibition of Obstruction of Natural Water Streams)
Article 214 A landowner may not interfere with a natural water stream flowing
from a neighboring land.
(Removal of Impediments to Water Streams)
Article 215 If a stream is blocked at low-lying ground due to a natural disasteror other unavoidable grave incident, an owner of a higher land may car ry out
construction work necessary to remove the impediment to the stream at thatowner's own expense.
(Repairs of Structures Related to Streams)
Article 216 If a land suffers or is likely to suffer damage due to destruction or
blockage of a structure installed on other land to store, discharge or draw
water, the owner of that land may have the owner of that other land repair the
structure or remove the impediments, or, if necessary, have the same carry out
preventive construction work.
(Customs with Respect to Allocation of Expenses)
Article 217 In the cases provided for in the preceding two Articles, if there are36other customs with respect to the allocation of expenses, those customs prevail.
(Prohibition of Installation of Structures That Discharge Rainwater to
Neighboring Lands)
Article 218 A landowner may not install a roof or other structures that discharge
rainwater directly onto neighboring land.
(Changes to Streams)
Article 219 (1) An owner of a channel, moat, or other such land containing a
stream may not change the course or width of the same if the land on the otherside is owned by another person.
(2) If the land on both sides of a stream is owned by the owner of the land
containing the stream, that owner may change the course or the width of thesame; provided, however, that the owner must return the stream to its natural
course at the point where the stream meets a neighboring land.
(3) If there are customs that differ from the provisions of the preceding two
paragraphs, those customs prevail.
(Running Water through Lower Ground for Discharge)
Article 220 An owner of a higher land may run water through lower lands to dry
out that owner's higher land if that land is flooded, or to discharge surplus
water for household or agricultural or industrial use until the water meets apublic stream or sewerage system. In these cases, the location and method thatcause the least damage to the lower ground must be selected.
(Use of Structures to Direct Water)
Article 221 (1) A landowner may use a structure installed by the owner of higher
or lower land in order to cause water from the landowner's land to passthrough that land.
(2) In the cases referred to in the preceding paragraph, the person using theother person's structure must bear the expenses of the installation andpreservation of the structure in proportion to the benefit that person enjoys.
(Construction and Use of Dams)
Article 222 (1) If an owner of land containing a stream needs to construct a dam,that owner may construct that dam by fixing it to the other side even if theland on the other side is owned by another person; provided, however, that theowner must pay compensation for damage arising as a result.
(2) The owner of land on the other side of a dam may use the dam referred to in
the preceding paragraph if that owner owns part of the land containing thestream.
37

(3) The provisions of paragraph (2) of the preceding Article apply mutatis
mutandis to the cases referred to in the preceding paragraph.
(Installation of Boundary Markers)
Article 223 A landowner may install boundary markers, sharing the expenses
with the owner of the neighboring land.
(Expenses of Installation and Preservation of Boundary Markers)
Article 224 The expenses of installation and preservation of boundary markers
are borne equally by neighbors; provided, however, that measuring expenses
are borne in proportion to the area of each land.
(Installation of Fences)
Article 225 (1) If two buildings are owned by different owners and there is an
open lot between them, each owner may install a fence on the boundary,sharing the expenses with the other owner.
(2) If no agreement is reached between the parties, the fence referred to in thepreceding paragraph must be a wooden fence, a bamboo fence or a fence madeof similar material and must be two meters high.
(Expenses of Installation and Preservation of Fences)
Article 226 The expenses of installation and preservation of the fences under thepreceding Article are borne equally by the neighbors.
(Installation of Fences by One of Neighbors)
Article 227 One of neighboring owners may install a fence using materials better
than those provided for in Article 225, paragraph (2) or elevating the heightprovided for under that paragraph; provided, however, that the relevant ownermust bear the increase in expenses arising as a result of the same.
(Customs Relating to Installation of Fences)
Article 228 If there are customs that differ from the provisions of the preceding
three Articles, those customs prevail.
(Presumption of Co-Ownership of Boundary Markers)
Article 229 Boundary markers, fences, walls, channels and moats installed onboundary lines are presumed to be co-owned by the neighbors.
Article 230 (1) The provisions of the preceding Article do not apply to a wall on aboundary line that constitutes part of a building.
(2) If the height of a wall that separates two neighboring buildings of different
38heights is higher than the height of the lower building, the preceding
paragraph also applies with respect to that portion of that wall that is higher
than the lower building; provided, however, that this does not apply to firewalls.
(Construction Work Raising Height of Co-Owned Walls)
Article 231 (1) One of neighboring owners may raise the height of a co-owned
wall; provided, however, that if the wall cannot withstand the construction
work, the relevant owner must reinforce that wall as necessary or rebuild thesame at the owner's own expense.
(2) If the height of a wall is raised pursuant to the provisions of the preceding
paragraph, the raised portion is owned solely by the owner that carried out theconstruction work.
Article 232 In the cases provided for in the preceding Article, if a neighborsuffers damage, that neighbor may claim compensation for the same.
(Cutting of Branches and Roots of Trees and Bamboo)
Article 233 (1) If a tree or bamboo branch from neighboring land crosses aboundary line, the landowner may have the owner of that tree or bamboo severthat branch.
(2) If a tree or bamboo root from neighboring land crosses a boundary line, theowner of the land may sever that root.
(Restrictions on Buildings Near Boundary Lines)
Article 234 (1) In order to construct a building, the building must be distanced
50 centimeters or more away from the boundary line.
(2) If a person attempts to construct a building in violation of the provisions of
the preceding paragraph, the owner of the neighboring land may have theconstruction suspended or changed; provided, however, that if one year passes
from the time when that construction started or if that building is completed,the owner may only claim compensation for loss or damage.
Article 235 (1) A person that installs a window or porch (hereinafter in this andthe following paragraph including a veranda) at a distance of less than one
meter from a boundary line allowing the observation of the residential land ofanother person must put up a privacy screen.
(2) The distance referred to in the preceding paragraph is calculated bymeasuring the length of a straight line from the point on the window or porchclosest to the neighboring land, to where it reaches the boundary line at a rightangle.
39

(Customs Relating to Construction Near Boundary Lines)
Article 236 If there are customs that differ from the provisions of the preceding
two Articles, those customs prevail.
(Restrictions on Digging Near Boundary Lines)
Article 237 (1) In order to dig a well, service water pit, sewage pit or compost pit,
the same must be distanced two or more meters from the boundary line, and inorder to dig a pond, cellar or human waste pit, the same must be distanced one
or more meters from the boundary line.
(2) In order to bury water pipes, or dig a channel or moat, the same must be
distanced from the boundary line by a measurement equivalent to at least half
the depth of the same; provided, however, that the distance is not required to
be exceeding one meter.
(Duty of Care Regarding Digging Near Boundary Lines)
Article 238 When carrying out a construction referred to in the preceding Article
near a boundary line, necessary care must be taken to ensure the prevention ofearth collapses or leakages of water or contaminated liquids.
Section 2 Acquisition of Ownership(Ownership in Ownerless Property)
Article 239 (1) Ownership of movables without an owner are acquired bypossessing the same with the intention to own.
(2) Ownerless immovables belong to the National Treasury.
(Finding of Lost Property)
Article 240 If the owner of lost property is not identified within three months ofthe time when public notice thereof is effected as prescribed by the Lost
Property Act (Act No. 73 of 2006), the person who found the lost property
acquires ownership of the same.
(Discovery of Buried Things)
Article 241 If the owner of a buried thing is not identified within six months ofthe time when public notice thereof is effected as prescribed by the Lost
Property Act, the finder acquires ownership of the same; provided, however,that with respect to a buried thing discovered inside a thing that belongs toanother person, the finder and that other person acquire equally proportionate
ownership of that buried thing.

40

(Accession to Immovables)
Article 242 The owner of immovables acquires ownership of a thi ng that has
been attached thereto as its appurtenance; provided, however, that the rightsof the other person that attached that thing by virtue of a title are notprejudiced.
(Accession to Movables)
Article 243 If two or more movable properties with different owners can nolonger be separated without damage due to accession, the ownership of thecomposite thing belongs to the owner of the principal movable property. The
same applies if excessive expense is required to separate the movables.
Article 244 If the distinction of principal and accessory cannot be made between
the movables united by accession, the owner of each movable property co -owns
the composite thing in proportion to the respective price current at the time of
the accession.
(Mixture)
Article 245 The provisions of the preceding two Articles apply mutatis mutandis
if the things of different owners are mixed together and can no longer bedistinguished.
(Processing)
Article 246 (1) If a person (hereinafter in this Article referred to as "processor")
adds labor to another person's movables, the ownership of the processed thing
belongs to the owner of the material; provided, however, that if the value
derived from the work significantly exceeds the value of the material, t heprocessor acquires ownership of the processed thing.
(2) In the cases prescribed in the preceding paragraph, if the processor provides a
portion of the materials, the processor acquires ownership of the processedthing only if the value of provided materials added to the value derived fromthe labor exceeds the value of the other person's materials.
(Effect of Accession, Mixture or Processing)
Article 247 (1) If the ownership of a thing is extinguished pursuant to theprovisions of Article 242 through the preceding Article, other rights existing onthat thing are also extinguished.
(2) In the cases prescribed in the preceding paragraph, if the owner of a thinghas become the sole owner of the thing formed by accession or appurtenance,
mixture or processing (hereinafter in this paragraph referred to as "composite
thing"), other rights existing on that thing thereafter exist on the composite
41

thing, and if the owner of the thing becomes a co-owner of the composite thing,other rights existing on that thing thereafter exist on that owner's interest in
the same.
(Demands for Compensation for Accession, Appurtenance, Mixture orProcessing)
Article 248 A person that suffers loss because of the application of the provisionsof Article 242 through the preceding Article may demand compensation inaccordance with the provisions of Article 703 and Article 704.
Section 3 Co-Ownership(Use of Property in Co-Ownership)
Article 249 Each co-owner may use the entire property in co-ownership in
proportion to each co-owner's interest.
(Presumption of Proportion of Co-Ownership Interests)
Article 250 Each co-owner's interest is presumed to be equal.
(Changes to Property in Co-Ownership)
Article 251 No co-owner may make any alteration to the property in coownership without the consent of the other co-owners.
(Management of Property in Co-Ownership)
Article 252 The particulars of the management of property in co-ownership aredetermined by a majority according to the value of the interests of the co owners, except for cases provided for in the preceding Article; provided,
however, that any of the co-owners may perform acts of preservation alone.
(Obligations to Bear Burdens Regarding Property in Co-Ownership)
Article 253 (1) Each co-owner pays the expenses of management and bears
burdens regarding the property in co-ownership, in proportion to each coowner's interest.
(2) If a co-owner does not perform the obligations referred to in the preceding
paragraph within one year, other co-owners may acquire that co-owner's
interest by paying a reasonable compensation.
(Claims on Property in Co-Ownership)
Article 254 A claim that one of the co-owners holds against other co-owners withrespect to the property in co-ownership may be exercised against their specificsuccessors.
42

(Waiver of Interests and Death of Co-Owners)
Article 255 If one of co-owners waives interest or dies without an heir, thewaived interest belongs to the other co-owners.
(Demands for Partition of Property in Co-Ownership)
Article 256 (1) Each co-owner may demand the partition of property in coownership at any time; provided, however, that this does not preclude
concluding a contract agreeing not to partition that property for a period notexceeding five years.
(2) The contract under the proviso to the preceding paragraph may be renewed;
provided, however, that the period thereof may not exceed five years from thetime of the renewal.
Article 257 The provisions of the preceding Article do not apply to the property
in co-ownership provided for in Article 229.
(Partition of Property in Co-Ownership by Judicial Decision)
Article 258 (1) If no agreement is reached among co-owners with respect to thepartition of property in co-ownership, a request for partition of the same may
be submitted to the court.
(2) In cases referred to in the preceding paragraph, if the property in co ownership cannot be partitioned in kind, or it is likely that the value thereof
will be significantly reduced by the partition, the court may order the sale ofthe same at auction.
(Payment of Claims Regarding Co-Ownership)
Article 259 (1) If one of the co-owners holds a claim regarding co-ownershipagainst other co-owners, upon partition, the portion of the property in coownership that belongs to the obligor may be appropriated for the payment of
the same.
(2) If it is necessary to sell the portion of the property in co-ownership thatbelongs to the obligor to obtain the payment referred to in the preceding
paragraph, the obligee may demand the sale of the same.
(Participation in Partition of Property in Co-Ownership)
Article 260 (1) A person that holds a right with respect to property in co ownership and a creditor of any of the co-owners may participate in partitions
at their own expense.
(2) If, notwithstanding a request for participation under the provisions of thepreceding paragraph, partition is effected without allowing the participation of43

the person that submitted the request, that partition may not be duly asserted
against the person that submitted the request.
(Co-Owners' Warranties upon Partitions)
Article 261 Each co-owner provides the same warranty as that of a seller inproportion to each co-owner's interest, with regards to the thing other coowners have acquired by the partition.
(Instruments Regarding Property in Co-Ownership)
Article 262 (1) When a partition is completed, each of the persons thatparticipated in the partition must retain the instruments regarding things
each of them acquired.
(2) Instruments regarding a thing that is partitioned for some or all co-owners
must be retained by the person that acquired the largest portion of that thing.
(3) In the cases referred to in the preceding paragraph, if no person acquired thelargest portion, the person that is to retain the instruments is determined byagreement among the persons that participated in the partition. If noagreement is reached, the court designates the same.
(4) A person that is to retain instruments must allow other persons thatparticipated in the partition to use the instruments at the request of the same.
(Rights of Common with Nature of Co-Ownership)
Article 263 Rights of common that have the nature of co-ownership are governed
by local customs and are otherwise subject to the application of the provisionsof this Section.
(Quasi-Co-Ownership)
Article 264 The provisions of this Section apply mutatis mutandis if two or more
persons share property rights other than ownership; provided, however, that
this does not apply if otherwise provided by laws and regulations.
Chapter IV Superficies(Content of Superficies)
Article 265 A superficiary has the right to use another person's land in order toown structures, or trees or bamboo, on that land.
(Rents)
Article 266 (1) The provisions of Articles 274 through 276 apply m utatis
mutandis if the superficiary must pay periodical rent to the owners of the land.
(2) Beyond what is provided for in the preceding paragraph, provisions on
44

leasehold apply mutatis mutandis to rent to the extent that application is notinconsistent with the nature of the same.
(Mutatis Mutandis Application of Provisions Regarding Neighboring
Relationships)
Article 267 The provisions of Section 1, Subsection 2 of the preceding Chapter(Neighboring Relationships) apply mutatis mutandis between superficiaries or
between a superficiary and a landowner; provided, however, that the mutatis
mutandis application of the provisions of Article 229 to superficiaries is limited
to when structures on the boundary line are installed after the establishmentof the superficies.
(Duration of Superficies)
Article 268 (1) If the duration of superficies is not fixed by the act that
established the same and there are no relevant customs, the superficiary may
waive that right at any time; provided, however, that if rent must be paid, thesuperficiary must give notice one year or more in advance or pay rent for one
year that has not yet become due and payable.
(2) If the superficiary does not waive that right pursuant to the provisions of thepreceding paragraph, the court may, at the request of the parties concerned, fix
a duration of 20 years or more but not more than 50 years, taking into
consideration the kind and status of the structures, or trees or bamboo andother circumstances at the time of the creation of the superficies.
(Removal of Structures)
Article 269 (1) When the right of the superficiary is extinguished, thesuperficiary may restore the land to its original state and remove structures
and trees or bamboo on the same; provided, however, that if the owner of theland gives notice that the owner will purchase the same by offering to pay anamount equivalent to the market value, the superficiary may not refuse thatoffer without reasonable grounds.
(2) If there are customs that differ from the provisions of the preceding
paragraph, those customs prevail.
(Superficies for Underground or Airspace)
Article 269-2 (1) An underground space or airspace may be established as the
subject matter of superficies for ownership of structures, through thespecification of upper and lower extents. In such a case, restrictions on the useof that land may be added in the act that establishes superficies for the
purpose of facilitating the exercise of the superficies.
(2) The superficies referred to in the preceding paragraph may be established45

even if third parties hold the rights to use or profit from the land provided thatall persons holding those rights or rights on them give their consent. In such acase, persons that hold the rights to use or profit from the land cannot preventthe exercise of the superficies to the same.
Chapter V Farming Rights(Content of Farming Rights)
Article 270 A farming right holder has the right to pay rent and engage incultivation or livestock farming on another person's land.
(Limitations on Alterations to Land by Farming Right Holders)
Article 271 A farming right holder may not make any alteration of the land that
results in irreparable damage.
(Assignment of Farming Rights or Leasing of Land)
Article 272 A farming right holder may assign the holder's right to anotherperson or lease the land during the duration of the right to cultivate or farm
livestock; provided, however, that this does not apply if those acts areprohibited by the act that established that right.
(Mutatis Mutandis Application of Provisions Regarding Lease)
Article 273 Beyond what is provided for in this Chapter and those provided forin the act of establishment, provisions regarding lease apply mutatis mutandis
to the obligations of a farming right holder, to the extent that application is notinconsistent with the nature of the same.
(Rent Reductions or Releases)
Article 274 A farming right holder may not demand release from or reduction in
the rent even if there is a loss of profits due to force majeure.
(Waiver of Farming Rights)
Article 275 If a farming right holder has gained no profit whatsoever for three ormore consecutive years or has gained profits less than the rent for five or moreconsecutive years due to force majeure, that holder may surrender waive thatright.
(Demand for Extinction of Farming Rights)
Article 276 If a farming right holder fails to pay the rent for two or moreconsecutive years, the landowner may demand the extinction of the farming
right.
46

(Customs Regarding Farming Rights)
Article 277 If there are customs that differ from the provisions of Article 271
through the preceding Article, those customs prevail.
(Duration of Farming Rights)
Article 278 (1) The duration of a farming right is 20 years or more and 50 year sor less. Even if an act of establishment provides for a period longer than 50
years, the duration is 50 years.
(2) The establishment of farming right may be renewed; provided, however, thatthe duration of that right may not exceed 50 years from the time of renewal.
(3) If an act of establishment does not provide for the duration of the farming
right, the duration of that right is 30 years unless there are other customs to
the contrary.
(Removal of Structures)
Article 279 The provisions of Article 269 apply mutatis mutandis to farming
rights.
Chapter VI Servitudes(Content of Servitudes)
Article 280 A servitude holder has the right to use another person's land for theconvenience of their own lands in accordance with purposes prescribed in theact establishing the servitude; provided, however, that this right must not
violate the provisions (limited to those that relate to public policy) under
Section 1 of Chapter 3 (Extent of Ownership).
(Accessoriness of Servitudes)
Article 281 (1) Servitudes are transferred together with the ownership in thedominant land (meaning the land of a servitude holder, enjoying benefits fromanother person's land; the same applies hereinafter) as appurtenances thereof,
and are subject of other rights that exist in relation to the dominant land;
provided, however, that this does not apply if the act establishing the servitude
provides otherwise.
(2) Servitudes may neither be transferred nor made the subject of other rights
apart from the dominant land.
(Indivisibility of Servitudes)
Article 282 (1) One of the co-owners of land may not terminate, with respect tothat owner's own interest, a servitude that exists on behalf of or in relation to47

the land.
(2) If the land is partitioned or a portion thereof is transferred to another person,
the servitude exists on behalf of or in relation to the respective portions of thesame; provided, however, that this does not apply if the servitude, by its nature,
relates only to a portion of the land.
(Acquisition of Servitudes by Prescription)
Article 283 A servitude may be acquired by prescription so long as it iscontinuously exercised and can be externally recognized.
Article 284 (1) If one of the co-owners of land acquires a servitude byprescription, the other co-owners also acquire the same servitude.
(2) Renewal of prescription period does not become effective against co -owners
unless it is made against each co-owner that exercises the servitude.
(3) If there are two or more co-owners that exercise a servitude, even if there isany ground for postponement of expiry of prescription period with respect toone of them, the prescription runs in favor of each co-owner.
(Servitude for Water Use)
Article 285 (1) If water on servient land (meaning a land of a person oth er than
the servitude holder, made available for the benefit of the dominant land; thesame applies hereinafter) subject to a servitude for water use is insufficient forthe demand of the dominant land and the servient land, the water is to be usedin proportion to the demand on each parcel of land, firstly for household
purposes with the remaining portion used for other purposes; provided,
however, that this does not apply if the act establishing the servitude provides
otherwise.
(2) If more than one servitude for water use is created with respect to the same
servient land, the subsequent servitude holders may not prevent the use ofwater by the previous servitude holders.
(Obligations of Owners of Servient Land to Install Structures)
Article 286 If the owner of servient land has borne obligations to install or
repair structures for the exercise of a servitude at that owner's own expense by
the act establishing the servitude or by a contract concluded after theestablishment, specific successors of the owner of the servient land also bearthose obligations.
Article 287 An owner of servient land may be exempted from obligations of thepreceding Article at any time by abandoning the ownership in the portion of
the land necessary for the servitude and transferring the same to the servitude
48

holder.
(Use of Structures by the Owner of Servient Lands)
Article 288 (1) The owner of a servient land may use structures installed on theservient land for the exercise of the servitude to the extent the use does not
obstruct the exercise of that servitude.
(2) In the cases referred to in the preceding paragraph, the owner of the servient
land must bear the expense for the installation and preservation of thestructures in proportion to the benefit that owner receives.
(Extinction of Servitude by Acquisition by Prescription of Servient Lands)
Article 289 If a possessor of servient land has possessed that land in conformity
with the necessary requirements for acquisitive prescription, the servitude isextinguished thereby.
Article 290 The extinctive prescription under the preceding Article is renewed by
the servitude holder exercising the relevant rights.
(Extinctive Prescription of Servitudes)
Article 291 The period of the extinctive prescription provided for in Article 166,
paragraph (2) commences upon the final exercise of the servitude if theservitude is not exercised continuously, and upon the occurrence of a fact thatprevents the exercise of the servitude if the servitude is exercised continu ously.
Article 292 If dominant land is co-owned by more than one person, and expiry ofprescription period is postponed or prescription period is renewed in favor of
one co-owner, the postponement of expiry of prescription period or the renewalof prescription period is also effective for the benefit of other co-owners.
Article 293 If a servitude holder does not exercise a portion of that holder's
rights, only that portion is extinguished by prescription.
(Rights of Common without the Nature of Co-Ownership)
Article 294 Rights of common that do not have the nature of co-ownership aregoverned by local customs and are otherwise subject to the mutatis mutandis
application of the provisions of this Chapter.
Chapter VII Rights of Retention(Content of Rights of Retention)
Article 295 (1) If a possessor of a thing belonging to another person has a claim
49

that has arisen in relation to that thing, that possessor may retain that thing
until that claim is satisfied; provided, however, that this does not apply if therelevant claim has not yet fallen due.
(2) The provisions of the preceding paragraph do not apply if possessioncommenced by means of a tortious act.
(Indivisibility of Rights of Retention)
Article 296 A holder of a right of retention may exercise that holder's rights
against the whole of the thing retained until the relevant claim is satisfied inits entirety.
(Collection of Fruits by Holders of Rights of Retention)
Article 297 (1) A holder of a right of retention may collect fruits derived fro m thething retained, and appropriate the same to the satisfaction of that holder'sown claim before other obligees.
(2) The fruits referred to in the preceding paragraph must be appropriated firstto the payment of interest on the claim, and any remainder must be
appropriated to the satisfaction of the principal.
(Custody of Thing Retained by Holders of Rights of Retention)
Article 298 (1) The holder of a right of retention must possess the thing retainedwith the due care of a prudent manager.
(2) The holder of the right of retention may not use, lease or provide as a security
the thing retained unless that holder obtains the consent of the obligor;
provided, however, that this does not apply to uses necessary for thepreservation of that thing.
(3) If the holder of a right of retention violates the provisions of the preceding
two paragraphs, the obligor may demand that the right of retention beterminated.
(Demands for Reimbursement of Expenses by Holders of Rights of Retention)
Article 299 (1) If the holder of a right of retention incurs necessary expenses
with respect to the thing retained, that holder may have the owner reimburse
the same.
(2) If the holder of a right of retention incurs beneficial expenses with respect tothe thing retained, to the extent that there is currently an increase in value asa result of the same, that holder may have the expenses incurred or theincrease in value reimbursed at the owner's choice; provided, however, that the
court may, at the request of the owner, grant a reasonable period of time forthe reimbursement of the same.

50

(Exercise of Rights of Retention and Extinctive Prescription of Claims)
Article 300 The exercise of a right of retention does not preclude the running of
extinctive prescription of claims.
(Extinction of Rights of Retention by Provision of Security)
Article 301 An obligor may demand that a right of retention be terminated byproviding a reasonable security.
(Extinction of Rights of Retention by Loss of Possession)
Article 302 A right of retention is extinguished if the holder of the right ofretention loses possession of the thing retained; provided, however, that thisdoes not apply if the thing retained is leased or it is made the subject of apledge pursuant to the provisions of Article 298, paragraph (2).
Chapter VIII Statutory Liens
Section 1 General Provisions(Content of Statutory Liens)
Article 303 The holder of a statutory lien has the rights to have that holder'sown claim satisfied prior to other obligees out of the assets of the relevant
obligor in accordance with the provisions of laws including this Act.
(Extension of Security Interest to Proceeds of Collateral)
Article 304 (1) A statutory lien may also be exercised against things including
monies that the obligor is to receive as a result of the sale, lease or loss of, or
damage to, the subject matter of the statutory lien; provided, however, that theholder of the statutory lien must attach the same before the payment ordelivery of the monies or other thing.
(2) The provisions of the preceding paragraph also apply to the consideration forreal rights created by the obligor on the subject matter of the statutory lien.
(Indivisibility of Statutory Liens)
Article 305 The provisions of Article 296 apply mutatis mutandis to statutory
liens.
Section 2 Kinds of Statutory Liens
Subsection 1 General Statutory Lien
(General Statutory Lien)
Article 306 A person that has a claim arising from the causes set forth below has
a statutory lien over the entire assets of the obligor:
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(i) expenses for the common benefit;(ii) an employer-employee relationship;(iii) funeral expenses; or(iv) the supply of daily necessaries.
(Statutory Liens for Expenses for Common Benefit)
Article 307 (1) Statutory liens for expenses for the common benefit exist withrespect to the expenses of preservation, liquidation or distribution of the assetsof the obligor incurred for the common benefit of all obligees.
(2) With respect to expenses referred to in the preceding paragraph that were n ot
beneficial for all obligees, the statutory lien exists solely in relation to obligeesthat benefited from those expenses.
(Statutory Liens for Employer-Employee Relationships)
Article 308 Statutory liens for employer-employee relationships exist withrespect to salaries and other claims that arise from the employer-employee
relationship between the obligor and the employee.
(Statutory Liens for Funeral Expenses)
Article 309 (1) Statutory liens for funeral expenses exist with respect to thereasonable expenses of a funeral held for the obligor.
(2) The statutory lien referred to in the preceding paragraph also exists withrespect to the reasonable expenses of a funeral held by the obligor for a relative
whom the obligor is bound to support.
(Statutory Liens for Daily Necessaries)
Article 310 Statutory liens for daily necessaries exist with respect to the supplyof food and drink items, fuel and electricity for the most recent six months
required for the household of the obligor or cohabiting relatives whom theobligor is bound to support and the domestic servants of the same.
Subsection 2 Statutory Liens over Movables(Statutory Liens over Movables)
Article 311 A person that has a claim arising from the causes set forth below has
a statutory lien against specific movables of the obligor:(i) a lease of immovables;(ii) a lodging at a hotel;(iii) the transportation of passengers or luggage;(iv) the preservation of movables;(v) the sale of movables;52

(vi) the supply of seeds and seedlings or fertilizer (including eggs of silkworms
or mulberry leaves provided to feed silkworms; the same applies hereinafter);(vii) agricultural labor; or(viii) industrial labor.
(Statutory Liens for Leases of Immovables)
Article 312 Statutory liens for a lease of immovables exist against the movablesof the lessee in connection with the rent of the relevant immovables and otherobligations of the lessee that arise from that lease relationship.
(Scope of Subject Matter of Statutory Liens for Leases of Immovables)
Article 313 (1) The statutory lien of a lessor of land exists against movables
furnished to that land or buildings for the use of that land, movables provided
for the use of that land, and fruits of that land in the possession of the lessee.
(2) The statutory lien of a lessor of a building exists against movables furnishedto that building by the lessee.
Article 314 In the case of an assignment of lease or subleasing, the statutory
lien of the lessor extends to the movables of the assignee or sublessee. The
same applies to monies that the assignor or sublessor is to receive.
(Scope of Secured Claims under Statutory Liens for Leases of Immovables)
Article 315 When all of the lessee's assets are to be liquidated, the statutory lienof the lessor exists only with respect to the rent and other obligations for theprevious, current and next terms, and obligations to compensate for loss ordamage that arise in the previous and current terms.
Article 316 If a lessor has received a security deposit prescribed in Article 622-2,
paragraph (1), the lessor has a statutory lien solely against the portion of thelessor's claim that will not be satisfied by that security deposit.
(Statutory Liens for Lodging at Hotels)
Article 317 Statutory lien for lodging at hotels exist against the hand luggage ofa hotel guest left at that hotel, in connection with room charges, and food andbeverage charges, that should be borne by the hotel guest.
(Statutory Liens for Transportation)
Article 318 Statutory liens for transportation exist against luggage in thepossession of the carrier, in connection with transportation charges forpassengers or freight charges for luggage and expenses incidental to the same.

53

(Mutatis Mutandis Application of Provisions on Good Faith Acquisition)
Article 319 The provisions of Articles 192 through 195 apply mutatis mutandis
to statutory liens under the provisions of Article 312 through the preceding
Article.
(Statutory Liens for Preservation of Movables)
Article 320 Statutory liens for the preservation of movables exist against
movables, in connection with expenses required for the preservation of those
movables, or expenses required for the preservation, approval or enforcementof rights regarding those movables.
(Statutory Liens for Sale of Movables)
Article 321 Statutory liens for the sale of movables exist against movables, inconnection with the price of those movables and interest on the same.
(Statutory Liens for Supply of Seeds and Seedlings or Fertilizer)
Article 322 Statutory liens for the supply of seeds and seedlings or fertilizer
exist against fruits (including eggs of silk worms or any thing derived from theuse of mulberry leaves provided to feed silkworms) derived from land where
the seeds and seedlings or fertilizer were used, within one year of that use, inconnection with the price of those seeds and seedlings or fertilizer and intereston the same.
(Statutory Liens for Agricultural Labor)
Article 323 Statutory liens for agricultural labor exist against fruits derived
from labor, in connection with the most recent year's wages of the person who
engages in that labor.
(Statutory Liens for Industrial Labor)
Article 324 Statutory liens for industrial labor exist against manufactured
things derived from labor, in connection with the most recent three months'
wages of the person who engages in that labor.
Subsection 3 Statutory Liens for Immovables(Statutory Liens for Immovables)
Article 325 A person that has a claim arising from the causes set forth below has
a statutory lien over specific immovables of the obligor:(i) the preservation of immovables;(ii) construction work for immovables; or(iii) the sale of immovables.
54

(Statutory Liens for Preservation of Immovables)
Article 326 Statutory liens for the preservation of immovables exist against therelevant immovables, in connection with the expenses required for thepreservation of the immovables or the expenses required for the preservation,
approval or enforcement of rights regarding the immovables.
(Statutory Liens for Construction Work for Immovables)
Article 327 (1) Statutory lien for construction work for immovables exists, withrespect to immovables, in connection with the expenses of construction work
performed by a person that designs, constructs or supervises construction
regarding the immovables of the obligor.
(2) The statutory liens referred to in the preceding paragraph exist with respect
to the relevant increased value alone, but only if there is a current increase i n
the value of the immovables resulting from the construction work.
(Statutory Liens for Sales of Immovables)
Article 328 Statutory liens for sales of immovables exist, with respect toimmovables, in connection with the price of the immovables and intere st on thesame.
Section 3 Order of Priority of Statutory Liens(Order of Priority of General Statutory Liens)
Article 329 (1) If there are competing general statutory liens, the order ofpriority follows the order set forth in each item of Article 306.
(2) Ife there are competing a general statutory lien and a special statutory lien,
the special statutory lien has priority over the general statutory lien; provided,
however, that statutory liens on expenses for the common benefit have priority
being effective against all obligees who benefit from the same.
(Order of Priority of Statutory Liens over Movables)
Article 330 (1) If there are competing special statutory liens against the same
movables, the order of priority follows the order set forth below. In this case, if
there are two or more preservers with respect to the statutory liens forpreservation of movables set forth in item (ii), a new preserver has priority
over previous preservers:(i) statutory liens for leases of immovables, lodging at hotels andtransportation;(ii) statutory liens for the preservation of movables; and(iii) statutory liens for the sale of movables, the supply of seeds and seedlings55

or fertilizer, agricultural labor and industrial labor.
(2) In the cases referred to in the preceding paragraph, if a holder of a statutory
lien ranked first knew at the time of acquiring the relevant claim of theexistence of a holder of a statutory lien of the second or third rank, that holder
may not exercise the relevant rights of priority against those persons. The
same applies to the exercise against persons that have preserved things onbehalf of the holder of a statutory lien of the first rank.
(3) Regarding fruits, the first rank belongs to persons who engage in agriculturallabor, the second rank belongs to persons that supply seeds and seedlings or
fertilizer, and the third rank belongs to lessors of land.
(Order of Priority of Statutory Liens over Immovables)
Article 331 (1) If there is conflict among special statutory liens against the sameimmovables, the order of priority follows the order set forth in the items of
Article 325.
(2) If the same immovables are subject to successive sales, the order of priority ofthe statutory liens for the sale of the immovables among sellers follows t hechronological order of the sales.
(Statutory Liens with Same Priority)
Article 332 If there are two or more holders of statutory liens with the samepriority with respect to the same object, the holders of statutory liens are paidin proportion to the amounts of their claims.
Section 4 Effect of Statutory Liens(Statutory Liens and Third Party Acquirers)
Article 333 Statutory liens may not be exercised against the movables that are
the subject matter of the same after the obligors have delivered those movables
to third party acquirers.
(Conflict between Statutory Liens and Pledges on Movables)
Article 334 If there is conflict between a statutory lien and a pledge on movables,
the pledgee of those movables has the same rights as those of the holder of astatutory lien of the first rank under Article 330.
(Effect of General Statutory Liens)
Article 335 (1) Holders of general statutory liens cannot be paid out of
immovables unless they are first paid out of property other than immova bles
and a claim that is not satisfied remains.
(2) With respect to immovables, holders of general statutory liens must first be56

paid out of those that are not the subject matters of special security.
(3) If holders of general statutory liens fail to participate in distributions inaccordance with the provisions of the preceding two paragraphs, they may not
exercise their statutory liens against registered third parties with respect toamounts that would have been paid to them if they had participated in th e
distribution.
(4) The provisions of the preceding three paragraphs do not apply if the proceedsof immovables are distributed prior to the proceeds of assets other thanimmovables, or if the proceeds of immovables that are the subject matter of a
special security are distributed prior to the proceeds of other immovables.
(Perfection of General Statutory Liens)
Article 336 General statutory liens may be duly asserted against obligees
without special security, even if the liens are not registered with res pect to therelevant immovables; provided, however, that this does not apply to registered
third parties.
(Registration of Statutory Liens for Preservation of Immovables)
Article 337 In order to preserve the effectiveness of statutory liens forpreservation of immovables, registration must be carried out immediately after
the completion of the act of preservation.
(Registration of Statutory Liens for Construction Work for Immovables)
Article 338 (1) In order to preserve the effectiveness of statutory li ens forconstruction work for immovables, the budgeted expenses of the construction
work must be registered prior to the commencement of the same. In this case,if the expenses of the construction work exceed the budgeted amount, astatutory lien does not exist with respect to the amount in excess of the same.
(2) The amount of increase in value of immovables that resulted fromconstruction work must be evaluated by an appraiser appointed by the court at
the time of the participation in the distribution.
(Registered Statutory Liens for Preservation of Immovables or Construction
Work for Immovables)
Article 339 Statutory liens registered in accordance with the provisions of thepreceding two Articles may be exercised prior to mortgages.
(Registration of Statutory Liens for Sales of Immovables)
Article 340 In order to preserve the effectiveness of statutory liens for the sale ofimmovables, a statement to the effect that the price of the immovables orinterest on the same has not been paid must be registered simultaneously with57

the execution of the sales contract.
(Mutatis Mutandis Application of Provisions Regarding Mortgages)
Article 341 Beyond what is provided for in this Section, the provisions regarding
mortgages apply mutatis mutandis to the effects of statutory liens, provided
that it is not inconsistent with the nature of the same.
Chapter IX Pledges
Section 1 General Provisions(Content of Pledges)
Article 342 A pledgee has the right to possess a thing received from an obligor ora third party as security for their claims and to have their own claims paidprior to other obligees out of that thing.
(Subject Matter of Pledges)
Article 343 A thing that cannot be transferred to another person may not bemade the subject of a pledge.
(Creation of Pledges)
Article 344 The creation of a pledge becomes effective through delivery of thesubject matter of the pledge to the obligee.
(Prohibition of Possession through Pledgors as Agents)
Article 345 A pledgee may not allow a pledgor to possess the thing pledged onbehalf of the pledgee.
(Scope of Secured Claims under Pledges)
Article 346 A pledges secures the principal, interest, penalties, expenses ofenforcing the pledge, expense of preserving the thing pledged and thecompensation of loss or damage arising from failure to perform obligations orlatent defects in the thing pledged; provided, however, that this does not apply
if the act establishing the pledge provides otherwise.
(Retention of the Thing Pledged)
Article 347 The pledgee may retain the thing pledged until the claims provided
for in the preceding Article are satisfied; provided, however, that this rightcannot be duly asserted against an obligee that has priority over the pledgee.
(Subpledges)
Article 348 The pledgee may subpledge the thing pledged within the duration of58

the pledgee's right, upon the pledgee's own responsibility. In this case, thepledgee is responsible for any loss arising from the subpledge even if the sameis caused by force majeure.
(Prohibition on Disposition of the Thing Pledged by Contract)
Article 349 The pledgor may not, either by the acts establishing pledges or bycontracts made prior to the due dates for the obligations, allow the pledgee toacquire ownership of the thing pledged as satisfaction of the obligations, nor
promise to allow the pledgee to dispose of it in any manner other than isprescribed by law.
(Mutatis Mutandis Application of Provisions on Rights of Retention andStatutory Liens)
Article 350 The provisions of Articles 296 through 300 and those of Article 304
apply mutatis mutandis to pledges.
(Third-Party Collateral Providers' Rights to Reimbursement)
Article 351 If a person that creates a pledge to secure an obligation of anotherperson performs that obligation or loses ownership of the thing pledged due tothe enforcement of the pledge, that person has the right to reimbursement fromthe obligor in accordance with the provisions regarding guarantee obligations.
Section 2 Pledges on Movables(Requirements for the Perfection of Pledges on Movables)
Article 352 A pledgee of movables cannot duly assert the pledge against third
parties unless that pledgee is in continuous possession of the thing pledged.
(Recovery of Possession of the Thing Pledged)
Article 353 A pledgee of movables may, if the pledged thing is usurped, recover
the same solely by filing an action for recovery of possession.
(Enforcement of Pledges on Movables)
Article 354 If the claim of a pledgee of movables is not satisfied, the pledgee may
make a request to the court seeking the immediate appropriation of the thingpledged for the satisfaction of that claim in accordance with the evaluation ofan appraiser only when there are reasonable grounds. In this case, the pledgeeof movables must notify the obligor in advance of the request.
(Order of Priority of Pledges on Movables)
Article 355 If more than one pledge is created with respect to the same movables,59the order of priority of those pledges follow the chronological order of theircreation.
Section 3 Pledges of Immovables(Use of and Obtaining Profit from Immovables by Pledgees)
Article 356 The pledgee of immovables may use and profit from the immovables
that are the subject matter of a pledge in line with the way the relevant
immovables are used.
(Management Expenses Borne by Pledgees of Immovables)
Article 357 The pledgee of immovables pays the expenses of management andotherwise bear burdens in relation to the immovables.
(Prohibition on Demanding Interest by Pledgees of Immovables)
Article 358 The pledgee of immovables may not demand interest on the relevantclaim.
(Special Provisions in Act of Establishment)
Article 359 The provisions of the preceding three Articles do not apply if the acts
establishing pledges provide otherwise or execution against earnings from theimmovable collateral (referring to the execution against earnings from
immovable collateral provided for in Article 180, item (ii) of the Civil Execution
Act; the same applies hereinafter) has been commenced.
(Duration of Pledges of Immovables)
Article 360 (1) The duration of pledges of immovables may not exceed 10 years.
Even if a longer period is provided for in the act establishing the pledge, theduration of the same is 10 years.
(2) The creation of pledges of immovables may be renewed; provided, however,that the duration of the same may not exceed 10 years from the time of therenewal.
(Mutatis Mutandis Application of Provisions on Mortgages)
Article 361 Beyond what is provided for in this Section, the provisions of thenext Chapter (Mortgages) apply mutatis mutandis to pledges of immovables,
provided that it is not inconsistent with the nature of the same.
Section 4 Pledges of Rights(Subject Matter of Pledges of Rights)
60

Article 362 (1) A pledge may have a property right for its subject matter.
(2) Beyond what is provided for in this Section, the provisions of the preceding
three Sections (General Provisions, Pledges on Movables and Pledges ofImmovables) apply mutatis mutandis to pledges referred to in the preceding
paragraph, provided that it is not inconsistent with the nature of the same.
Article 363 Deleted(Requirements for Perfection of Pledges over Claims)
Article 364 The creation of a pledge over a claim (including a pledge over a claim
which has not yet arisen) may not be duly asserted against a third party
obligor and other third parties unless notice of the creation of the pledge is
given to that third party obligor in accordance with the provisions of Article
467, or unless that third party obligors gives consent to the same.
Article 365 Deleted(Collection of Claims by Pledgees)
Article 366 (1) A pledgee may directly collect the claim that is the subject matterof the pledge.
(2) If monies are the subject matter of a pledged claim, the pledgee may collectthe same to the extent of the portion that corresponds to the amount of thepledgee's own claim.
(3) If the due date of the pledged claim referred to in the preceding paragrapharrives prior to the due date of the claim of the pledgee, the pledgee may havethe third party obligor deposit with official depository that amount to be paid
to the pledgee. In this case, the pledge exists over the amount so deposited.
(4) If the subject matter of the pledged claim is not monies, the pledgee has thepledge over the thing received for the satisfaction of the claim.
Article 367 Deleted
Article 368 Deleted
Chapter X Mortgages
Section 1 General Provisions(Content of Mortgages)
Article 369 (1) A mortgagee has the right to have the mortgagee's claim satisf iedprior to other obligees out of the immovables that the obligor or a third party
provided to secure the obligation without transferring possession.
61

(2) Superficies and farming rights may be the subject matter of a mortgage. In
this case, the provisions of this Chapter apply mutatis mutandis.
(Scope of Effect of Mortgages)
Article 370 A mortgage extends to the things that form an integral part of theimmovables that are the subject matter of the mortgage (hereinafter referred
to as "mortgaged immovables") except for buildings on the mortgaged land;
provided, however, that this does not apply if the act establishing the mortgage
provides otherwise or the rescission of fraudulent act may be demanded asprescribed in Article 424, paragraph (3) with regard to the act of the obligor.
Article 371 If there is a default with respect to a claim secured by a mortgage,
the mortgage extends to the fruits of the mortgaged immovables derived after
the default.
(Mutatis Mutandis Application of Provisions on Right of Retention)
Article 372 The provisions of Article 296, Article 304 and Article 351 apply
mutatis mutandis to mortgages.
Section 2 Effect of Mortgages(Order of Priority of Mortgages)
Article 373 If more than one mortgage is created with respect to the sameimmovables, the order of priority of those mortgages follows the chronologicalorder of their registration.
(Changes in Order of Priority of Mortgages)
Article 374 (1) The order of priority of mortgages may be changed with theagreement of all mortgagees; provided, however, that if there are interested
persons, the consent of the same must be obtained.
(2) The changes in order referred to in the preceding paragraph do not become
effective unless registered.
(Scope of Secured Claims under Mortgages)
Article 375 (1) If a mortgagee has the right to demand periodic payments
including interest, that mortgagee may exercise the mortgage solely withrespect to payments of the last two years before maturity; provided, however,that with respect to prior periodic payments, if special registration is effected
after maturity, the mortgagee is not precluded from exercising the mortgage as
from the time of that registration.
(2) If the mortgagee has the right to claim compensation for loss or damage
62

resulting from defaults in obligations, the provisions of the preceding
paragraph also apply mutatis mutandis to the loss or damage of the mostrecent two years; provided, however, that the aggregate period including theinterest and other periodic payments may not exceed two years.
(Disposition of Mortgages)
Article 376 (1) A mortgagee may apply the mortgage to secure other claims, orassign or waive that mortgage, or its order of priority, for the benefit of otherobligees of the same obligor.
(2) In the cases referred to in the preceding paragraph, if a mortgagee disposes ofthe mortgage for the benefit of two or more persons, the order of priority of therights of persons who benefit from that disposition follows the chronologicalorder of supplemental registration in the registration of the mortgage.
(Requirements for Perfection of Disposition of Mortgages)
Article 377 (1) In the cases in the preceding Article, the mortgagee may not duly
assert the disposition of mortgages against principal obligors, guara ntors,
mortgagors or their respective successors unless the disposition is notified tothe principal obligors or the principal obligors consent to that disposition inaccordance with the provisions of Article 467.
(2) If the principal obligors have received the notice or given the consent
pursuant to the provisions of the preceding paragraph, payments made without
the consent of the persons who benefit of the disposition of the mortgage may
not be duly asserted against those beneficiaries.
(Direct Satisfaction of Mortgage with Purchase Price)
Article 378 If a third party that purchases the ownership or superficies of amortgaged immovables pays the price of the same to a mortgagee at therequest of the same mortgagee, that mortgage is terminated for the be nefit ofthat third party.
(Claims for Extinguishment of Mortgages)
Article 379 A third party acquirer of a mortgaged immovables may make a claim
for the extinguishment of a mortgage as prescribed in Article 383.
Article 380 No principal obligor, guarantor or successor of the same may make aclaim for the extinguishment of a mortgage.
Article 381 A third party acquirer of a mortgaged immovables that is subject to acondition precedent may not make a claim for the extinguishment of amortgage while it is uncertain whether or not the condition precedent will be63fulfilled.
(Timing of Claims for Extinguishment of Mortgages)
Article 382 A third party acquirer of a mortgaged immovables must make aclaim for the extinguishment of a mortgage before attachment under auction
procedure as a result of the enforcement of the mortgage takes effect.
(Procedures for Claims for Extinguishment of Mortgages)
Article 383 If a third party acquirer of a mortgaged immovables makes a claim
for the extinguishment of a mortgage, that third party must send the
documents set forth below to each registered obligee:(i) a document that specifies the cause and date of the acquisition, the nameand address of the assignor and the acquirer, the nature, location and pri ceof the mortgaged immovables and burdens of the acquirer;(ii) a certificate of registered information regarding the mortgaged immovables(limited to certificates certifying all registered information currently ineffect); and(iii) a document to the effect that, if an obligee does not enforce the mortgage
by filing a petition for auction within two months, the third party acquirer ofthe mortgaged immovables will pay the price provided for in item (i) or an
amount specifically fixed in accordance with the order of priority of claims, orwill deposit the price or that amount with official depository.
(Deemed Approval of Obligees)
Article 384 In the cases set forth below, the obligee that has received the
documents set forth in each item of the preceding Article is deemed to haveapproved the price or amount that the third party acquirer of the mortgaged
immovables has offered as stated in the document set forth in item (iii) of that
Article:(i) if the obligee does not enforce the mortgage by filing a petition for auction
within two months after receipt of the documents set forth in each item of
the preceding Article;(ii) if the obligee withdraws a petition under the preceding item;(iii) if a decision dismissing a petition under item (i) has become fi nal andbinding; or(iv) if a decision rescinding auction procedures based on a petition under item(i) (excluding rulings under the provisions of Article 63, paragraph (3) or
Article 68-3, paragraph (3) of the Civil Execution Act applied mutatis
mutandis under Article 188 of that Act, or under the provisions of Article 183,
paragraph (2) of that Act if the certified copy under paragraph (1), item (v) ofthat Article is submitted) has become final and binding.
64

(Notice of Petitions for Auction)
Article 385 If an obligee that has received the documents set forth in each itemof Article 383 files a petition under item (i) of the preceding Article, thatobligee must give notice to that effect to the obligor and assignor of themortgaged immovables within the period under that item.
(Effect of Claims for Extinguishment of Mortgages)
Article 386 A mortgage is extinguished if all registered obligees approve theprice or amount offered by the third party acquirer of the mortgaged
immovables, and the third party acquirer of the mortgaged immovables has
paid or deposited with the official depository the price or amount approved.
(Perfection of Leases with Registered Consent of Mortgagees)
Article 387 (1) A registered lease may be duly asserted against mortgagees that
hold mortgages registered prior to the registration of that lease if all
mortgagees that hold those mortgages give their consent and those consents
are registered.
(2) For a mortgagee to give the consent referred to in the preceding paragra ph,
the approval of the persons that hold rights for which the mortgage is the
subject matter and other persons that will suffer detriment as a result of theconsent of the mortgagee must be obtained.
(Statutory Superficies)
Article 388 If the land and a building on that land belong to the same owner, amortgage is created with respect to that land or building, and the enforcementof that mortgage causes them to belong to different owners, it is deemed that asuperficies has been created with respect to that building. In this case, the rent
is fixed by the court at the request of the parties.
(Auction of Buildings on Mortgaged Lands)
Article 389 (1) If a building is constructed on a mortgaged land after the creationof a mortgage, the mortgagee may auction the building together with the land;
provided, however, that the right of priority of that mortgagee may be
exercised solely against the proceeds of the land.
(2) The provisions of the preceding paragraph do not apply if the owner of thatbuilding has rights with respect to the possession of the mortgaged land that
may be duly asserted against the mortgagee.
(Purchases of Mortgaged Immovables by Third Party Acquirers)
Article 390 A third party acquirer of a mortgaged immovables may be the65purchaser at the auction of the same.
(Claims for Reimbursement of Expenses by Third Party Acquirers of Mortgaged
Immovables)
Article 391 If a third party acquirer of a mortgaged immovables has incurrednecessary or beneficial expenses with respect to the mortgaged immovables,that third party may obtain reimbursement of the same out of the proceeds ofthe mortgaged immovables prior to other obligees, in accordance with thedistinctions in Article 196.
(Distribution of Proceeds in Cases of Joint Mortgages)
Article 392 (1) If an obligee holds mortgages on several immovable properties tosecure the same claim, and the proceeds of those immovable properties are to
be distributed simultaneously, the burden of the claim is divided in proportion
to the value of each of the immovable properties.
(2) If an obligee holds mortgages on several immovable properties to secure thesame claim, and the proceeds from only one of the immovable properties are to
be distributed, the mortgagee may receive the payment of the entire claim o ut
of those proceeds. In this case, subordinated mortgagees may exercise theirmortgages in subrogation of that mortgagee, up to the amount that thatmortgagee that receives payment would otherwise be entitled to receive fromthe proceeds of other immovable properties, in accordance with the provisionsof the preceding paragraph.
(Supplemental Registration of Subrogation in Case of Joint Mortgages)
Article 393 A person that exercises a mortgage by way of subrogation pursuant
to the provisions of the second sentence of paragraph (2) of the preceding
Article may note that subrogation in the registration of that mortgage.
(Payment from Assets Other than Mortgaged Immovables)
Article 394 (1) A mortgagee may receive payment from assets other than themortgaged immovables only for the portion of that mortgagee's claim that is
not paid from the proceeds of the relevant mortgaged immovables.
(2) The provisions of the preceding paragraph do not apply if the proceeds ofother assets are to be distributed prior to the proceeds of the mortgaged
immovables. In these cases, each other obligee may demand that the amount tobe distributed to the mortgagee be deposited in order to have the mortgagee
receive payment under the provisions of that paragraph.
(Suspension of Delivery by Users of Mortgaged Buildings)
Article 395 (1) A person that uses or profits from a building subject to a66

mortgage by virtue of a lease that cannot be duly asserted against the
mortgagee, and that is set forth as follows (in the following paragraph referred
to as "mortgaged building user") is not required to deliver that building to thepurchaser thereof until six months have passed from the time when thepurchaser purchased that building at auction:(i) a person that has been using or profiting from the building since prior to thecommencement of auction procedures; or(ii) a person that is using or profiting from the building by virtue of a leasegiven after the commencement of auction procedures by the administrator ofcompulsory administration or execution against earnings from immovable
collateral.
(2) The provisions of the preceding paragraph do not apply if the purchaser,
specifying a reasonable period of time, issues a notice to the mortgaged
building user demanding payment of consideration for a period of one month ormore with respect to the use of the building referred to in that paragraph thathas been made after the time of purchase by the purchaser, and no payment ismade within that reasonable period of time.
Section 3 Extinction of Mortgages(Extinctive Prescription of Mortgages)
Article 396 No mortgage is extinguished by prescription in relation to obligors
and mortgagors unless it is extinguished simultaneously with the claim the
mortgage secures.
(Extinction of Mortgages by Acquisition by Prescription of Mortgaged
Immovables)
Article 397 If a person that is neither an obligor nor a mortgagor has possessed
the mortgaged immovables in complete conformity with the requirements foracquisitive prescription, the mortgage is extinguished thereby.
(Renunciation of Mortgaged Superficies)
Article 398 Even if a holder of superficies or a farming right holder that createdmortgage on that holder's superficies or farming right renounces the relevant
rights, the renunciation may not be duly asserted against the mortgagee.
Section 4 Revolving Mortgages(Revolving Mortgages)
Article 398-2 (1) Mortgages may be created, by an establishing act, in order tosecure unspecified claims of a certain scope, up to the limit of a maximum
67amount.
(2) The scope of the unspecified claims to be secured by the mortgage under theprovisions of the preceding paragraph (hereinafter referred to as "revolving
mortgage") must be prescribed by limiting the scope to claims arising from
specific contracts with the obligor for continuous transactions or other claims
arising from certain kinds of transactions with the obligor.
(3) Claims that arise continuously with the obligor pursuant to a specific cause,claims under negotiable instruments or checks, or electronically recordedmonetary claims (meaning electronically recorded monetary claims prescribedin Article 2, paragraph (1) of the Electronically Recorded Monetary Claims Act(Act No. 102 of 2007); the same applies in paragraph (2) of the followin g
Article) may be treated as claims that are to be secured by a revolving
mortgage, notwithstanding the provisions of the preceding paragraph.
(Scope of Secured Claims under Revolving Mortgages)
Article 398-3 (1) A revolving mortgagee may exercise the relevant revolving
mortgage up to the maximum amount with respect to all of crystallized
principal as well as periodic payments including interest and compensation forloss or damage resulting from failure to perform obligations.
(2) If a claim under a negotiable instrument or check or electronically recordedmonetary claim acquired from causes other than the transactions with the
obligor is agreed to be treated as a claim to be secured by a revolving mortgage,
and any of the following grounds exist, that revolving mortgage may be
exercised only with respect to claims acquired before those grounds arose;
provided, however, that even with respect to claims acquired after the grounds
arose, the exercise of the revolving mortgage is not precluded as far as theclaims were acquired without knowledge of those grounds:(i) the suspension of payments by the obligor;(ii) a petition to commence bankruptcy proceeding, the commencement of
rehabilitation proceeding, the commencement of reorganization proceeding or
the commencement for special liquidation with respect to the obligor; or(iii) a petition for commencement of auction procedure in relation to amortgaged immovables or attachment for disposition of delinquency.
(Alterations in Scope of Secured Claims under Revolving Mortgages and of
Obligors)
Article 398-4 (1) The scope of the claims to be secured by a revolving mortgage
may be changed if the change is effected before the principal is crystallized.
The same applies with respect to change of obligors.
(2) In order to effect the changes referred to in the preceding paragraph, it is not
required that the approval of third parties including subordinated mortgagee68

be obtained.
(3) If the change under paragraph (1) is not registered before the principal is
crystallized, it is deemed that the change was not effected.
(Changes in Maximum Amounts of Revolving Mortgages)
Article 398-5 Changes in the maximum amount of a revolving mortgage may not
be made unless the consent of the interested parties is obtained.
(Provisions of Principal Crystallization Date of Revolving Mortgage)
Article 398-6 (1) With respect to the principal secured by a revolving mortgage,
the date when the principal is to be crystallized may be specified or changed.
(2) The provisions of Article 398-4, paragraph (2) apply mutatis mutandis to thecases referred to in the preceding paragraph.
(3) The date under paragraph (1) must be within five years of the day when thedate was prescribed or changed.
(4) If registration with respect to a change in the date under paragraph (1) is noteffected before the old date, the principal secured is crystallized on that olddate.
(Assignments of Secured Claims under Revolving Mortgages)
Article 398-7 (1) A person that acquires a claim from a revolving mortgagee
before the principal is crystallized may not exercise the revolving mortgage
with respect to that claim. The same applies to a person that made payment foror on behalf of an obligor before the principal was crystallized.
(2) If an obligation is assumed before the principal is crystallized, the revolving
mortgagee may not exercise the revolving mortgage with respect to the
obligation of the person that assumes the obligation.
(3) If the assumption of obligation releasing an old obligor is effected before theprincipal is crystallized, the obligee may not transfer the revolving mortgage tothe obligation assumed by the new obligor, notwithstanding the provisions ofArticle 472-4, paragraph (1).
(4) If any novation due to the substitution of the obligee is effected before theprincipal is crystallized, the obligee before the novation may not transfer the
revolving mortgage to the obligations after the novation, notwithstanding theprovisions of Article 518, paragraph (1). The same applies to the obligee in thecase of novation due to the substitution of the obligor before the principal is
crystallized.
(Succession of Revolving Mortgagees or Obligors)
Article 398-8 (1) If succession involving a revolving mortgagee commences before
the principal is crystallized, the revolving mortgage secures the claims that69

exist at the time of the commencement of succession and otherwise secures
claims that were agreed upon by the heirs and the mortgagor of the revolving
mortgage and that an heir acquires after the commencement of succession.
(2) If succession involving an obligor commences before the principal is
crystallized, the revolving mortgage secures the obligations that exist at thetime of the commencement of succession and otherwise secures the claims thatwere agreed upon by the revolving mortgagee and the mortgagor of therevolving mortgage and that an heir assumes after the commencement of
succession.
(3) The provisions of Article 398-4, paragraph (2) apply mutatis mutandis if anagreement as referred to in the preceding two paragraphs is reached.
(4) If the agreements referred to in paragraph (1) and paragraph (2) are notregistered within six months of the commencement of succession, the principal
secured is deemed to have been crystallized at the time of the commencementof succession.
(Mergers of Revolving Mortgagees or Obligors)
Article 398-9 (1) If there is a merger with respect to a revolving mortgagee
before the principal is crystallized, the revolving mortgage secures the claims
that exist at the time of the merger and otherwise secures claims that a
corporation that survives the merger or a corporation that is incorporated by
the merger acquires after the merger.
(2) If there is a merger with respect to an obligor before the principal is
crystallized, the revolving mortgage secures the obligations that exist at thetime of the merger and otherwise secures the obligations that a corporationthat survives the merger or a corporation that is incorporated by the merger
assumes after the merger.
(3) In the cases provided for in the preceding two paragraphs, the mortgagor of
the revolving mortgage may demand that the principal secured be crystallized;
provided, however, that this does not apply, in the cases referred to in thepreceding paragraph, if the relevant obligor is the mortgagor of the revolving
mortgage.
(4) If a demand under the provisions of the preceding paragraph is made, theprincipal secured is deemed to have been crystallized at the time of the merger.
(5) The demand under the provisions of paragraph (3) may not be made if two
weeks have passed since the day when the mortgagor of the revolving mortgage
acquired knowledge of the merger. The same applies if one month has passed
from the day of the merger.
(Company Splits of Revolving Mortgagees or Obligors)
Article 398-10 (1) If, before the principal is crystallized, a company split in70

which the relevant revolving mortgagee is the company to be split is effected,
the revolving mortgage secures the claims that exist at the time of the split
and otherwise secures claims acquired after the split by the split company andthe company incorporated by the split, or claims acquired after the split by thecompany that succeeded to some or all of the rights and obligations of the split
company regarding its business.
(2) If, before the principal is crystallized, a split in which the relevant obligor isthe company to be split is effected, the revolving mortgage secures theobligations that exist at the time of the split and otherwise secures obligations
that are assumed after the split by the split company and the company
incorporated by the split, or claims acquired after the split by the company
that assumed some or all of the rights and obligations of the split company
regarding its business.
(3) The provisions of paragraphs (3) through (5) of the preceding Article apply
mutatis mutandis to cases under the preceding two paragraphs.
(Disposition of Revolving Mortgages)
Article 398-11 (1) Before the principal is crystallized, a revolving mortgagee may
not dispose of a revolving mortgage under the provisions of Article 376,
paragraph (1); provided, however, that the revolving mortgagee is notprecluded from applying that revolving mortgage to secure other claims.
(2) The provisions of Article 377, paragraph (2) do not apply to payments madebefore the principal is crystallized in the cases provided for in the proviso to
the preceding paragraph.
(Assignments of Revolving Mortgages)
Article 398-12 (1) Before the principal is crystallized, a revolving mort gagee may
assign a revolving mortgage, with the approval of the mortgagor of therevolving mortgage.
(2) A revolving mortgagee may divide the revolving mortgage into two revolving
mortgages and assign either of the same pursuant to the provisions of thepreceding paragraph. In this case, the rights for which that revolving mortgage
is the subject matter is extinguished with respect to the revolving mortgage
that was assigned.
(3) In order to effect an assignment under the provisions of the preceding
paragraph, the approval of the person that holds the rights for which thatrevolving mortgage is the subject matter must be obtained.
(Partial Assignments of Revolving Mortgages)
Article 398-13 Before the principal is crystallized, a revolving mortgagee may,with the approval of the mortgagor of the revolving mortgage, effect a partial71assignment of the revolving mortgage (meaning assignments of revolving
mortgages that the assignor effects without dividing the revolving mortgage inorder to co-own the same with the assignee; hereinafter the same applies inthis Section).
(Co-Ownership of Revolving Mortgages)
Article 398-14 (1) Co-owners of a revolving mortgage are paid in proportion to
the amount of their respective claims; provided, however, that if before th e
principal is crystallized, a proportion other than the above is agreed upon, or if
it is agreed upon that a certain person will be paid prior to another, thatagreement prevails.
(2) A co-owner in a revolving mortgage may, with the consent of the other c oowners, assign rights of the same pursuant to the provisions of Article 398 -12,
paragraph (1).
(Assignments or Waivers of Order of Priority of Mortgages and Assignments orPartial Assignments of Revolving Mortgages)
Article 398-15 If a revolving mortgagee that has accepted an assignment or
waiver of the order of priority of a mortgage has assigned or partially assignedthat mortgagee's revolving mortgage, the assignee benefits from theassignment or waiver of that order of priority.
(Joint Revolving Mortgages)
Article 398-16 The provisions of Articles 392 and 393 apply with respect to arevolving mortgage only when the fact that the revolving mortgage has been
simultaneously established on several immovable properties to secure the same
claim is registered.
(Changes in Joint Revolving Mortgages)
Article 398-17 (1) An change in the scope, obligors or maximum amount of theclaims to be secured, or assignment or partial assignment of the revolving
mortgages for which registration is effected in accordance with the preceding
Article does not take effect unless registration is effected with respect to all
immovable properties over which that revolving mortgages are established.
(2) The principal secured by the revolving mortgage for registered pursuant to
the preceding Article is crystallized even when grounds on which the principal
is crystallized arise only with respect to one immovable property alone.
(Aggregate Revolving Mortgages)
Article 398-18 A person that has a revolving mortgage on several immovable
properties may exercise the right of priority with respect to the proceeds of72

each immovable property up to the respective maximum amounts, except forcases provided for in Article 398-16.
(Requests for Crystallizing of Principal of Revolving Mortgages)
Article 398-19 (1) If three years have passed from the time of the creation of arevolving mortgage, the mortgagor of the revolving mortgage may request the
crystallizing of the principal secured. In this case, the principal sec ured is
crystallized when two weeks have passed since the time of that request.
(2) A revolving mortgagee may request the crystallizing of the principal secured
at any time. In this case, the principal secured is crystallized on the request of
the same.
(3) The provisions of the preceding two paragraphs do not apply if the date on
which the principal secured is to be crystallized is specified.
(Grounds for Crystallizing of Principal of Revolving Mortgages)
Article 398-20 (1) The principal secured by a revolving mortgage is crystallized
in the following cases:(i) if the revolving mortgagee has filed, with respect to the mortgaged
immovables, a petition for auction or execution against earnings from
immovable collateral or the attachment under the provisions of Article 304
as applied mutatis mutandis pursuant to Article 372; provided, however, that
this provision applies only if the commencement of either auction proceduresor execution procedures against earnings from immovable collateral, or an
attachment has been effected;(ii) if the revolving mortgagee has effected an attachment for disposition ofdelinquency against the mortgaged immovables;(iii) if two weeks have passed from the time when the revolving mortgagee
acquired knowledge of the commencement of auction procedures or
attachment for disposition of delinquency against the mortgaged
immovables; or(iv) if the obligor or mortgagor of the revolving mortgage has become subject toan order commencing bankruptcy proceeding.
(2) If the commencement of auction procedures, the attachment under item (iii) of
the preceding paragraph or the order commencing bankruptcy proceedingunder item (iv) of that paragraph ceases to be effective, it is deemed that the
principal secured was not crystallized; provided, however, that this does not
apply if a person has acquired that revolving mortgage or a right for which therevolving mortgage is the subject matter on the assumption that the principal
was crystallized.
(Requests for Reductions in Maximum Amount of Revolving Mortgages)
73Article 398-21 (1) After the principal is crystallized, the mortgagor of therevolving mortgage may request a reduction in the maximum amount of thatrevolving mortgage, to the amount of the obligations actually in existence plus
the amount of the periodic payments including interest and the amount ofcompensation for loss or damage due to default in obligations that will arise in
the following two years.
(2) As to the reduction in the maximum amount of a revolving mortgage
registered pursuant to Article 398-16, it suffices to make the request referred
to in the preceding paragraph with respect to one of those immovable
properties.
(Requests for Extinguishment of Revolving Mortgages)
Article 398-22 (1) If the amount of the obligations currently in existence after
the principal is crystallized exceeds the maximum amount of a revolving
mortgage, the person that created the revolving mortgage to secure theobligations of another person or a third party that has acquired ownership,superficies, farming rights, or a lease that can be duly asserted against any
third party with respect to the mortgaged immovables may request theextinguishment of that revolving mortgage on paying or depositing with an
official depository an amount equivalent to that maximum amount. In this case,that payment or deposit has the effect of performance of the obligation.
(2) A revolving mortgage that has been registered pursuant to Article 398 -16 is
extinguished if the request for extinguishment referred to in the preceding
paragraph is made with respect to one immovable property.
(3) The provisions of Articles 380 and 381 apply mutatis mutandis to therequests for extinguishment under paragraph (1).
Part III Claims
Chapter I General Provisions
Section 1 Subject Matter of Claim(Subject Matter of Claim)
Article 399 Even something that cannot be given an estimated monetary value
may be the subject matter of a claim.
(Duty of Care in Cases of Delivery of Specific Things)
Article 400 If the subject matter of a claim is the delivery of a specific thing, theobligor must retain the thing with the due care of a prudent manager, which isdetermined in light of the contract or other sources of claims and the common
sense in the transaction, until the delivery.

74

(Fungible Claim)
Article 401 (1) If the object of a claim is designated only with reference to a typeand its quality cannot be determined in light of the nature of the juridical act
or intention of the parties, the obligor must deliver a thing of medium quality.
(2) In the case referred to in the preceding paragraph, if the obligor has
completed the acts necessary to deliver the thing, or has designated the thing
the obligor is to deliver with the consent of the obligee, that thing thenceforthconstitutes the subject matter of the claim.
(Monetary Claim)
Article 402 (1) If the subject matter of a claim is money, the obligor, at the
obligor's own choice, may make the payment in currency of any kind; provided,
however, that this does not apply to if the delivery of a specific kind of currency
is the subject matter of the claim.
(2) If the specific kind of currency that is the subject matter of the claim has lostits mandatory circulating power at the time of the payment, the obligor must
make payment in other currency.
(3) The provisions of the preceding two paragraphs apply mutatis mutandis if thedelivery of the currency of a foreign state is the subject matter of the claim.
Article 403 If the amount of the claim is designated in the currency of a foreignstate, the obligor may make the payment in Japanese currency converted withthe foreign exchange rate at the place of the performance.
(Statutory Interest Rate)
Article 404 (1) Unless the parties manifest a particular intention with respect toa claim which bears interest, the rate of the interest is the statutory interest
rate as of the time when the interest first accrues.
(2) The statutory interest rate is 3% per annum.
(3) Notwithstanding the provisions of the preceding paragraph, pursuant to theprovisions of Ministry of Justice Order, the statutory interest rate is to change
pursuant to the provisions of the following paragraph for each term consistingof three years.
(4) The statutory interest rate for each term is the rate calculated by adding or
deducting the rate equivalent to the difference between the benchmark rate forthe most recent term during which there was a change in the statutory interest
rate pursuant to the provisions of this paragraph (hereinafter referred to as
the "most recent term of change" in this paragraph) and the benchmark rate
for the current term (any part of the ratio which is less than 1% is disregarded),
to or from the statutory interest rate for the most recent term of change.
(5) The term "benchmark rate" prescribed in the preceding paragraph means the75

rate announced by the Minister of Justice as the rate calculated by dividing, by
60, the sum of the average interest rate for short-term loans for each month(meaning the average of the interest rates for loans (limited to loans for a termof less than one year) extended by banks in each month)) during the period
from January of the year six years prior to the year which contains the firstday of each term to December of the year two years prior to the year whichcontains the first date of each term (any part of the rate which is less than
0.1% is disregarded), pursuant to the provisions of Ministry of Justice Order.
(Incorporation of Interest into Principal)
Article 405 If the payment of interest corresponding to one ye ar or more isdelayed, and if the obligor does not pay that interest notwithstanding thedemand by the obligee, the obligee may incorporate that interest into theprincipal.
(Attribution of Right to Choose in Cases of Alternative Obligation)
Article 406 If the subject matter of the claim is to be determined by a choice
being made from among more than one performance, the right to choose
belongs to the obligor.
(Exercise of Right to Choose)
Article 407 (1) The right to choose under the preceding Article is exercised bymanifesting the intention to the counterparty.
(2) The manifestation of intention referred to in the preceding paragraph may
not be withdrawn without the consent of the counterparty.
(Transfer of Right to Choose)
Article 408 If a claim is due and, notwithstanding a demand by the counterparty
specifying a reasonable period of time, the party that holds the right to choose
does not exercise the right within that period of time, the right to choose istransferred to the counterparty.
(Right to Choose of Third Party)
Article 409 (1) If a third party makes the choice, that choice is made by
manifesting intention to either the obligee or the obligor.
(2) In the case prescribed in the preceding paragraph, if the third party is unable
to make the choice or has no intention to make the choice, the right to choose istransferred to the obligor.
(Identification of Alternative Obligation Due to Impossibility)
Article 410 If a performance included in the subject matter of a claim is76

impossible, and the impossibility is by negligence of the party that has theright to choose, the claim exists to the extent of the remaining performances.
(Effect of Choice)
Article 411 The choice becomes effective retroactively as of the time of theaccrual of the claim; provided, however, that this may not prejudice the rights
of a third party.
Section 2 Effects of Claims
Subsection 1 Liability for Non-Performance(Time of Performance and Delay in Performance)
Article 412 (1) If a fixed due date is assigned to the performance of an obligation,
the obligor is liable for delay from the time that due date arrives.
(2) If an uncertain due date is assigned to the performance of an obligation, theobligor is liable for delay from the time when the obligor receives the request
for performance after the due date arrives or the time when the obligor
becomes aware of the arrival of that due date, whichever comes earlier.
(3) If no time limit is assigned to the performance of an obligation, the obligor isliable for delay from the time the obligor receives the request for performance.
(Impossibility of Performance)
Article 412-2 (1) If the performance of an obligation is impossible in light of thecontract or other sources of claims and the common sense in the transaction,
the obligee may not request the performance of the obligation.
(2) The impossibility of the performance of an obligation based on a contract as of
the time of the formation of the contract does not preclude claiming
compensation for loss or damage that arises from the impossibility of theobligation pursuant to the provisions of Article 415.
(Obligee's Delay in Acceptance)
Article 413 (1) If the obligee refuses, or is unable, to accept the tender of theperformance of an obligation, and the subject matter of the obligation is thedelivery of a specific thing, it is sufficient for the obligor to retain the thing by
exercising care identical to that the obligor exercises for the obligor's own
property, during the period from the time of the tender of the performance
until the delivery of the thing.
(2) If the obligee's refusal or inability to accept the performance of an obligation
results in increasing the expenses for the performance, the amount of increaseis borne by the obligee.

77

(Impossibility of Performance during Obligor's Delay in Performance or
Obligee's Delay in Acceptance, and Grounds Attributable)
Article 413-2 (1) If the performance of an obligation becomes impossible due togrounds not attributable to either party during a period in which the obligor isliable for delay in performance of the obligation, the impossibility of
performance is deemed to be due to grounds attributable to the obligor.
(2) If the obligee refuses or is unable to accept the performance of an obligation,and the performance of the obligation becomes impossible due to grounds not
attributable to either party after the obligor's tender of the performance, theimpossibility of performance is deemed to be due to grounds attributable to the
obligee.
(Compelling Performance)
Article 414 (1) If an obligor voluntarily fails to perform an obligation, the obligee
may request the court to enforce obligor to perform through methods such as
direct compulsion, execution by substitution, or indirect compulsion, in
accordance with the provisions of the Civil Execution Act and other laws andregulations concerning the procedure for compulsory execution; provided,
however, that this does not apply if the nature of the obligation does not permit
the enforcement.
(2) The provisions of the preceding paragraph do not preclude claiming
compensation for loss or damage.
(Compensation for Loss or Damage Due to Non-Performance)
Article 415 (1) If an obligor fails to perform consistent with the purpose of theobligation or the performance of an obligation is impossible, the obligee may
claim compensation for loss or damage arising from the failure; provided,
however, that this does not apply if the failure to perform the obligation is due
to grounds not attributable to the obligor in light of the contract or othersources of obligation and the common sense in the transaction.
(2) If the obligee is entitled to claim compensation for loss or damage pursuant to
the provisions of the preceding paragraph, and any of the following case s
applies, the obligee may claim compensation for loss or damage in lieu of theperformance of the obligation:(i) the performance of the obligation is impossible;(ii) the obligor manifests the intention to refuse to perform the obligation; or(iii) the obligation has arisen from a contract, and the contract is cancelled or
the obligee acquires the right to cancel the contract on the ground of theobligor's failure to perform the obligation.
(Scope of Compensation for Loss or Damage)78

Article 416 (1) The purpose of the claim for compensation for the loss or damage
for failure to perform an obligation is to have the obligor to pay thecompensation for loss or damage which would ordinarily arise from the failure.
(2) The obligee may also claim the compensation for damage which has arisen
from any special circumstances if the party did foresee, or should have foreseen,
the circumstances.
(Method of Compensation for Loss or Damage)
Article 417 Unless a particular intention is manifested, the amount of thecompensation for loss or damage is determined with reference to monetary
value.
(Deduction of Interim Interest)
Article 417-2 (1) In the case of determining the amount of compensation for loss
or damage in relation to profits to be acquired in the future and deducting anamount equivalent to interest that is to accrue until the time of acquiring the
profits, the deduction is made by applying the statutory interest rateapplicable as of the time when the claim for the compensation for loss ordamage arises.
(2) The preceding paragraph also applies in the case of determining the amountof compensation for loss or damage to cover expenses to be incurred in the
future and deducting an amount equivalent to interest that is to accrue until
the time of incurring the expenses.
(Comparative Negligence)
Article 418 If the obligee is negligent regarding the failure to perform theobligation or the occurrence or spreading of a damage caused thereby, the court
determines the liability for compensation for loss or damage and the amountthereof by taking these elements into consideration.
(Special Provisions for Monetary Debt)
Article 419 (1) The amount of the compensation for loss or damage for failure to
perform an obligation to deliver money is determined with reference to thestatutory interest rate as of the time when the obligor first assumes the
responsibility for the delay; provided, however, that if the agreed-upon interest
rate exceeds the statutory interest rate, the agreed-upon interest rate prevails.
(2) The obligee is not be required to prove loss or damage with respect to thecompensation for loss or damage referred to in the preceding paragraph.
(3) The obligor may not raise the defense of force majeure with respect to thecompensation for loss or damage referred to in paragraph (1).

79(Liquidated Damages)
Article 420 (1) The parties may agree on the amount of liquidated damages withrespect to the failure to perform the obligation.
(2) The agreement on liquidated damages do not preclude the request for
performance or the exercise of the cancellation right.
(3) A penalty is presumed to constitute liquidated damages.
Article 421 The provisions of the preceding Article apply mutatis mutandis if theparties agree in advance to appropriate anything other than money ascompensation for loss or damage.
(Subrogation for Compensation for Loss or Damage)
Article 422 If an obligee receives the full value of a thing or right which is the
subject matter of the claim as compensation for loss or damage, the obligo r
subrogates the obligee to that thing or right by operation of law.
(Right to Demand Substitute)
Article 422-2 If the obligor acquires a right or profit as a substitute for the
subject matter of the obligation due to the same cause as the one that has
rendered the performance of the obligation impossible, the obligee may demand
the transfer of the right or reimbursement of the profit from the obligor, to theextent of the amount of damage sustained thereby.
Subsection 2 Obligee's Right of Subrogation(Requirements for Obligee's Right of Subrogation)
Article 423 (1) An obligee may exercise the right of the obligor (hereinafterreferred to as the "subrogor's right") when it is necessary to do so in order topreserve the obligee's own claim; provided, however, that this does not apply torights which belong exclusively to and are personal to the obligor or rights
which are immune from attachment.
(2) The obligee may not exercise the subrogor's right unless and until theobligee's claim becomes due; provided, however, that this does not apply to an
act of preservation.
(3) The obligee may not exercise the subrogor's right if the obligee's claim is notenforceable by compulsory execution.
(Scope of Exercise by Subrogation)
Article 423-2 If the obligee exercises the subrogor's right, and the subject matterof the subrogor's right is divisible, the obligee may exercise the subrogor's rightonly to the extent of the amount of the obligee's own claim.
80

(Payment or Delivery to Obligee)
Article 423-3 If the obligee exercises the subrogor's right, and the subject matterof the subrogor's right is the payment of money or delivery of movables, theobligee may demand that the other party make the payment or delivery to the
obligee. In such a case, if the other party makes the payment or delivery to the
obligee, the subrogor's right is extinguished thereby.
(Defense of the Other Party)
Article 423-4 If the obligee exercises the subrogor's right, the other party may
duly assert against the obligee any defense that can be asserted against the
obligor.
(Obligor's Authority to Collect and Dispose)
Article 423-5 Even if the obligee exercises the subrogor's right, the obligor is notprecluded from independently collecting or otherwise disposing of thesubrogor's right. In such a case, the other party is not precluded fromperforming the obligation to the obligor with respect to the subrogor's right.
(Notice of Suit to Be Given by Obligee That Has Filed Action Concerning
Exercise of Subrogor's Right)
Article 423-6 If the obligee files an action concerning the exercise of thesubrogor's right, the obligee must give a notice of suit to the obligor without
delay.
(Obligee's Right of Subrogation to Preserve the Right to Request Registration)
Article 423-7 A person that has acquired by assignment from another person aproperty for which the acquisition or loss of rights and the change to rights
cannot be duly asserted against a third party unless registered may exercise
the assignor's right to request a third party to complete the registration
procedure if the assignor does not exercise that right. In such a case, theprovisions of the preceding three Articles apply mutatis mutandis.
Subsection 3 Obligee's Right to Demand Rescission of Fraudulent Act
Division 1 Requirements for Obligee's Right to Demand Rescission of
Fraudulent Act(Obligee's Demand for Rescission of Fraudulent Act)
Article 424 (1) An obligee may demand the court to rescind an act which the
obligor commits knowing that it will prejudice the obligee; provided, however,that this does not apply if a person that benefits from that act (hereinafter81referred to as the "beneficiary" in this Subsection) does not know, at the time of
the act, that the obligee will be prejudiced.
(2) The provisions of the preceding paragraph do not apply to an act with asubject matter other than property rights.
(3) The obligee may make the demand under the provisions of paragraph (1)(hereinafter referred to as "demand for rescission of fraudulent act") only if theobligee's claim has arisen from a cause that existed before the act prescribed inparagraph (1).
(4) The obligee may not make demand for rescission of fraudulent act if theobligee's claim is not enforceable by compulsory execution.
(Special Provisions for Act of Disposing of Property in Exchange for Reasonable
Value)
Article 424-2 If the obligor commits an act of disposing of a property held
thereby, and, in exchange, acquires a reasonable value from the beneficiary,
the obligee may make demand for rescission of fraudulent act with respect tothat act only if the act satisfies all of the following requirements:(i) the act is actually likely to cause the obligor to engage in a disposition thatwill be prejudicial to other obligees such as concealment and gratuitousconveyance (hereinafter referred to as "concealment or other disposition" inthis Article) by changing the kind of the property through that disposition
such as realization of immovables;(ii) the obligor, at the time of the act, has the intention to engage inconcealment or other disposition of any property such as money that the
obligor acquires as in exchange for the act; and(iii) the beneficiary, at the time of the act, knows that the obligor has theintention to engage in concealment or other disposition.
(Special Provisions for Provision of Security to Specific Obligee)
Article 424-3 (1) The obligee may make demand for rescission of fraudulent act
with respect to an act concerning the provision of a security or extinguishmentof an obligation that is committed by the obligor with regard to an existingobligation, only if the act satisfies all of the following requirements:(i) the act is committed while the obligor is unable to pay debts (meaning thecondition in which the obligor, due to lack of ability to pay, is generally andcontinuously unable to pay debts as they become due; the same applies initem (i) of the following paragraph); and(ii) the act is committed by the obligor in collusion with the beneficiary with
the intention to prejudice other obligees.
(2) If the act prescribed in the preceding paragraph is not within the scope of theobligor's obligation or the time of the act is not such that is required as the82obligor's obligation, and it satisfies all of the following requirements, theobligee may make demand for rescission of fraudulent act with respect to thatact, notwithstanding the provisions of that paragraph:(i) the act is committed within 30 days before the obligor became unable to pay
debts; and(ii) the act is committed by the obligor in collusion with the beneficiary with
the intention to prejudice other obligees.
(Special Provisions for Substitute Performance for Excessive Consideration)
Article 424-4 With respect to an act concerning the extinguishment of an
obligation which has been committed by the obligor, if the value of the payment
or delivery received by the beneficiary exceeds the amount of the obligation
extinguished by that act, and the act satisfies the requirement prescribed in
Article 424, the obligee may make demand for rescission of fraudulent act withregard to the part other than the part corresponding to the amount of theobligation extinguished, notwithstanding the provisions of paragraph (1) of thepreceding Article.
(Demand for Rescission of Fraudulent Act against Subsequent Acquirer)
Article 424-5 If the obligee is entitled to make demand rescission for fraudulent
act against the beneficiary, and a person subsequently acquires the property
which has been transferred to the beneficiary, the obligee may also makedemand for rescission of fraudulent act against the subsequent acquirer only inthe situations specified in the following items according to the categories set
forth in the respective items:(i) if the subsequent acquirer acquires the property from the beneficiary: thesubsequent acquirer, at the time of the acquisition, knows that the obligor's
act will be prejudicial to the obligee; or(ii) if the subsequent acquirer acquires the property from another subsequentacquirer: the relevant subsequent acquirer and all the subsequent acquirers
that previously acquired the property, at the time of their respective
acquisitions, know that the obligor's act will be prejudicial to the obligee.
Division 2 Method of Exercising Right to Demand Rescission of
Fraudulent Act(Demand of Return of Property or Reimbursement of Value)
Article 424-6 (1) In making demand for rescission of fraudulent act against thebeneficiary, the obligee may demand the rescission of the act committed by the
obligor and also demand the return of the property which has been transferredto the beneficiary as a result of that act. If it is difficult for the beneficiary to83return the property, the obligee may demand the reimbursement of its value.
(2) In making demand for rescission of fraudulent act against the subsequentacquirer, the obligee may demand the rescission of the act committed by the
obligor and also demand the return of the property which has been acquired by
the subsequent acquirer. If it is difficult for the subsequent acquirer to return
the property, the obligee may demand the reimbursement of its value.
(Defendant and Notice of Suit)
Article 424-7 (1) In an action concerning demand for rescission of fraudulent act,
the person specified in each of the following items according to the categories
set forth in the respective items stands as a defendant:(i) an action concerning demand for rescission of fraudulent act against thebeneficiary: the beneficiary; or(ii) an action concerning demand for rescission of fraudulent act against thesubsequent acquirer: the subsequent acquirer that is the other party to thedemand for rescission of fraudulent act.
(2) If the obligee files an action concerning demand for rescission of fraudulent
act, the obligee must give notice of suit to the obligor without delay.
(Scope of Fraudulent Act to Be Rescinded)
Article 424-8 (1) If the obligee makes demand for rescission of fraudulent act,
and the subject matter of the act committed by the obligor is divisible, theobligee may demand rescission of the act only to the extent of the amount of
the obligee's own claim.
(2) The preceding paragraph also applies if the obligee demands thereimbursement of value pursuant to the provisions of the second sentence ofArticle 424-6, paragraph (1) or the second sentence of paragraph (2) of that
Article.
(Payment or Delivery to Obligee)
Article 424-9 (1) If the obligee demands the return of property from thebeneficiary or subsequent acquirer pursuant to the provisions of the first
sentence of Article 424-6, paragraph (1) or the first sentence of paragraph (2) ofthat Article, and the subject matter of the demand for return is the payment ofmoney or delivery of movables, the obligee may demand that the beneficiarymake the payment or delivery to the obligee or that the subsequent acquirer
make the delivery to the obligee. In such a case, if the beneficiary or
subsequent acquirer makes the payment or delivery to the obligee, they are notrequired to make the payment or delivery to the obligor.
(2) The preceding paragraph also applies if the obligee demands thereimbursement of value from the beneficiary or subsequent acquirer pursuant84

to the provisions of the second sentence of Article 424-6, paragraph (1) or thesecond sentence of paragraph (2) of that Article.
Division 3 Effect of Exercise of Right to Demand Rescission of
Fraudulent Act(Scope of Persons Affected by Upholding Judgment)
Article 425 A final and binding judgment upholding demand for rescission of
fraudulent act is effective against the obligor and all obligees.
(Beneficiary's Right for Counter-Performance Received by Obligor)
Article 425-2 If an act concerning the disposition of property conducted by the
obligor (excluding an act concerning the extinguishment of an obligation) is
rescinded, the beneficiary may demand that the obligor return the counter performance that the beneficiary completed in order to acquire the property. If
it is difficult for the obligor to return the counter-performance, the beneficiary
may demand the reimbursement of its value.
(Restoration of Beneficiary's Claim)
Article 425-3 If an act concerning the extinguishment of an obligation conductedby the obligor is rescinded (excluding the case of rescission pursuant to theprovisions of Article 424-4), and the beneficiary returns the payment ordelivery received from the obligor or reimburse its value, this restores thebeneficiary's claim against the obligor to its original state.
(Right of Subsequent Acquirer Subject to Demand for Resciss ion of Fraudulent
Act)
Article 425-4 If an act done by the obligor is rescinded by the demand for
rescission of fraudulent act made against the subsequent acquirer, thesubsequent acquirer may exercise the right specified in each of the following
items according to the categories set forth in the respective items; provided,
however, that this is limited to the value of the counter-performance which wascompleted by the subsequent acquirer in order to acquire the property from thepredecessor or the value of the claim which was extinguished as a result of theacquisition of the property by the subsequent acquirer from the predecessor:(i) if the act prescribed in Article 425-2 is rescinded: the beneficiary's right todemand return of the counter-performance or right to demand
reimbursement of its value from the obligor, which should have arisen
pursuant to the provisions of that Article if the act were rescinded by thedemand for rescission of fraudulent act against the beneficiary; or(ii) if the act prescribed in the preceding Article is rescinded (excluding the85case of rescission pursuant to the provisions of Article 424-4): thebeneficiary's claim against the obligor, which should have been restored
pursuant to the provisions of the preceding Article if the act were rescinded
by demand for rescission of fraudulent act against the beneficiary.
Division 4 Limitation on Period for Right to Demand Rescission of
Fraudulent Act
Article 426 No action for demand for rescission of fraudulent act may be filed if
two years have passed from the time when the obligee came to know that the
obligor committed the act knowing that it would be prejudicial to the obligee.
The same applies if 10 years have passed from the time of the act.
Section 3 Claims and Obligations with Multiple-Parties
Subsection 1 General Provisions(Divisible Claims and Divisible Obligations)
Article 427 If there are more than one obligee or obligor, unless a particularintention is manifested, each obligee or each obligor has rights or obligation s inequal ratios.
Subsection 2 Indivisible Claims and Indivisible Obligations(Indivisible Claim)
Article 428 The provisions of the following Subsection (Joint and Several
Claims) (excluding the provisions of Articles 433 and 435) apply mutatis
mutandis if the subject matter of a claim is indivisible by nature and the claim
is held by two or more obligees.
(Novation or Release between Obligor and One Obligee of Indivisible Claim)
Article 429 Even if there is a novation or release between one of the obligees ofan indivisible claim and the obligor, other obligees may request the obligor toperform the obligation in whole. In such a case, the benefit which should havebeen allocated to that one obligee if that obligee did not lose the relevant rig ht
must be reimbursed to the obligor.
(Indivisible Obligation)
Article 430 The provisions of Subsection 4 (Joint and Several Obligation)(excluding the provisions of Article 440) apply mutatis mutandis if the subjectof an obligation is indivisible by nature and there are multiple obligors.

86

(Changing into Divisible Claims or Divisible Obligations)
Article 431 If an indivisible claim becomes a divisible claim, each obligee may
request the performance only of the share of the claim to which each obligee i sentitled, and if an indivisible obligation becomes a divisible obligation, eachobligor is liable only for the share of the obligation for which each obligor isliable.
Subsection 3 Joint and Several Claims(Request by Joint and Several Obligees for Performance)
Article 432 If the subject matter of a claim is divisible by nature, and two or
more persons hold the claim jointly and severally based on the provisions oflaws and regulations or the manifestation of intention of the parties, eachobligee may request the performance in whole or in part for the benefit of all
obligees, and the obligor may perform for each obligee for the benefit of all
obligees.
(Novation or Release between Obligor and One Joint and Several Obligee)
Article 433 If there is a novation or release between one of the joint and several
obligees and the obligor, the other obligees may not request performance of thepart concerning the benefit which should have been allocated to that one
obligee if the obligee did not lose the relevant right.
(Set-Off between Obligor and One Joint and Several Obligee)
Article 434 If the obligor has a claim against one of the joint and several obligees,
and the obligor invokes a set-off, the set-off becomes effective against otherjoint and several obligees as well.
(Merger of Obligor with One Joint and Several Obligee)
Article 435 If there is a merger between one of the joint and several obligees andthe obligor, the obligor is deemed to have performed the obligation.
(Principle of Relative Effect)
Article 435-2 Except in cases prescribed in Article 432 through the preceding
Article, any act of one of the joint and several obligees or any circumstances
which have arisen with respect to one of the joint and several obligees do not
become effective in relation to other joint and several obligees; provided,
however, that if one of the other joint and several obligees and the obligor
manifest a particular intention, their intention prevails with respect to theeffect in relation to the remaining other joint and several obligees.

87Subsection 4 Joint and Several Obligations(Request to Joint and Several Obligors for Performance)
Article 436 If the subject matter of an obligation is indivisible by nature, andtwo or more persons bear the obligation jointly and severally based on theprovisions of laws and regulations or the manifestation of intention of theparties, the obligee may request one of the joint and several obligors, or all of
the joint and several obligors, simultaneously or successively, to perform theobligation, in whole or in part.
(Invalidity of Juridical Act with Respect to One of Joint and Several Obligors)
Article 437 Even if there are grounds for the invalidity or rescission of ajuridical act with respect to one of the joint and several obligors, the validity ofthe obligation of other joint and several obligor is not impaired.
(Novation between Obligee and One Joint and Several Obligor)
Article 438 If novation takes place between one of the joint and several ob ligors
and the obligee, the claim is extinguished for the benefit of all joint and several
obligors.
(Set-Offs by One Joint and Several Obligor)
Article 439 (1) If one of the joint and several obligors has a claim against the
obligee and invokes a set-off, the claim is extinguished for the benefit of all
joint and several obligors.
(2) Until the joint and several obligor that has the claim referred to in thepreceding paragraph invokes a set-off, other joint and several obligors may
refuse to perform the obligation to the obligee only to the extent of that joint
and several obligor's share of the obligation.
(Merger with One of Joint and Several Obligors)
Article 440 If there is a merger between one of the joint and several obligors andthe obligee, the joint and several obligor is deemed to have performed theobligation.
(Principle of Relative Effect)
Article 441 Except in cases prescribed in Articles 438, Article 439, paragraph (1),and the preceding Article, any circumstances which have arisen with r espect toone of the joint and several obligors is not effective in relation to other joint
and several obligors; provided, however, that if the obligee and one of the otherjoint and several obligors manifest a different intention, their intention
prevails with respect to the effect in relation to the remaining other joint and88

several obligees.
(Right to Reimbursement among Joint and Several Obligors)
Article 442 (1) If one of the joint and several obligors performs the obligation orotherwise obtain a common discharge in exchange for that obligor's own
property, the joint and several obligor has the right to reimbursement fromother joint and several obligors for the amounts in proportion to theirrespective shares of the obligation of the amount of the property expended by
the joint and several obligor in order to obtain the discharge (if the amount ofproperty exceeds the amount after the common discharge, the amount thus
discharged), regardless of whether the amount discharged exceeds the amountof the joint and several obligor's own share.
(2) The reimbursement under the provisions of the preceding paragraph includes
the compensation of the statutory interest which accrues on or after the day ofthe performance of the obligation or other discharge, and the compensation forunavoidable expenses and other loss or damage.
(Limitation on Reimbursement to Joint and Several Obligor That Has Failed toGive Notice)
Article 443 (1) If one of the joint and several obligors performs the obligation orotherwise obtains a common discharge in exchange for that obligor's own
property, while knowing the existence of other joint and several obligors but
without giving notice of the common discharge to the other joint and several
obligors, another joint and several obligor has a defense that can be duly
asserted against the obligee, the other joint and several obligor may duly
assert that defense against the joint and several obligor that obtained thedischarge to the extent of the other obligor's share of the obligation. In such acase, if the other joint and several obligor duly asserts a set -off as defense
against the joint and several obligor that obtained the discharge, the joint andseveral obligor may request the obligee to perform the obligation which s houldhave been extinguished due to set-off.
(2) If one of the joint and several obligors that has performed the obligation orotherwise obtained a common discharge in exchange for that obligor's own
property, while knowing the existence of other joint and several obligors, fails
to give notice of the acquisition of the discharge to the other joint and several
obligors, and as a result, another joint and several obligor performs theobligation or performs another act in good faith to obtain discharge inexchange for that obligor's own property, the other joint and several obligor
may deem that the act performed to obtain the discharge is valid.
(Allocation of Share of Person Who Does Not Have Sufficient Financial
89

Resources for Reimbursement)
Article 444 (1) If one of the joint and several obligors does not have the sufficientfinancial resources to make the reimbursement, the portion that is unable to be
reimbursed is borne by the joint and several obligor that demands thereimbursement and the other joint and several obligors that have the financial
resources, in proportion to their respective shares of the obligation.
(2) In the case prescribed in the preceding paragraph, if neither the joint andseveral obligor that demands the reimbursement nor the other obligors thathave the financial resources have shares of the obligation, the portion that is
unable to be reimbursed is borne equally among the joint and several obligor
that demands the reimbursement and the other obligors that have the financial
resources.
(3) Notwithstanding the provisions of the preceding two paragraphs, if the joint
and several obligor that demands the reimbursement is unable to receive thereimbursement due to negligence, that joint and several obligor may not
request other joint and several obligors to bear their respective shares of theobligation.
(Release of One Joint and Several Obligor and Right to Reimbursement)
Article 445 Even if one of the joint and several obligors is released from theobligation or the prescription period expires for one of the joint and several
obligors, other joint and several obligors may exercise the right toreimbursement referred to in Article 442, paragraph (1) against that one joint
and several obligor.
Subsection 5 Guarantee Obligation
Division 1 General Provisions(Responsibility of Guarantor)
Article 446 (1) A guarantor has the responsibility to perform the obligation of
the principal obligor when the latter fails to perform that obligation.
(2) No guarantee contract becomes effective unless it is made in writing.
(3) If a guarantee contract is concluded by electronic or magnetic record which
records the terms thereof, the guarantee contract is deemed to be made inwriting, and the provisions of the preceding paragraph apply.
(Scope of Guarantee Obligation)
Article 447 (1) The guarantee obligation includes interest, penalty andcompensation for loss or damage in connection with the principal obligation,
and all other charges secondary to that obligation.
(2) A guarantor may stipulate the amount of penalty or compensation for loss or90

damage with regard to the guarantor's own guarantee obligation only.
(Burden of Guarantor, and Subject Matter or Terms of Principal Obligation)
Article 448 (1) If the burden of a guarantor is more onerous than t he principal
obligation as to either its subject matter or terms, it is reduced to the extent of
the principal obligation.
(2) Even if the subject matter or terms of the principal obligation are made more
onerous after the conclusion of a guarantee contract, the burden of theguarantor remains unchanged.
(Guarantee of Voidable Obligations)
Article 449 If a guarantor that guarantees an obligation which may be voidable
due to the principal obligor's limited capacity to act, is aware, at the time ofentering into a guarantee contract, of the cause for its voidability, thatguarantor is presumed to have assumed an independent obligation of the same
subject matter in the event of non-performance by the principal obligor or
rescission of the obligation.
(Requirements for Guarantor)
Article 450 (1) If an obligor has the obligation to provide a guarantor, thatguarantor must:(i) be a person with capacity to act; and(ii) have sufficient financial resources to pay the obligation.
(2) If the guarantor ceases to meet the requirements set forth in item (ii) of thepreceding paragraph, the obligee may demand that some other person meeting
the requirements set forth in any item of the same paragraph be substituted
for that guarantor.
(3) The provisions of the preceding two paragraphs do not apply if the obligee has
designated the guarantor.
(Providing Other Security)
Article 451 If an obligor is unable to provide a guarantor meeting therequirements set forth in any item of paragraph (1) of the preceding Artic le,the obligor may provide other security in lieu thereof.
(Defense of Demand)
Article 452 If an obligee has requested performance of an obligation from theguarantor, the guarantor may request the obligee to demand performance ofthe principal obligor first; provided, however, that this does not apply if theprincipal obligor is subject to an order commencing bankruptcy proceeding or if
the principal obligor's whereabouts are unknown.
91

(Defense of Debtor's Financial Resources)
Article 453 Even after the obligee has made a demand to the principal obligor inaccordance with the provisions of the preceding Article, the obligee must first
execute on the property of the principal obligor if the guarantor proves that the
principal obligor has the financial resources to pay the obligation and that theexecution can be easily performed.
(Special Provisions for Joint and Several Guarantee)
Article 454 If a guarantor has assumed an obligation jointly and severally withthe principal obligor, the guarantor does not have the rights set forth in thepreceding two Articles.
(Effect of Defense of Demand and Defense of Debtor's Financial Resources)
Article 455 If after the guarantor makes a request or gives proof pursuant to theprovisions of Article 452 or Article 453, the obligee fails to demand or to levy
execution and becomes unable to obtain full performance from the principal
obligor as a result of that, the guarantor is released from the obligation to theextent that the obligee would have received payment if the obligee had
immediately demanded or levied execution.
(Cases with Multiple Guarantors)
Article 456 If there are multiple guarantors, the provisions of Article 427 apply
even if their obligations arise from individual acts.
(Effect of Circumstance Which Arises with Respect to the Principal Obligor)
Article 457 (1) The postponement of expiry of prescription period and therenewal of prescription period due to grounds such as a request for
performance in relation to the principal obligor are also effective in relation to
the guarantor.
(2) A guarantor may assert against the obligee a defense that can be raised by
the principal obligor.
(3) If the principal obligor has a right to set-off, right to rescind or right to cancel
against the obligee, the guarantor may refuse to perform the obligation to the
obligee to the extent that the principal obligor should have been released fromthe obligation by exercising these rights.
(Effect of Circumstance Which Arises with Respect to Jointly and Sev erally
Liable Guarantor)
Article 458 The provisions of Article 438, Article 439, paragraph (1), Article 440,
and Article 441 apply mutatis mutandis to circumstances which arise with92

regard to the guarantor that bears the obligation jointly and severally w ith theprincipal obligor.
(Obligee's Duty to Provide Information on the Status of Performance ofPrincipal Obligation)
Article 458-2 If a guarantor gives a guarantee as requested by the principal
obligor, the obligee, upon request of the guarantor, must provide, without delay,
the guarantor with information concerning whether or not there has been adefault in terms of the principal of the principal obligation or any interest,
penalty or compensation for loss or damage in connection with the principal
obligation or any other charges secondary to the obligation, as well as theremaining amount of these items and the amount of those already due.
(Obligee's Duty to Provide Information If Principal Obligor Forfeits the Benefitof Time)
Article 458-3 (1) If the principal obligor has the benefit of time forfeits thebenefit, the obligee must notify the guarantor to that effect within two months
from the time when the obligee comes to know the principal obligor's forfeitureof the benefit.
(2) If the obligee fails to notify the guarantor as referred to in the preceding
paragraph within the period referred to that paragraph, the obligee may not
request the guarantor to perform the guarantee obligation for any delay
damages that have accrued after the principal obligor is accelerated andbecomes immediately due until the obligee notifies the guarantor pursuant to
the provisions of that paragraph (excluding those that should have accrued
even if the principal obligor maintains the benefit of time).
(3) The provisions of the preceding two paragraphs do not apply if the guarantor
is a corporation.
(Right to Reimbursement of Guarantor Guaranteeing by Request)
Article 459 (1) If a guarantor gives a guarantee as requested by the principal
obligor, and performs the obligation on behalf of the principal obligor or
performs any other act that causes the obligation to be extinguished in
exchange for the guarantor's own property (hereinafter referred to as an "actfor extinguishment of obligation"), the guarantor has a right to reimbursementfrom the principal obligor for the amount of property expended for that act (ifthe amount of property exceeds the amount of the principal obligation
extinguished by the act for extinguishment of obligation, the amount thus
extinguished).
(2) The provisions of Article 442, paragraph (2) apply mutatis mutandis to thecases set forth in the preceding paragraph.
93

(Right to Reimbursement in Case of Guarantor Guaranteeing by Request Who
Performed Obligation Before Due Date)
Article 459-2 (1) If a guarantor gives a guarantee as requested by the principal
obligor and performs an act for extinguishment of obligation before the due
date of the principal obligation, the guarantor has the right to reimbursementfrom the principal obligor to the extent that the principal obligor was enrichedat the time of the act. In such a case, if the principal obligor alleges to have
had grounds for set-off prior to the day of the act for extinguishment of
obligation, the guarantor may request the obligee to perform the obligation
which should have been extinguished due to the set-off.
(2) Reimbursement under the provisions of the preceding paragraph includes thestatutory interest which accrues on and after the due date of the principal
obligation and compensation for loss or damage including expenses which could
not have been avoided even if an act for extinguishment of obligation were
performed on or after the due date.
(3) The right to reimbursement referred to in paragraph (1) may not be exercised
before the due date of the principal obligation.
(Right of Guarantor Guaranteeing by Request to Reimbursement in Advance)
Article 460 If a guarantor has given a guarantee as requested by the principal
obligor, the guarantor may exercise in advance the right to reimburs ement
against the principal obligor if:(i) the principal obligor is subject to an order commencing bankruptcy
proceeding, and the obligee does not participate in the distribution of thebankruptcy estate;(ii) the obligation is due; provided, however, that no extension of time grantedby the obligee to the principal obligor after the conclusion of the guarantee
contract may be duly asserted against the guarantor; and(iii) the guarantor is, without negligence, rendered a judicial decision order ing
the guarantor to perform the obligation to the obligee.
(Cases in Which a Principal Obligor Reimburses a Guarantor)
Article 461 (1) If a principal obligor reimburses a guarantor pursuant to theprovisions of the preceding Article, the principal obligor may demand theguarantor to provide security or to obtain an exemption for the principal
obligor until the obligee receives the full satisfaction of the entire obligation.
(2) In the case prescribed in the preceding paragraph, the principal obligor may
be released from the obligation for reimbursement by making a deposit with an
official depository, by providing security, or by procuring the discharge of theliabilities of the guarantor.
94

(Right to Reimbursement of Guarantor Guaranteeing without Request by
Principal Obligor)
Article 462 (1) The provisions of Article 459-2, paragraph (1) apply mutatis
mutandis if a person, that has given guarantee without the request of theprincipal obligor, performs an act for extinguishment of obligation.
(2) A person that has become a guarantor against the will of the principal obligor
has the right to reimbursement only to the extent currently enriched. In thiscase, if the principal obligor asserts to have grounds for set -off against the
obligee prior to the day of the demand for reimbursement, the guarantor may
demand that the obligee perform the obligation which would have been
extinguished by that set-off.
(3) The provisions of Article 459-2, paragraph (3) apply mutatis mutandis to theexercise of the right to reimbursement if the guarantor referred to in thepreceding two paragraphs performs an act for extinguishment of obligation
before the due date of the principal obligation.
(Limitation on Reimbursement for Guarantor Who Failed to Give Notice)
Article 463 (1) If a guarantor gives a guarantee as requested by the principal
obligor and performs an act for extinguishment of obligation without giving
prior notice to the principal obligor, the principal obligor may assert against
the guarantor any defense that could have been asserted against the obligee. In
such a case, if the principal obligor asserts a set-off against the guarantor, theguarantor may request the obligee to perform the obligation which should havebeen extinguished due to the set-off.
(2) If a guarantor gives a guarantee as requested by the principal obligor andperforms an act for extinguishment of obligation in good faith because of theprincipal obligor's failure to notify the guarantor of the principal obligor's
performance of an act for extinguishment of obligation, the guarantor may
deem that the guarantor's own act for extinguishment of obligation is valid.
(3) If the principal obligor performs an act for extinguishment of obligation after
the guarantor has performed an act for extinguishment of obligation, theprincipal obligor may deem that the guarantor's own act for extinguishment of
obligation is valid, not only if the guarantor has given guarantee against thewill of the principal obligor but also if the principal obligor has performed an
act for extinguishment of obligation in good faith because of the guarantor's
failure to notify the principal obligor of the guarantor's performance of act for
extinguishment of obligation.
(Right to Reimbursement of Guarantor for Joint and Several Obligation orIndivisible Obligation)
95

Article 464 A person that has become a guarantor for one of the joint and several
obligors or for one of the indivisible obligors has the right to reimbursementfrom the other obligors only to the extent of that person's s hare of theobligation.
(Right of Joint Guarantors to Reimbursement for One Obligation)
Article 465 (1) If there are multiple guarantors, and one guarantor has paid theentire amount of the obligation or any amount exceeding that guarantor's
share because the principal obligation is indivisible, or because there is a
special provision to the effect that each guarantor should pay the entire
amount, the provisions of Articles 442 through 444 apply mutatis mutandis.
(2) Except in the cases prescribed in the preceding paragraph, if one of theguarantors that are not jointly and severally liable has paid the entire amountor any amount exceeding that guarantor's share, the provisions of Article 462
apply mutatis mutandis.
Division 2 Contract for Revolving Guarantee by Individual(Liability of Guarantor of Contract for Revolving Guarantee by Individual)
Article 465-2 (1) A guarantor to a guarantee contract under which the principal
obligation is one or more unidentified obligations within a certain specified
scope (hereinafter referred to as a "contract for revolving guarantee") and theguarantor is not a corporation (hereinafter referred to as a "contract for
revolving guarantee by an individual") is liable to perform the obligation interms of the amounts of the principal of the principal obligation, any interest,
penalty and compensation for loss or damage in connection with the principal
obligation, and all the other charges secondary to the obligation, as well as theamount of any penalty or compensation for loss or damage which is agreedupon on with regard to the guarantee obligation, up to a certain maximum
amount which pertains to all of these amounts.
(2) A contract for revolving guarantee by an individual does not become effective
unless it provides for the maximum amount prescribed in the preceding
paragraph.
(3) The provisions of Article 446, paragraphs (2) and (3) apply mutatis mutandis
to the provisions concerning a maximum amount prescribed in paragraph (1) in
a contract for revolving guarantee by an individual.
(Principal Crystallization Date for Contract for Revolving Guarantee by
Individual for Loans)
Article 465-3 (1) If a contract for revolving guarantee by an individual underwhich the scope of the principal obligation includes an obligation to be borne as96

a result of loans or receiving a discount of a negotiable instrument (hereinafterreferred to as a "loan obligation"; and this contract is hereinafter referred to asa "contract for revolving guarantee by an individual for loans") provides for thedate on which the principal of the principal obligation should be crystallized(hereinafter referred to as the "principal crystallization date"), and it also
provides that the principal crystallization date is to fall on or aft er the day on
which five years have passed after the day of the conclusion of the contract for
the revolving guarantee by an individual for loans, the provisions concerning
the principal crystallization date do not become effective.
(2) If a contract for revolving guarantee by an individual for loans does notprovide for a principal crystallization date (or if the provisions concerning theprincipal crystallization date do not become effective pursuant to theprovisions of the preceding paragraph), the principal crystallization date is tofall on the day on which three years have passed from the day of the conclusionof the contract for revolving guarantee by an individual for loans.
(3) If a change of the principal crystallization date provided for in a con tract for
revolving guarantee by an individual for loans is to be effected, and theprincipal crystallization date as changed falls on a day later than the day on
which five years have passed after the day of the change, that change of theprincipal crystallization date does not become effective; provided, however,that this does not apply if the change of the principal crystallization date iseffected within two months immediately preceding the principal crystallization
date, and the principal crystallization date as changed falls on a day within
five years from the original principal crystallization date.
(4) The provisions of Article 446, paragraphs (2) and (3) apply mutatis mutandis
to the provisions concerning a principal crystallization date in a contr act for
revolving guarantee by an individual for loans and a change thereof (excluding
provisions to the effect that the principal crystallization date is to fall on a day
within three years from the day of the conclusion of that contract for revolving
guarantee by an individual for loans, and any change which is intended tochange the principal crystallization date to a day preceding the original
principal crystallization date).
(Grounds for Crystallization of Principal in Contract for Revolving Guarantee
by Individual)
Article 465-4 (1) The principal of the principal obligation under a contract for
revolving guarantee by an individual is crystallized in the following cases;
provided, however, that in the case set forth in item (i), it is crystallized onl y if
the procedure for compulsory execution or enforcement procedure of a security
right is commenced:(i) if an obligee files a petition for compulsory execution or enforcement of any
97security right for a claim for payment of money with regard to any prop ertyof the guarantor;(ii) if the guarantor receives an order commencing bankruptcy proceeding; or(iii) the relevant principal obligor or guarantor has died.
(2) Beyond the case prescribed in the preceding paragraph, the principal of theprincipal obligation under a contract for revolving guarantee by an individualfor loans is crystallized in the following cases; provided, however, that in thecase set forth in item (i), it is crystallized only if the procedure for compulsory
execution or enforcement procedure of a security right is commenced:(i) if the obligee files a petition for compulsory execution or enforcement of asecurity right for a claim for payment of money with regard to property of theprincipal obligor; or(ii) if the principal obligor receives an order commencing bankruptcy
proceeding.
(Right to Reimbursement in Contract for Revolving Guarantee When the
Guarantor Is a Corporation)
Article 465-5 (1) If a contract for revolving guarantee under which the guarantor
is a corporation does not provide for the maximum amount prescribed in
Article 465-2, paragraph (1), a guarantee contract under which the principal
obligation is an obligation arising from the right to reimbursement held by theguarantor of the contract for revolving guarantee against the principal obligor
does not become effective.
(2) If a contract for revolving guarantee under which the guarantor is a
corporation and the scope of the principal obligation includes a loan obligation
does not provide for the principal crystallization date, or its provisions
concerning the principal crystallization date or any change thereof would not
become effective should the provisions of Article 465-3, paragraph (1) orparagraph (3) be applied, a guarantee contract under which the principal
obligation is an obligation arising from the right to reimbursement held by theguarantor of the revolving guarantee contract against the principal obligor
does not become effective. The same applies to a contract for revolving
guarantee under which the scope of the principal obligation includes anobligation arising from the right to reimbursement.
(3) The provisions of the preceding two paragraphs do not apply if the guarantorof a guarantee contract under which the principal obligation is an obligation
arising from the right to reimbursement or of a contract for revolving
guarantee under which the scope of the principal obligation includes anobligation arising from the right to reimbursement is a corporation.
Division 3 Special Provisions for Guarantee Contract for Obligations
98

Arising from Business(Preparation of Notarial Instrument and Effect of Guarantee)
Article 465-6 (1) A guarantee contract under which the principal obligation is aloan obligation assumed for business or a contract for a revolving guarantee
under which the scope of the principal obligation includes a loan obligation
assumed for business does not become effective unless the person that will
become a guarantor manifests, prior to the conclusion of the contract, theintention to perform the guarantee obligation by means of a notarial
instrument prepared within one month prior to the day of conclusion of thecontract.
(2) The notarial instrument referred to in the preceding paragraph must be
prepared in compliance with the following formalities:(i) the person that will become a guarantor gives the notary oral instructions
regarding the particulars specified in (a) or (b) below for the category ofcontract set forth therein:(a) a guarantee contract (excluding the one set forth in (b)): the obligee andobligor of the principal obligation, the principal of the principal obligation,
whether any interest, penalty or compensation for loss or damage inconnection with the principal obligation or any other charges secondary to
the obligation are provided for in the contract and, if so, the details thereof,
as well as the fact that the person that will become a guarantor has theintention to pay the entire amount of the obligation if the principal obligor
fails to perform the obligation (if the person that will become a guarantor
seeks to assume the obligation jointly and severally with the principal
obligor, the intention to pay the entire amount of the obligation, regardlessof whether the obligee has made a demand to the principal obligor,
whether the principal obligor is able to perform the obligation, or whether
the principal obligor has any other guarantor); or(b) a contract for a revolving guarantee: the obligee and obligor of theprincipal obligation, the scope of the principal obligation, the maximum
amount under the contract for revolving guarantee, whether the principal
crystallization date is provided for in the contract and, if so, the details
thereof, as well as the fact that the person that will become a guarantor
has the intention to pay the entire amount of the obligation with regard to
the principal of the principal obligation and any interest, penalty, andcompensation for loss or damage in connection with the principal obligation
and any other charges secondary to the obligation, which are to arise by
the principal crystallization date or the time when an event that causes the
crystallization of the principal takes place, such as the events set forth in
the items of Article 465-4, paragraph (1) or the items of paragraph (2) of99

that Article, up to the maximum amount, if the principal obligor fails toperform the obligation (if the person that will become a guarantor seeks toassume the obligation jointly and severally with the principal obligor, theintention to pay the entire amount of the obligation, regardless of whether
the obligee has made a demand to the principal obligor, whether the
principal obligor is able to perform the obligation, or whether the principal
obligor has any other guarantor);(ii) the notary takes dictation from the person that will become the guarantor,
and reads this aloud to, or allows its inspection by, the person that will
become the guarantor;(iii) the person that will become a guarantor signs and seals the instrument
after having approved the accuracy of the dictation taken by the notary;
provided, however, that if the person that will become a guarantor is unable
to sign, the notary may include a supplementary note giving the reason
therefor in lieu of the signature of that person; and(iv) the notary includes a supplementary note to the effect that the instrument
has been prepared in compliance with the formalities set forth in thepreceding three items, and signs and seals the instrument.
(3) The provisions of the preceding two paragraphs do not apply if the personthat will become a guarantor is a corporation.
(Special Provisions for Formalities of Notarial Instrument on Guarantee)
Article 465-7 (1) If a person that will become a guarantor of a guarantee contract
or a contract for a revolving guarantee referred to in paragraph (1) of thepreceding Article is unable to speak, the person must make a statement infront of the notary of the particulars specified in paragraph (1), item (i), (a) or(b) of that Article for the category of contract set forth therein, through aninterpreter or by that person's own hand, in lieu of the oral instructions
referred to in the same item. In such a case, to apply the provisions of item (ii)of that paragraph, the term "oral instructions" in that item is deemed to be
replaced with "statement through an interpreter or by that person's own hand".
(2) If a person that will become a guarantor of a guarantee contract or contract
for revolving guarantee referred to in paragraph (1) of the preceding Article isunable to hear, the notary may convey the content of the dictation taken asprescribed in paragraph (2), item (ii) of that Article to the person that will
become a guarantor, through an interpreter, in lieu of the reading it aloud asreferred to in the same item.
(3) If a notary prepares a notarial instrument in compliance with the formalitiesprescribed in the preceding two paragraphs, the notary must include a
supplementary note to that effect on the instrument.

100

(Preparation of Notarial Instrument and Effect of Guarantee for Right toReimbursement)
Article 465-8 (1) The provisions of Article 465-6, paragraphs (1) and (2) and thepreceding Article apply mutatis mutandis to a guarantee contract under which
the principal obligation is a loan obligation assumed for business or aguarantee contract under which the principal obligation is an obligation
relating to the right to reimbursement held by a guarantor against the
principal debtor under a revolving guarantee contract under which the scope of
the principal obligation includes a loan obligation assumed for business. The
same applies to a contract for revolving guarantee under which the scope of theprincipal obligation includes an obligation relating to that right toreimbursement.
(2) The provisions of the preceding paragraph do not apply if the person that will
become a guarantor is a corporation.
(Exclusion from Application of Provisions Concerning Preparation of Notarial
Instrument and Effect of Guarantee)
Article 465-9 The provisions of the preceding three Articles do not apply to aguarantee contract under which the person that will become a guarantor is anyof the following persons:(i) if the principal obligor is a corporation, its managing administrator, director,
executive officer, or any person equivalent thereto; or(ii) if the principal obligor is a corporation, any of the following persons:(a) a person that holds the majority of voting rights of all shareholders(excluding voting rights in respect of shares that do not allow voting rights
to be exercised for all matters that may be resolved at a shareholders
meeting; hereinafter the same applies in this item) of the principal obligor;(b) if the majority of voting rights of all shareholders of the principal obligor
is held by another stock company: a person that holds the majority ofvoting rights of all shareholders of that other stock company; or(c) if the majority of voting rights of all shareholders of the principal obligor
is held by another stock company and a person that holds the majorit y ofvoting rights of all shareholders of that other stock company: a person that
holds the majority of voting rights of all shareholders of that other stockcompany;(d) if the principal obligor is a corporation that is not a stock company: aperson equivalent to the person set forth in (a), (b) or (c); or(iii) a person that conducts business jointly with the principal obligor(excluding one that is a corporation; hereinafter the same applies in thisitem) or the principal obligor's spouse who actually engages in the businessconducted by the principal obligor.
101

(Duty to Provide Information upon Conclusion of Contract)
Article 465-10 (1) If the principal obligor requests a person to give guarantee foran obligation to be assumed for business as the principal obligation or give
revolving guarantee for an obligation to be assumed for business that isincluded in the scope of the principal obligation, the principal obligor must
provide the person so requested with information concerning the following
particulars:(i) the status of assets, and income and expenditure;(ii) whether the principal obligor has any obligation other than the principal
obligation, and the amount and status of performance thereof; and(iii) if the principal obligor has provided or seeks to provide any other security
for the principal obligation, an indication of this and the details of the
security.
(2) If, because the principal obligor fails to provide information concerning theparticulars set forth in the items of the preceding paragraph or provides
information that is factually inaccurate, the person requested to guarantee
misunderstands these particulars and manifests the intention to offer or accept
the offer of a guarantee contract based on the misunderstanding, the guarantor
may rescind the guarantee contract if the obligee knew or could have known
that the principal obligor failed to provide information concerning theseparticulars or provided information that was factually inaccurate.
(3) The provisions of the preceding two paragraphs do not apply if the personthat gives guarantee is a corporation.
Section 4 Assignment of Claims(Assignability of Claims)
Article 466 (1) A claim may be assigned; provided, however, that this does not
apply if its nature does not permit the assignment.
(2) Even if a party to a claim manifests the intention to prohibit or restrict theassignment of the claim (hereinafter referred to as the "manifestation of
intention to restrict assignment"), the validity of the assignment of the c laim is
not impaired.
(3) In the case prescribed in the preceding paragraph, the obligor may refuse toperform the obligation to a third party such as the assignee that knew or did
not know due to gross negligence that the manifestation of intention to res trict
assignment was made, and may duly assert against such third party any eventthat results in extinguishment of the obligation such as payment to theassignor.
(4) The provisions of the preceding paragraph do not apply if the obligor does not102perform the obligation, and the third party prescribed in that paragraph makes
a demand to the obligor for the performance to the assignor by specifying areasonable period of time, but the obligor does not perform the obligation
within that period.
(Deposit Made by Obligor for Claim Subject to Manifestation of Intention to
Restrict Assignment)
Article 466-2 (1) If a claim for payment of money subject to the manifestation of
intention to restrict assignment is assigned to a third party, the obligor may
deposit the amount of money equivalent to the full amount of the claim with an
official depository having jurisdiction over the place of performance of theobligation (including the current domicile of the assignor if the place ofperformance of the obligation is determined on the basis of the current domicileof the obligee; the same applies in the following Article).
(2) An obligor that has made a deposit pursuant to the provisions of thepreceding paragraph must notify the assignor and the assignee of the deposit
without delay.
(3) Only the assignee is entitled to request the refund of the money deposited
pursuant to the provisions of paragraph (1).
Article 466-3 In the case prescribed in paragraph (1) of the preceding Article, if
an order commencing bankruptcy proceeding is issued with regard to theassignor, the assignee (limited to the one that has acquired the full amount of
the claim referred to in that paragraph and that may duly assert theassignment of the claim against a third party such as the obligor) ma y have theobligor deposit the amount of money equivalent to the full amount of the claim
with an official depository having jurisdiction over the place of performance ofthe obligation even if the assignee knew or did not know due to grossnegligence that the manifestation of intention to restrict assignment was made.
In such a case, the provisions of paragraphs (2) and (3) of that Article apply
mutatis mutandis.
(Attachment of Claim Subject to Manifestation of Intention to Restrict
Assignment)
Article 466-4 (1) The provisions of Article 466, paragraph (3) do not apply to an
attaching obligee that has enforced compulsory execution against a claim thatis subject to the manifestation of intention to restrict assignment.
(2) Notwithstanding the provisions of the preceding paragraph, if a third party
such as the assignee knew or did not know due to gross negligence that the
manifestation of intention to restrict assignment was made, and the obligee ofthe assignee or other third party enforces compulsory execution against the103

claim referred to in that paragraph, the obligor may refuse to perform theobligation and duly assert against an attaching obligee any event that resultsin extinguishing the obligation such as payment to the assignor.
(Effect of Manifestation of Intention to Restrict Assignment of Claim for
Deposits)
Article 466-5 (1) Notwithstanding the provisions of Article 466, paragraph (2),the manifestation of intention to restrict assignment which is made by a party
with regard to a claim for deposits in a deposit account (hereinafter referred toas a "claim for deposits") may be duly asserted against a third party such as
the assignee that knew or did not know due to gross negligence that the
manifestation of intention to restrict assignment was made.
(2) The provisions of the preceding paragraph do not apply to an attachingobligee that has commenced compulsory execution against a claim for deposits
that is subject to the manifestation of intention to restrict assignment.
(Assignability of Claim Yet to Arise)
Article 466-6 (1) The assignment of a claim does not require the claim to havealready arisen by the time of the manifestation of intention to assign it.
(2) If a claim is assigned, and the claim is yet to arise by the time of the
manifestation of intention to assign it, the assignee by operation of law
acquires the claim when it arises.
(3) In the case prescribed in the preceding paragraph, if the assignor makes the
manifestation of intention to restrict assignment by the time when the a ssignor
gives notice under the provisions of the following Article or the obligor gives
consent under the provisions of that Article (hereinafter referred to as the"time of completion of perfection"), a third party such as the assignee is deemed
to have known this, and the provisions of Article 466, paragraph (3) (orparagraph (1) of the preceding Article if the claim subject to the manifestationof intention to restrict assignment is a claim for deposits) apply thereto.
(Requirement for Perfection of Assignment of Claim)
Article 467 (1) The assignment of a claim (including the assignment of a claimthat is yet to arise) may not be duly asserted against the applicable obligor or
any other third party, unless the assignor gives notice thereof to the obligo r or
the obligor has consented to the same.
(2) Notice or consent as referred to in the preceding paragraph may not be duly
asserted against a third party other than the obligor unless the notice or theconsent is made using an instrument bearing a certified date.
(Defense of Obligor upon Assignment of Claim)
104

Article 468 (1) An obligor may duly assert against the assignee any event thathas taken place with regard to the assignor by the time of completion of theperfection.
(2) For the purpose of the application of the provisions of the preceding
paragraph in the case referred to in Article 466, paragraph (4), the phrase "atthe time of the completion of the perfection" in that paragraph is deemed to be
replaced with "at the time when a reasonable period of time referred to in
Article 466, paragraph (4) has elapsed"; and to apply the provisions of thatparagraph in the case referred to in Article 466-3, the phrase "at the time of
the completion of the perfection" in that paragraph is deemed to be replacedwith "at the time when the obligor receives a request from the assignee
referred to in Article 466-3 to make a deposit with an official depository
pursuant to the provisions of that Article".
(Right to Set-Off upon Assignment of Claim)
Article 469 (1) An obligor may duly assert against the assignee a set-off based ona claim against the assignor that the obligor acquired before the time ofsatisfaction of the requirement for perfection.
(2) The preceding paragraph also applies to a claim against the assign or that the
obligor acquires after the time of the completion of the perfection if the claim isany of the following; provided, however, that this does not apply if the obligor
acquires a claim of another person after the time of the completion of theperfection:(i) a claim that has arisen from a cause that existed before the time of thecompletion of the perfection; or(ii) beyond what is set forth in the preceding item, a claim that has arisen froma contract under which the claim acquired by the assignee has arisen.
(3) To apply the provisions of the preceding two paragraphs in the case referred
to in Article 466, paragraph (4), the phrase "at the time of the completion of
the perfection" in these provisions is deemed to be replaced with "at the time
when a reasonable period of time referred to in Article 466, paragraph (4) has
elapsed"; and to apply these provisions in the case referred to in Article 466 -3,
the phrase "at the time of the completion of the perfection" in these provisions
is deemed to be replaced with "at the time when the obligor receives a requestfrom the assignee referred to in Article 466-3 to make a deposit with an official
depository pursuant to the provisions of that Article".
Section 5 Assumption of Obligation
Subsection 1 Assumption of Obligation Not Releasing Obligor(Requirements for and Effect of Assumption of Obligation Not Releasing
105

Obligor)
Article 470 (1) An additional obligor resulting from the assumption of obligation
not releasing an obligor assumes, jointly and severally with the initial obligor,
an obligation of the same content as the obligation assumed by the initial
obligor to the obligee.
(2) The assumption of obligation not releasing an obligor may be effected by acontract between the obligee and the person that becomes the additional
obligor.
(3) The assumption of obligation not releasing an obligor may also be effected bya contract between the initial obligor and the person that becomes the
additional obligor. In such a case, the assumption of obligation not releasing an
obligor becomes effective when the obligee gives consent to the person that
becomes the additional obligor.
(4) The assumption of obligation not releasing an obligor to be effected pursuant
to the provisions of the preceding paragraph is governed by the provisions
concerning a third party beneficiary contract.
(Defense by Additional Obligor in Assumption of Obligation Not Releasing
Obligor)
Article 471 (1) An additional obligor may duly assert against the obligee any
defense that could have been asserted by the initial obligor at the time when
the assumption of obligation not releasing an obligor became effective, withregard to the obligation that the additional obligor has assumed through theassumption of obligation not releasing the obligor.
(2) If the initial obligor has a right to rescind or right to cancel against the
obligee, the additional obligor may refuse to perform the obligation to the
obligee to the extent that the initial obligor should have been released from theobligation by exercising either of these rights.
Subsection 2 Assumption of Obligation Releasing Old Obligor(Requirements for and Effect of Assumption of Obligation Releasing Old
Obligor)
Article 472 (1) A new obligor resulting from the assumption of oblig ation
releasing an old obligor assumes an obligation of the same content as theobligation of the initial obligor to the obligee, and the initial obligor is released
from their own obligation.
(2) The assumption of obligation releasing an old obligor may be effected by acontract between the obligee and the person that becomes the replacing obligor.
In such a case, the assumption of obligation releasing an old obligor becomes
effective when the obligee notifies the initial obligor of the conclusion of that106contract.
(3) The assumption of obligation releasing an old obligor may also be effected if
the initial obligor and the person that becomes the replacing obligor conclude acontract and the obligee gives consent to the person that becomes the replacing
obligor.
(Defense by New Obligor in Assumption of Obligation Releasing Old Obligor)
Article 472-2 (1) A new obligor may duly assert against the obligee any defensethat could have been asserted by the initial obligor at the time when theassumption of obligation releasing an obligor became effective, with regard to
the obligation that the replacing obligor has assumed through the assumptionof obligation releasing the obligor.
(2) If the old obligor has a right to rescind or right to cancel agai nst the obligee,
the new obligor may refuse to perform the obligation to the obligee to theextent that the initial obligor could have been released from the obligation by
exercising either of these rights should the assumption of obligation releasing
the obligor not be effected.
(Right to Reimbursement of New Obligor Resulting from Assumption of
Obligation Releasing Old Obligor)
Article 472-3 A new obligor resulting from the assumption of obligation
releasing an old obligor does not acquire a right to reimbursement from theobligor.
(Transfer of Security Resulting from Assumption of Obligation Releasing Old
Obligor)
Article 472-4 (1) An obligee may transfer a security right that has been createdas security for the obligation from which the initial obligor is released
pursuant to the provisions of Article 472, paragraph (1) to the obligation
assumed by the replacing obligor; provided, however, that if a person otherthan the replacing obligor created the security right, the obligee must obtainconsent from that person.
(2) The transfer of a security right under the provisions of the preceding
paragraph must be effected by manifesting the intention to the replacing
obligor in advance or upon the transfer.
(3) The provisions of the preceding two paragraphs apply mutatis mutandis if
there is a person that gave guarantee for the obligation from which the initial
obligor is released pursuant to the provisions of Article 472, paragraph (1).
(4) In the case referred to in the preceding paragraph, the consent refe rred to inparagraph (1) as applied mutatis mutandis pursuant to the preceding
paragraph does not become effective unless it is given in writing.
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(5) If the consent referred to in the preceding paragraph is given by means of anelectronic or magnetic record in which its content is recorded, the consent isdeemed to have been given in writing, and the provisions of that paragraphapply thereto.
Section 6 Extinction of Claims
Subsection 1 Performance
Division 1 General Provisions(Performance)
Article 473 If the obligor performs an obligation to the obligee, the claim isextinguished.
(Performance by Third Parties)
Article 474 (1) A third party may also perform an obligation.
(2) A third party that has no legitimate interest in performing an obligation may
not perform the obligation against the will of the obligor; provided, however,that this does not apply if the obligee did not know that the performance isagainst the will of the obligor.
(3) The third party prescribed in the preceding paragraph may not perform theobligation against the will of the obligee; provided, however, that this does not
apply if the third party performs the obligation as requested by the obligor,
and the obligee knew this.
(4) The provisions of the preceding three paragraphs do not apply if the nature ofan obligation does not permit the performance by a third party or if a party
manifests the intention to prohibit or restrict the performance by a third party.
(Recovery of Thing Transferred in Performance of Obligation)
Article 475 If a person effecting performance has delivered a thing owned byanother person in performance of the obligation, the person so effecting
performance may not recover that thing without effecting valid performance denovo.
(Effect of Performance If Thing Delivered in Performance of Obligation Is
Consumed or Assigned)
Article 476 In a case as referred to in the preceding Article, if an obligee in goodfaith consumes or assigns things received in performance of an obligation, that
performance is valid. In such a case, if the obligee has received a claim forcompensation from a third party, the obligee is not precluded from seeking
reimbursement from the person performing the obligation.

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(Performance by Payment into Account for Deposits)
Article 477 Performance made by making payment into the obligee's account for
deposits becomes effective when the obligee acquires a right to demand therefund of the amount paid, against the obligor of the claim to be paid from
deposits.
(Performance to Person That Appears to Be Authorized to Accept)
Article 478 Performance made to a person that does not constitute a person
authorized to accept the performance (meaning the obligee or a third party
authorized to accept performance based on the provisions of laws andregulations or the manifestation of intention of the parties; the same applies
hereinafter) but that appears to be the person authorized to accept theperformance in light of common sense in the transaction is effective only if theperson effecting performance was acting in good faith and without negligence.
(Performance to Person Other Than Person with Right to Performance)
Article 479 Except as provided in the preceding Article, any performance madeto a person other than the person with right to performance is effective only tothe extent that the obligee is enriched as a result thereof.
(Performance to Holder of Receipt)
Article 480 Deleted(Performance by Third Party Obligor of Claim Attached)
Article 481 (1) If a third party obligor of a claim that has been attached performs
the obligation to that third party's own obligee, the attaching obligee isentitled to request the third party obligor to perform the obligation de novo tothe extent of the damage sustained by the attaching obligee.
(2) The provisions of the preceding paragraph do not preclude the relevant third
party obligor from exercising the right to reimbursement from the obligee.
(Accord and Satisfaction)
Article 482 If a person that has right to perform an obligat ion (hereinafterreferred to as a "performer") concludes a contract with the obligee to the effectthat the person is to have the obligation extinguished by making, in lieu of thepayment or delivery to be performed by the obligor, another type of payment ordelivery, and the performer makes that other type of payment or delivery, thepayment or delivery thus made has the same effect as that of the performanceof the obligation.
(Delivery of Specific Thing on As-Is Basis)
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Article 483 If the subject matter of a claim is the delivery of a specific thing, andthe quality of the thing may not be determined as of the time when the delivery
is due in light of the cause from which the claim has arisen such as a contract
and the common sense in the transaction, the person that performs theobligation must deliver the thing on an "as-is" basis as of the time when thedelivery is due.
(Place and Time of Performance)
Article 484 (1) Unless a particular intention is manifested with respect to theplace where the performance should take place, the delivery of a specific thing
must be effected at the place where that thing was located when the relevantclaim accrued, and the discharge of any other obligation must be effected at thecurrent domicile of the obligee.
(2) If the trading hours are specified by laws and regulations or customs,
performance may be made or demanded only within the trading hours.
(Expense of Performance)
Article 485 Unless a particular intention is manifested with respect to theexpenses of performance, those expenses are borne by the obligor; provided,
however, that if the obligee caused the expenses of performance to increase by
relocating the domicile thereof or taking any other act, the amount of increase
due to this is borne by the obligee.
(Request for Issuance of Receipt)
Article 486 A person performing an obligation may request the person accepting
the performance to issue a receipt.
(Request for Return of Instrument Evidencing Claims)
Article 487 If there is an instrument evidencing a claim and the person making
the performance has made full performance, that person may demand thereturn of the instrument.
(Appropriation of One Payment or Delivery among Two or More Obligations
Requiring the Same Kind of Payment or Delivery)
Article 488 (1) If an obligor bears to a single obligee two or more obligations
which require the same kind of payment or delivery, and the payment ordelivery provided in performance of the obligations is not sufficient to
extinguish all of these obligations (excluding the case prescribed in paragraph(1) of the following Article), the person that makes the performance may, at thetime of the payment or delivery, designate a particular obligation to which that
performance should be appropriated before any others.
110(2) If the person performing an obligation does not make the designation under
the provisions of the preceding paragraph, the person receiving theperformance may, at the time of such receipt, designate a particular obligation
to which such performance should be appropriated before any others; provided,
however, that this does not apply if the person performing the obligation
immediately raises an objection to that appropriation.
(3) The designation of the appropriation of the performance under the preceding
two paragraphs is effected through a manifestation of intention to thecounterparty.
(4) Neither the person that makes the performance nor the person that accepts
the performance makes designation under the provisions of paragraph (1) orparagraph (2), the performance is appropriated pursuant to the provisions of
the following items:(i) if the obligations include those which are due and those which are not yetdue, the performance is appropriated to those which are due;(ii) if all obligations are due, or none of the obligations is due, the performanceis appropriated in the order of the obligations which are to result in more
benefit to the obligor when performed;(iii) if all obligations would have equal benefit to the obligor when performed,
the performance is appropriated in the order of the obligations which have,or should have, the earliest due date; or(iv) the performance of obligations which are equal in terms of the particulars
set forth in the preceding two items is appropriated in proportion to theamount of each obligation.
(Appropriation to Principal, Interest and Expenses Payable)
Article 489 (1) If the obligor is liable to pay interest and expenses in addition toprincipal with respect to one or more obligations (if the obligor b ears two or
more obligations, limited to when the obligor bears these obligations requiring
the same kind of payment or delivery to the same obligee), and the person that
performs the obligations makes payment or delivery which is not sufficient to
extinguish the obligation in its entirety must be appropriated first to expenses,
and then to interest and principal, in this order.
(2) The provisions of the preceding Article apply mutatis mutandis in the casereferred to in the preceding paragraph in which the person makes payment ordelivery which is not sufficient to extinguish any of expenses, interest or
principal in whole.
(Appropriation of Performance by Agreement)
Article 490 Notwithstanding the provisions of the preceding two Articles, if theperson that makes performance and the person that accepts performance agree111

on the order of appropriation of performance, the performance is appropriatedaccording to the agreed-upon order.
(Appropriation in Cases More Than One Performance Should Be Tendered)
Article 491 If more than one performance should be tendered to discharge asingle obligation, if the person that must perform tenders any performance
which is not sufficient to extinguish such obligation in its entirety, theprovisions of the preceding three Articles apply mutatis mutandis.
(Effect of Tender of Performances)
Article 492 Upon tendering the performance, the obligor is relieved from any
and all responsibilities which may arise from the non-performance of theobligation.
(Method of Tender of Performances)
Article 493 The tender of the performance must be made actually consistent
with the main purport of the obligation; provided, however, that if the obligee
refuses to accept that performance in advance or if any act is required on thepart of the obligee with respect to the performance of the obligation, it issufficient for the obligor to request the acceptance thereof by giving a noticethat the tender of the performance has been prepared.
Division 2 Deposit of Subject Matter of Performance(Deposit)
Article 494 (1) In the following cases, a performer may deposit the subject
matter of the performance with an official depository for the benefit of theobligee. In such a case, the claim is extinguished when the performer makes
the deposit:(i) the performer tenders the performance, and the obligee refuses to accept it;or(ii) the obligee is unable to accept the performance.
(2) The preceding paragraph also applies if the performer is unable to ascertain
the obligee; provided, however, that this does not apply if the performer isnegligent in this respect.
(Method of Deposit)
Article 495 (1) The deposit under the provisions of the preceding Article must be
made with the official depository having jurisdiction over the place where t herelevant obligation is performed.
(2) If there is no specific provision in laws and regulations with respect to the112official depository, the court, at the request of the performer, must designate
the depository and appoint a custodian of the thing to be deposited.
(3) A person that has effected a deposit pursuant to the provisions of thepreceding Article must notify the obligee of the deposit without delay.
(Recovery of Deposited Thing)
Article 496 (1) As long as the obligee does not accept the deposit, or the
judgment which pronounces that the deposit is effective does not become final
and binding, the performer may recover the deposited thingy. In such case, it isdeemed that no deposit has been effected.
(2) The provisions of the preceding paragraph do not apply in cases any pledge or
mortgage has been extinguished due to the deposit.
(Thing Not Suitable for Deposit)
Article 497 In the following cases, the performer may, with the permission of thecourt, sell the thing that is the subject matter of performance at public auction
and deposit the proceeds of such sales with an official depository:(i) the thing is not suitable for deposit;(ii) the price of the thing is likely to decline due to causes such as loss anddamage;(iii) excessive expenses are required for the preservation of the thing; or(iv) beyond the cases set forth in the preceding three items, there arecircumstances that make it difficult to deposit the thing.
(Demand for Return of Deposited Thing)
Article 498 (1) If the property that is the subject matter of performance or theproceeds referred to in the preceding Article are deposited, the obligee may
demand the return of the deposited thing.
(2) If the obligor is to effect performance in exchange for payment or delivery by
the obligee, the obligee may not receive deposited thing without making thatpayment or delivery.
Division 3 Subrogation by Performance(Requirements for Subrogation by Performance)
Article 499 A person that has performed the obligation for the benefit of theobligor is subrogated to the claim of the obligee.
Article 500 The provisions of Article 467 apply mutatis mutandis in the casereferred to in the preceding Article (unless a person with a legitimate interestin making performance is subrogated to the claim of the obligee).
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(Effect of Subrogation by Performance)
Article 501 (1) A person that is subrogated to the claim of the obligee pursuant
to the provisions of the preceding two Articles may exercise any and all rights
possessed by the obligee as the effect of, and as a security for, the claim held by
the obligee.
(2) The exercise of rights under the provisions of the preceding paragraph isallowed only to the extent that the person that is subrogated to the claim of theobligee is entitled to seek reimbursement from the obligor based on the
person's own rights (if one of the guarantors is subrogated to the claim of theobligee in relation to other guarantors, only to the extent that the guarantor isentitled to seek reimbursement from the other guarantors based on thatguarantor's own rights).
(3) In the case referred to in paragraph (1), the following provisions apply in
addition to the provisions of the preceding paragraph:(i) a third party acquirer (meaning a person that has acquired from the obligor
the property that is the subject of security; hereinafter the same applies inthis paragraph) is not subrogated to the claim of the obligee in relation to
any guarantors or third-party collateral providers;(ii) one of the third party acquirers is subrogated to the claim of the obligee in
relation to other third party acquirers in proportion to the price of each
property;(iii) the provisions of the preceding item apply mutatis mutandis if one of thethird-party collateral providers is subrogated to the claim of the obligee in
relation to other third-party collateral providers;(iv) between a guarantor and a third-party collateral provider, the subrogation
to the claim of the obligee is effected depending on the number of these
persons involved; provided, however, that if there are two or more thirdparty collateral providers, they are subrogated to the claim of the obligee inproportion to the price of each property with respect to the amount which
remains after deduction of the share of the guarantor; and(v) a person that has acquired from a third party acquirer the property that is
the subject of security is deemed to be a third party acquirer, and theprovisions of items (i) and (ii) apply thereto; and a person that has acquired
from a third-party collateral provider the property that is the subject of
security is deemed to be a third-party collateral provider, and the provisionsof items (i) and (iii) and the preceding item apply thereto.
(Subrogation by Partial Performance)
Article 502 (1) If performance by subrogation occurs with respect to one part of aclaim, the subrogee, with the consent of the obligee, may exercise the rights of114

the subrogee together with the obligee in proportion to the value of thesubrogee's performance.
(2) Even in a case as referred to in the preceding paragraph, the obligee may
exercise the obligee's right independently.
(3) The right to be exercised by the obligee in the case referred to in thepreceding two paragraphs prevails over the right to be exercised by thesubrogee with regard to money to be obtained as a result of the exercise of therights such as the proceeds from the sale of the property that is the subject of
security for the claim of the obligee.
(4) In the case referred to in paragraph (1), the cancellation of a contract basedon the failure to perform the obligation may be effected only by the obligee. In
such a case, the obligee must reimburse to the subrogee the value of theperformance that the subrogee effected plus interest.
(Delivery of Instrument Evidencing Claims by Obligee)
Article 503 (1) An obligee that has received full performance by way ofsubrogation must deliver to the subrogee the instruments regarding the claim
and any collateral that the obligee possesses.
(2) If performance by subrogation occurs with respect to a part of a claim, theobligee must enter the particulars of that subrogation in the instruments
regarding the claim and allow the subrogee to supervise the custody of thecollateral that the obligee possesses.
(Loss of Security by Obligee)
Article 504 (1) If there is a person that has legitimate interest in performing an
obligation (hereinafter referred to as a "person entitled to subrogation" in thisparagraph), and the obligee causes the security thereof to be lost or dim inishedintentionally or negligently, the person entitled to subrogation is relieved from
responsibility to the extent that that person can no longer seek the
reimbursement due to the loss or diminution in the security available upon
subrogation. If the person entitled to subrogation is a third-party collateralprovider, the same applies to a third party that has acquired from the person
entitled to subrogation the property that is the subject of security and to thespecific successor thereof.
(2) The provisions of the preceding paragraph do not apply if the obligee is foundto have reasonable grounds in light of the common sense in the transaction for
causing the security to be lost or diminished.
Subsection 2 Set-Offs(Requirements for Set-Offs)
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Article 505 (1) If two persons bear an obligation to each other that has the samekind of purpose and if both obligations are due, each obligor may be relieved
from the obligation by setting off the value of that obligation against thecorresponding amount of the obligation of the other obligor; provided, however,that this does not apply if the nature of the obligation does not permit such a
set-off.
(2) Notwithstanding the provisions of the preceding paragraph, if a party
manifests the intention to prohibit or restrict a set-off, that manifestation of
the intention may be duly asserted against a third party only if the third party
knew or did not know due to gross negligence it.
(Method and Effect of Set-Offs)
Article 506 (1) Set-offs are effected through the manifestation of one party's
intention to the other. In such a case, no condition or time limit may be added
to the manifestation of intention.
(2) A manifestation of intention as referred to in the preceding paragraph iseffective retroactive to the time when the obligations of both parties became
eligible to be set-off.
(Set-Offs between Obligations with Different Places of Performance)
Article 507 Set-offs may be effected even if the places of performance of bothobligations are different. In such case, the party seeking to effect the set-off
must compensate the counterparty for any damage suffered as result of such
set-off.
(Set-Offs Using a Claim Extinguished by Prescription as Claim Used to Assert
Set-Off)
Article 508 If a claim extinguished by prescription was eligible for set-off prior
to its extinguishment, the obligee may use that claim for the set-off.
(Prohibition of Effecting Set-Offs Against Claims Arising from Tortious Acts as
Passive Sett-Off Claim)
Article 509 The obligor of either of the following obligations may not duly assert
a set-off against the obligee; provided, however, that this does not apply if theobligee acquires a claim corresponding to the relevant obligation from anotherperson:(i) an obligation for compensation for loss or damage based on a tort committed
in bad faith; or(ii) an obligation for compensation for loss or damage for death or injury to
person (excluding the one set forth in the preceding item).

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(Prohibition of Set-Offs Against Any Claim Exempt from Attachment as
Passive Set-Off Claim)
Article 510 If any claim is exempt from attachment, the obligor of that claim
may not assert the set-off as defense against the obligee of that claim.
(Prohibition of Set-Offs Against Any Claim Attached)
Article 511 (1) A third party obligor of a claim which has been attached may notassert sett-off as defense with any claim acquired after the attachment against
the attaching obligee, but may duly assert against the same a set-off basedusing a claim acquired before the attachment.
(2) Notwithstanding the provisions of the preceding paragraph, if a claim
acquired after the attachment has arisen from a cause that existed before theattachment, the third party obligor may use that claim for a set-off against theattaching obligee; provided, however, that this does not apply if the third party
obligor acquires the claim of another person after the attachment.
(Appropriation of Set-Off)
Article 512 (1) If an obligee manifests the intention to effect a set -off using one
or more claims held by the obligee against the obligor against one or moreobligations borne by the obligee to the obligor, the claims held and theobligations borne by the obligee are extinguished by a set-off at thecorresponding amount, in the order of time when they become eligible for setoff, unless otherwise agreed upon by the parties.
(2) In the case referred to in the preceding paragraph, if the claims held by the
obligee that seeks a set-off are insufficient to extinguish all of the obligations
borne by the obligee, the following provisions apply, unless otherwise agreed
upon by the parties:(i) if the obligee has two or more obligations (excluding the case prescribed in
the following item), the provisions of Article 488, paragraph (4), items (ii)through (iv) apply mutatis mutandis; and(ii) if the obligee is liable to pay interest and expenses in addition to principalwith regard to one or more obligations borne by the obligee, the provisions ofArticle 489 apply mutatis mutandis; in this case, the term "preceding Article"
in paragraph (2) of that Article is deemed to be replaced with "paragraph (4),items (ii) through (iv) of the preceding Article".
(3) In the case referred to in paragraph (1), if the obligations held by the obligee
that seeks a set-off are insufficient to extinguish all of the claims held by the
obligee, the provisions of the preceding paragraph apply mutatis mutandis.
Article 512-2 The provisions of the preceding Article apply mutatis mutandis toa set-off if the claims held by the obligee against the obligor include a claim for117which more than one payment or delivery should be made as the performanceof a single obligation. The same applies to a set-off if the obligations borne by
the obligee to the obligor include an obligation for which more than one
payment or delivery should be made as the performance of a single obligation.
Subsection 3 Novation(Novation)
Article 513 If the parties conclude a contract which gives rise to a new obligationthat falls under any of the following as a replacement of the previous obligation,
the previous obligation is extinguished by novation:(i) an obligation that makes a material change to the content of theperformance of the previous obligation;(ii) an obligation for which the previous obligor is substituted by a third party;or(iii) an obligation for which the previous obligee is substituted by a third party.
(Novation by Substitution of Obligor)
Article 514 (1) A novation by substitution of obligor may be effected by acontract concluded between the obligee and a person that becomes the obligor
after the novation. In such a case, the novation becomes effective when the
obligee notifies the obligor prior to the novation of the conclusion of thecontract.
(2) The obligor after the novation by substitution of obligor does not acquire aright to reimbursement from the obligor prior to the novation.
(Novation by Substitution of Obligee)
Article 515 (1) A novation by substitution of obligee may be effected by acontract concluded among the obligee prior to the novation, a person that
becomes the obligee after the novation, and the obligor.
(2) A novation by substitution of obligee may not be duly asserted against a third
party unless it is made using an instrument bearing a certified date.
Articles 516 and 517 Deleted(Transfer of Security to Obligation After Novation)
Article 518 (1) To the extent of the amount of the obligation prior to the novation,
the obligee (in the case of a novation by substitution of obligee, the obligee
prior to the novation) may transfer the pledge or mortgage created as the
security of that obligation to the obligation in effect after the novation;
provided, however, that if any third party created that security, the consent of118

the third party must be obtained.
(2) The transfer of the pledge or mortgage referred to in the preceding paragraphmust be effected by manifesting the intention to the other party to the novation(in the case of a novation by substitution of obligee, the obli gor) in advance orupon the transfer.
Subsection 4 Release
Article 519 If an obligee manifests the intention to release an obligor from an
obligation to that obligor, the obligee's claim is extinguished.
Subsection 5 Merger
Article 520 If a claim and obligation becomes vested in the same person, suchclaim is extinguished; provided, however, that this does not apply if such aclaim is the subject matter of the right of a third party.
Section 7 Negotiable Instruments of Value
Subsection 1 Negotiable Instruments Payable to Order(Assignment of Negotiable Instrument Payable to Order)
Article 520-2 Assignment of a negotiable instrument payable to order does not
become effective unless the instrument is indorsed and delivered to theassignee.
(Method of Indorsement of Negotiable Instrument Payable to Order)
Article 520-3 With regard to assignment of a negotiable instrument payable toorder, the provisions concerning the method of indorsement in the Negotiable
Instrument Act (Act No. 20 of 1932) apply mutatis mutandis depending on thenature of the negotiable instrument payable to order.
(Presumption of Right of Holder of Negotiable Instrument Payable to Order)
Article 520-4 If the holder of a negotiable instrument payable to order provesthat holder's rights by means of an uninterrupted series of indorsements, theholder is presumed to lawfully hold rights embodied on the instrument.
(Good Faith Acquisition of Negotiable Instrument Payable to Order)
Article 520-5 If a person, for any reason, loses possession of a negotiable
instrument payable to order, and the holder of the instrument proves theholder's rights pursuant to the provisions of the preceding Article, the holder is
not obligated to return the instrument; provided, however, that this does no t
119

apply if the holder has acquired the instrument in bad faith or due to grossnegligence.
(Limitation on Defense of Obligor in Case of Assignment of Negotiable
Instrument Payable to Order)
Article 520-6 The obligor of a negotiable instrument payable to order may not
duly assert against an assignee in good faith any grounds which could havebeen duly asserted against the obligee before the assignment of the instrument,
except for the particulars written on the instrument or any result which
necessarily arises from the nature of the instrument.
(Pledge of Negotiable Instrument Payable to Order)
Article 520-7 The provisions of Article 520-2 through the preceding Article apply
mutatis mutandis to the creation of a pledge on a negotiable instrument
payable to order.
(Place of Payment of Negotiable Instrument Payable to Order)
Article 520-8 Payment of a negotiable instrument payable to order must be madeat the current domicile of the obligor.
(Presentation of Negotiable Instrument Payable to Order and Delay in
Performance)
Article 520-9 Even if a due date is specified for the performance of an obligationof a negotiable instrument payable to order, the obligor of the instrument is
responsible for the delay on and after the time the holder of the i nstrument
presents it and requests its performance after the due date has arrived.
(Right to Examine of Obligor of Negotiable Instrument Payable to Order)
Article 520-10 The obligor of a negotiable instrument payable to order has theright, but not the duty, to examine the identity of the holder of the instrument
and the signature and seal affixed thereon; provided, however, that thepayment of the obligation is invalid if the obligor is acting in bad faith or isgrossly negligent.
(Forfeiture of Negotiable Instrument Payable to Order)
Article 520-11 A negotiable instrument payable to order may be made invalid
through the public notification proceedings prescribed in Article 100 of the
Non-Contentious Case Procedures Act (Act No. 51 of 2011).
(Method of Exercising Right in Case of Forfeiture of Negotiable Instrument
Payable to Order)120

Article 520-12 If the holder of a negotiable instrument payable to order for thedelivery of things such as money or of negotiable instruments of value loses thenegotiable instrument payable to order, and files a petition for public
notification prescribed in Article 114 of the Non-Contentious Case Procedures
Act, the holder may have the obligor deposit the subject matter of theobligation or have the same perform the obligation in line with the purport of
the negotiable instrument payable to order by providing reasonable security.
Subsection 2 Registered Negotiable Instruments Payable to Holder(Assignment of Registered Negotiable Instrument Payable to Holder)
Article 520-13 Assignment of a registered negotiable instrument payable toholder (meaning a negotiable instrument on which the name of the obligee is
written with a supplementary note that payment should be made to its holder;
the same applies hereinafter) does not become effective unless the instrument
is delivered to the assignee.
(Presumption of Right of Holder of Registered Negotiable Instrument Payable
to Holder)
Article 520-14 The holder of a registered negotiable instrument payable toholder is presumed to lawfully hold rights embodied on the instrument.
(Good Faith Acquisition of Registered Negotiable Instrument Payable to
Holder)
Article 520-15 If a person, for any reason, loses possession of a registerednegotiable instrument payable to holder, and the holder of the instrument
proves that holder's rights pursuant to the provisions of the preceding Article,
the holder is not obligated to return the instrument; provided, however, that
this does not apply if the holder has acquired the instrument in bad faith or
due to gross negligent.
(Limitation on Defense of Obligor in Case of Assignment of Registered
Negotiable Instrument Payable to Holder)
Article 520-16 The obligor of a registered negotiable instrument payable toholder may not duly assert against an assignee in good faith any grounds
which could have been duly asserted against the obligee before the assignmentof the instrument, except for the particulars written on the instrument or any
result which necessarily arises from the nature of the inst rument.
(Pledge of Registered Negotiable Instrument Payable to Holder)
Article 520-17 The provisions of Article 520-13 through the preceding Article
121

apply mutatis mutandis to the creation of a pledge on a registered negotiable
instrument payable to holder.
(Application Mutatis Mutandis of Provisions on Negotiable Instruments
Payable to Order)
Article 520-18 The provisions of Articles 520-8 through 520-12 apply mutatis
mutandis to registered negotiable instruments payable to holder.
Subsection 3 Other Registered Negotiable Instruments
Article 520-19 (1) Negotiable instruments on which the name of the obligee is
written, other than negotiable instruments payable to order and registerednegotiable instruments payable to holder, may be assigned or made the subjectof a pledge only in compliance with the formalities concerning the assignmentof claims or the creation of a pledge for this purpose, and only with the effect of
the assignment or the creation.
(2) The provisions of Articles 520-11 and 520-12 apply mutatis mutandis to thenegotiable instruments referred to in the preceding paragraph.
Subsection 4 Bearer Instruments
Article 520-20 The provisions of Subsection 2 (Registered Negotiable
Instruments Payable to Holder) apply mutatis mutandis to bearer instruments.
(Freedom of Conclusion and Terms of Contract)
Article 521 (1) Unless otherwise provided for in laws and regulations, any
person may freely decide whether or not to conclude a contract.
(2) Parties to a contract may freely decide the terms of the contract, subject tothe restrictions prescribed by laws and regulations.
(Formation and Formality of Contract)
Article 522 (1) A contract is formed when a party manifests the intention to offer
to conclude a contract (hereinafter referred to as an "offer") showing the termsof the contract and the other party accepts the offer.
(2) Unless otherwise provided for in laws and regulations, it is not required tosatisfy any formalities such as preparation of a written document in order toform a contract.
Chapter II Contracts
Section 1 General Provisions
Subsection 1 Formation of Contracts122

(Offers That Specify Period for Acceptance)
Article 523 (1) An offer which specifies a period for acceptance may not be
revoked; provided, however, that this does not apply if the offeror reserves theright to revoke.
(2) If an offeror does not receive notice of acceptance of the offer referred to in thepreceding paragraph within the period referred to in that paragraph, the offer
ceases to be effective.
(Effect of Delayed Acceptance)
Article 524 The offeror may deem a delayed acceptance to be a new offer.
(Offers That Do Not Specify Period for Acceptance)
Article 525 (1) An offer made without specifying a period for acceptance may not
be revoked until the passage of a reasonable period of time for the offeror toreceive a notice of acceptance; provided, however, that this does not apply if
the offeror reserves the right to revoke.
(2) Notwithstanding the provisions of the preceding paragraph, an offer referred
to in that paragraph which has been made to a person with whom the offeror ishaving a dialogue may be revoked at any time while the dialogue continues.
(3) If an offeror does not receive from a person with whom the offeror is having a
dialogue a notice of acceptance of the offer referred to in paragraph (1) while
the dialogue continues, the offer ceases to be effective; provided, however, that
this does not apply if the offeror manifests the intention to maintain the effectof the offer after the end of the dialogue.
(Death of Offeror)
Article 526 If an offeror dies, comes to be in a constant state wherein the offeror
lacks mental capacity, or becomes subject to restrictions on legal capacity to
act after issuing notice of the offer, and the offeror has manifested theintention not to make the offer effective should any of these facts occur, or theother party comes to know that any of these facts has occurred before issuing a
notice of acceptance, that offer is not effective.
(Time of Formation of Contract When No Notice of Acceptance Is Required)
Article 527 If no notice of acceptance is required due to the offeror's
manifestation of intention or customs of the transaction, a contract is formed
upon the occurrence of any fact which should be regarded as a manifestation of
intention of acceptance.
(Acceptances Modifying Offers)123

Article 528 If the offeree has accepted the offer by adding a condition or making
other modifications, it is deemed that the offeree has refused the offer andmade a new offer.
(Offers of Reward to the Public)
Article 529 A person that makes an offer to the public indicating that a personthat performs an certain act will be given a certain reward (hereinafterreferred to as an "offer of reward to the public") is obligated to give the reward
to the person that performs the act, regardless of whether or not the person
performing that act knows of the offer.
(Offers of Reward to the Public Made by Specifying Period for Performance ofRequested Act)
Article 529-2 (1) An offeror of reward to the public may not revoke the offer tothe public made by specifying a period during which the requested act shouldbe performed; provided, however, that this does not apply if, in the offer to the
public, the offeror reserves the right to revoke the offer.
(2) The offer to the public referred to in the preceding paragraph ceases to beeffective if no person completes the requested act within that period.
(Offers of Reward to the Public Made Without Specifying Period for
Performance of Requested Act)
Article 529-3 An offeror of reward to the public may revoke the offer to the
public made without specifying a period during which the requested act shouldbe performed, if no person completes the requested act; provided, however, that
this does not apply if, in the offer to the public, the offeror manifests theintention not to revoke the offer.
(Method of Revocation of Offers of Reward to the Public)
Article 530 (1) Revocation of an offer to the public by the same method as theone used to make a previous offer to the public is effective in relation to any
person that does not know about it.
(2) Revocation of an offer to the public may be carried out by a method that isdifferent from the one used to make a previous offer to the public; provided,
however, that the revocation is effective only in relation to persons who know
about it.
(Right to Receive Rewards Offered to the Public)
Article 531 (1) If more than one person has performed the act requested in anoffer to the public, only the person performing the act first holds the right toreceive the reward.
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(2) If two or more persons have performed the act referred to in the preceding
paragraph simultaneously, each holds the right to receive an equal share of the
reward; provided, however, that the person to receive the reward is selected by
lot if the reward is indivisible by nature or if the offer prescribes that only one
person will receive the reward.
(3) The provisions of the preceding two paragraphs do not apply if the offeror
manifests an intention to the contrary in the offer to the public.
(Offer of Reward to Most Outstanding Applicant of the Public)
Article 532 (1) If an offer to the public stipulates that only the most outstanding
applicant is to receive the reward in the event that two or more persons have
performed the act requested in that offer, the offer to the public is effective
only if it specifies an application period.
(2) In the cases referred to in the preceding paragraph, the most outstanding
applicant is judged by a person specified in the offer to the public and if nosuch person is specified in the offer, by the person that makes that offer.
(3) Applicants may not raise objection to the judge's decision under the preceding
paragraph.
(4) The provisions of paragraph (2) of the preceding Article apply mutatis
mutandis if the acts of two or more persons are judged to be of the same level.
Subsection 2 Effect of Contracts(Defense of Simultaneous Performance)
Article 533 A party to a bilateral contract may refuse to perform that party's
own obligation until the other party tenders the performance of that otherparty's obligation (including the performance of an obligation to compensate forloss or damage in lieu of the performance of an obligation); provided, however,that this does not apply if the obligation of the other party is not yet due.
Articles 534 and 535 Deleted(Obligors' Burden of Risk)
Article 536 (1) If the performance of an obligation becomes impossible due togrounds not attributable to either party, the obligee may refuse to perform
counter-performance.
(2) If the performance of an obligation becomes impossible due to grounds
attributable to the obligee, the obligee may not refuse to complete counter performance. In such a case, if the obligor benefits from being released fromthat obligation, the obligor must reimburse the obligee for the benefit.

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(Third Party Beneficiary Contract)
Article 537 (1) If one of the parties promises in a contract to render a certain
performance to a third party, the third party has the right to claim that
performance directly from the obligor.
(2) The validity of the contract referred to in the preceding paragraph is not
impaired even if a third party does not exist or a third party is not sp ecified at
the time of its formation.
(3) In the case referred to in paragraph (1), rights of the third party accrue when
the third party has manifested intention of availing of the benefit of thecontract under that paragraph to the obligor.
(Determination of Rights of the Third Party)
Article 538 (1) After rights of the third party have accrued pursuant to theprovisions of the preceding Article, the parties may not modify or extinguish
those rights.
(2) If, after rights of the third party accrue pursuant to the provisions of thepreceding Article, the obligor does not perform the obligation to the third party,
the other party to the contract referred to in paragraph (1) of that Article may
not cancel the contract without the consent of the third party.
(Obligors' Defense)
Article 539 The obligor may duly assert a defense based on the contract referred
to in Article 537, paragraph (1) against a third party that benefits from thecontract.
Subsection 3 Transfer of Contractual Status
Article 539-2 If one of the parties to a contract made an agreement with a third
party to transfer that party's contractual status to that third party, and theother party to the contract gives consent to the transfer, the contractual statusis transferred to the third party.
Subsection 4 Cancellation of Contracts(Exercise of Right to Cancel)
Article 540 (1) If one of the parties has the right to cancel pursuant to theprovisions of the contract or the law, the cancellation is effected bymanifestation of intention to the other party.
(2) The manifestation of intention referred to in the preceding paragraph may
not be revoked.

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(Cancellation After Demand)
Article 541 If one of the parties does not perform that party's obligation, and theother party demands performance of that obligation, specifying a reasonable
period of time, but no performance is completed during that period, the otherparty may cancel the contract; provided, however, that this does not apply if
the non-performance of the obligations upon the passage of the period is minor
in light of the contract and the common sense in the transaction.
(Cancellation Without Demand)
Article 542 (1) In the following cases, the obligee may immediately cancel thecontract without making the demand referred to in the preceding Article:(i) if the performance of the whole of the obligation is impossible;(ii) if the obligor unequivocally manifests the intention to refuse to perform theobligation in whole;(iii) if the performance of part of the obligation is impossible, or if the obligor
clearly manifests the intention to refuse to perform part of the obligation andthe purpose of the contract cannot be achieved by the performance of theremaining part of the obligation;(iv) if, due to the nature of the contract or a manifestation of intention by theparties, the purpose of the contract cannot be achieved unless the obligationis performed at a specific time on a specific date or within a certain period oftime, and the obligor fails to perform the obligation at that time or before
that period of time expires; or(v) beyond the cases set forth in the preceding items, if the obligor does not
perform the obligation and it is obvious that the obligor is unlikely toperform the obligation to the extent necessary to achieve the purpose of thecontract even if the obligee makes the demand referred to in the preceding
Article.
(2) In the following cases, the obligee may immediately cancel a part of thecontract without making the demand referred to in the preceding Art icle:(i) the performance of the part of the obligation is impossible; or(ii) the obligor clearly manifests the intention to refuse to perform the part ofthe obligation.
(Non-Performance Due to Grounds Attributable to Obligee)
Article 543 If non-performance of an obligation is due to grounds attributable tothe obligee, the obligee may not cancel the contract under the preceding two
Articles.
(Indivisible Nature of Right to Cancel)
Article 544 (1) If one party to a contract is comprised of two or more persons, the127cancellation of the contract may be effected only by, or against, all of those
persons.
(2) In the case referred to in the preceding paragraph, if the right to cancel isextinguished with respect to one of the persons that constitute a party to thecontract, it is also extinguished with respect to the other persons.
(Effect of Cancellation)
Article 545 (1) If one of the parties exercises the right to cancel, each party
assumes an obligation to restore the other party to that other party's or iginalstate; provided, however, that this may not prejudice the rights of a third party.
(2) In the case referred to in the main clause of the preceding paragraph, if any
monies are to be refunded, interest must accrue from the time of the receipt of
those monies.
(3) In the case referred to in the main clause of paragraph (1), if a thing otherthan money is to be returned, fruits that have accrued on or after the time of
the receipt of the thing must also be returned.
(4) The exercise of the right to cancel does not preclude claims for compensation
for loss or damage.
(Cancellation of Contract and Simultaneous Performance)
Article 546 The provisions of Article 533 apply mutatis mutandis to thepreceding Article.
(Extinguishment of Right to Cancel by Demand)
Article 547 If no period of time is specified for the exercise of the right to cancel,
the other party may issue a notice of demand to the holder of the right tocancel, specifying a reasonable period of time, to the effect that the holder ofthe right to cancel is to give a definite answer as to whether the holder willcancel or not within that period of time. In this case, if no notice of cancellationis received within that period, the right to cancel is extinguished.
(Extinguishment of Right to Cancel by Damage Caused to Object Intentionallyby Holder of Right to Cancel)
Article 548 The right to cancel is extinguished if the holder of the right to cancel,
intentionally or negligently, causes significant damage to, or makes it
impossible to return the object of the contract, or converts the object intoanother kind of thing by processing or alteration; provided, however, that thisdoes not apply if the holder of the right to cancel does not know of the holder's
right to cancel.
Subsection 5 Standard Terms of Contract128

(Agreement on Standard Terms of Contract)
Article 548-2 (1) In the following cases, a person making an agreement to
conduct a standard transaction (meaning a transaction conducted by aspecified person with an unspecified and large number of persons as thecounterparties, in which the uniformity of the whole or part of the transaction
is reasonable to both parties; the same applies hereinafter) (that agreement isreferred to as an "agreement on standard transaction" in the following Article)
is deemed to have made an agreement on individual terms of the standard form
contract (referring to a collection of provisions prepared by that specific personwith the purpose of applying them as the terms of a contract for a standardtransaction; the same applies hereinafter):(i) if the person agrees to apply the standard terms of contract as the terms ofcontract; or(ii) if the person that has prepared the standard terms of contract (hereinafterreferred to as the "preparer of the standard terms") manifests to thecounterparty the intention to apply the standard terms of contract as theterms of the contract in advance.
(2) Notwithstanding the provisions of the preceding paragraph, the person isdeemed not to have agreed to any provisions as referred to in that paragraphthat restrict the rights or expand the duties of the counterparty and that arefound, in light of the manner and circumstances of the standard transaction as
well as the common sense in the transaction, to unilaterally prejudice theinterests of the counterparty in violation of the fundamental principle
prescribed in Article 1, paragraph (2).
(Disclosure of Details of Standard Terms)
Article 548-3 (1) A preparer of the standard terms that conducts or seeks to
conduct a standard transaction must disclose the details of the standard termsof contract by a reasonable method without delay if the counterparty requests
this within a reasonable period of time before or after an agreement on
standard transaction is made; provided, however, that this does not apply if
the preparer has already delivered to the counterparty a document that
contains the standard terms of contract or provided the other party with anelectronic or magnetic record that contains the same.
(2) The provisions of the preceding Article do not apply if the preparer of thestandard terms of contract refuses the request referred to in the preceding
paragraph before an agreement on standard transaction is made; provided,
however, that this does not apply if a temporary communication failure takes
place or the preparer has a legitimate reason to refuse it.

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(Amendment to Standard Terms of Contracts)
Article 548-4 (1) In the following cases, a preparer of the standard terms ofcontract may, by amending the standard terms of contract, modify the terms ofthe contract without making separate agreements with each of thecounterparties and deem that the parties have agreed to the amended
provisions of the standard terms of contract:(i) if the amendment to the standard terms of contract conforms to the generalinterest of the counterparties; or(ii) if the amendment to the standard terms of contract does not run afoul ofthe purpose of the contract, and it is reasonable in light of the circumstances
concerning the amendment such as the necessity of the amendment, theappropriateness of the details of the amended conditions, whether or not it isprovided in the contract that the standard terms of contract may be subject
to an amendment pursuant to the provisions of this Article, and the details ofsuch provisions.
(2) If a preparer of the standard form contract is to amend the standard form
contract under the provisions of the preceding paragraph, the preparer mustspecify the time when the amendment takes effect, and make the intention toamend the standard form contract, the details of the amended standard
general conditions, and the time when the amendment takes place known (tothe appropriate scope of persons) by an appropriate method such as using theinternet.
(3) An amendment to the standard general conditions under the provisions ofparagraph (1), item (ii) does not become effective unless it is made known (tothe appropriate scope of persons) pursuant to the provisions of that paragraphby the time when the amendment takes effect as referred to in the preceding
paragraph.
(4) The provisions of Article 548-2, paragraph (2) do not apply to an amendment
to the standard terms of contract under the provisions of paragraph (1).
Section 2 Gifts(Gifts)
Article 549 Gifts become effective by the manifestation of intention by one of theparties to give a certain property to the other party gratuitously, and theacceptance of the other party thereof.
(Cancellation of Gift Not in Writing)
Article 550 Gifts not in writing may be cancelled by either party; provided,
however, that this does not apply to a portion of the gift for which performancehas been completed.
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(Donor's Obligation to Deliver)
Article 551 (1) The donor is presumed to have promised to deliver or transfer thething or right that is the subject matter of the gift, while maintaining its
condition as of the time when it is specified as the subject matter of the gift.
(2) With respect to gifts with burden, the donor provides the same warranty a sthat of a seller, to the extent of that burden.
(Periodic Gifts)
Article 552 A gift that is to be delivered periodically ceases to be effective on thedeath of the donor or the donee.
(Gifts with Burden)
Article 553 With respect to gifts with burden, beyond what is provided for in thisSection, the provisions regarding bilateral contracts apply mutatis mutandis,
to the extent those provisions are not inconsistent with the nature of gifts withburden.
(Gifts on Donor's Death)
Article 554 With respect to gifts that become effective on the death of the donor,
the provisions regarding bequests apply mutatis mutandis, to the extent they
are not inconsistent with the nature of gifts that become effective on the deathof the donor.
Section 3 Sale
Subsection 1 General Provisions(Sale)
Article 555 A sale becomes effective when one of the parties promises to transfer
certain property rights to the other party and the other party promises to pay
the price for this.
(Option Contracts for Purchase and Sales Exercisable by One Party)
Article 556 (1) An option contract for a purchase and sale made by one party
becomes effective when the other party manifests the intention to complete thepurchase and sale.
(2) If no period is provided in relation to the manifestation of intention referred
to in the preceding paragraph, the party to the option contact may issue a
notice of demand to the other party, specifying a reasonable period of time, tothe effect that the other party is to give a definite answer as t o whether or notthat party will complete the sale within that period. In such cases, if the other131party fails to give a definite answer within that period, the option contract fora purchase and sale by one party ceases to be effective.
(Earnest Money)
Article 557 (1) If the buyer pays earnest money to the seller, the buyer may
cancel the contract by waiving the earnest money, or the seller may cancel thecontract by actually providing the buyer with twice its amount; provided,
however, that this does not apply after the counterparty commences
performance of the contract.
(2) The provisions of Article 545, paragraph (4) do not apply to the cases referred
to in the preceding paragraph.
(Expenses of Contracts for Sale)
Article 558 The expenses associated with contracts for sale are borne equally byboth parties.
(Mutatis Mutandis Application to Contracts for Value)
Article 559 The provisions of this Section apply mutatis mutandis to contracts
for value other than contracts for sale; provided, however, that this does not
apply when it is not permitted by the nature of the contract for value.
Subsection 2 Effect of Sale
(Seller's Obligation for Satisfaction of Requirements for Perfection of Transfer
of Rights)
Article 560 The seller bears an obligation to enable the buyer to satisfy therequirements for perfection of the transfer of the right that is the subject
matter of the sale, such as completing registration.
(Seller's Obligation When Purchasing and Selling Rights of Others)
Article 561 If the subject matter of a sale is another person's right (including apart of a right that belongs to another person), the seller bears an obligation toacquire the right and transfer it to the buyer.
(Buyer's Right to Demand Cure)
Article 562 (1) If the subject matter delivered to the buyer does not conform to
the terms of the contract with respect to the kind, quality or quantity, thebuyer may demand that the seller cure the non-conformity of performance by
repairing the subject matter, delivering the substitute or delivering thereplenishment; provided, however, that the seller may cure the non-conformityof performance by a method that is different from the method demanded by the132buyer if it does not impose any undue burden on the buyer.
(2) If the non-conformity referred to in the preceding paragraph is due to grounds
attributable to the buyer, the buyer may not demand that the seller cure thenon-conformity of performance under the provisions of that paragraph.
(Buyer's Right to Demand Reduction of Price)
Article 563 (1) In the case prescribed in the main clause of paragraph (1) of thepreceding Article, if the buyer demands that the seller cure the non -conformityof performance by specifying a reasonable period of time but the non conformity of performance is not cured within that period, the buyer may
request a reduction of the price in proportion to the degree of non-conformity.
(2) Notwithstanding the provisions of the preceding paragraph, in the following
cases, a buyer in good faith may request a reduction of the price immediately
without making demand referred to in that paragraph:(i) if it is impossible to cure the non-conformity of performance;(ii) if the seller unequivocally manifests the intention to refuse to cure the nonconformity of performance;(iii) if, due to the nature of the contract or a manifestation of intention by theparties, the purpose of the contract is unable to be achieved unless theperformance is carried out at a specific time on a specific date or w ithin acertain period of time, and the seller fails to cure the non-conformity of theperformance at the time or before the period expires; or(iv) beyond the cases set forth in the preceding items, it is obvious that theseller is unlikely to cure the non-conformity of the performance even if thebuyer makes the demand referred to in the preceding paragraph.
(3) If the non-conformity referred to in paragraph (1) is due to grounds
attributable to the buyer, the buyer may not request a reduction of the pric e
under the provisions of the preceding two paragraphs.
(Claim for Compensation for Loss or Damage and Exercise of Right to Cancel
by Buyer)
Article 564 The provisions of the preceding two Articles do not preclude thebuyer from claiming compensation for loss or damage pursuant to theprovisions of Article 415 or exercising the right to cancel pursuant to theprovisions of Articles 541 and 542.
(Seller's Warranty in Case of Non-Conformity of Transferred Right to Terms ofContract)
Article 565 The provisions of the preceding three Articles apply mutatis
mutandis if the right transferred by the seller to the buyer does not conform to
the terms of the contract (including the case in which the seller fails to transfer
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part of a right that belongs to another person).
(Limitation on Period of Warranty with Respect to Kind or Quality of Subject
Matter)
Article 566 If the subject matter delivered by the seller to the buyer does notconform to the terms of the contract with respect to the kind or quality, and th ebuyer fails to notify the seller of the non-conformity within one year from thetime 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 thedelivery.
(Transfer of Risk for Loss of Subject Matter)
Article 567 (1) If the seller delivers the subject matter (limited to one that has
been ascertained as the subject matter of the sale; hereinafter the same applies
in this Article) to the buyer, and the subject matter is lost or damaged after t hetime of the delivery due to any grounds not attributable to either party, thebuyer may not demand cure of the non-conformity of performance, demand areduction of the price, claim compensation for loss or damage, or cancel thecontract, on the ground of the loss or damage. In such a case, the buyer may
not refuse to pay the price.
(2) The preceding paragraph also applies if the seller tenders the performance ofthe obligation of delivery by delivering the subject matter that conforms to theterms of the contract, but the buyer refuses to accept or is unable to accept theperformance, and the subject matter is lost or damaged after the time of thetender of the performance due to any grounds not attributable to either party.
(Warranty in Cases of Auctions)
Article 568 (1) The successful bidder at an auction based on the provisions of the
Civil Execution Act and other laws (hereinafter referred to as an "auction" inthis Article) may cancel the contract or demand a reduction of the price against
the obligor pursuant to the provisions of Articles 541 and 542 and theprovisions of Article 563 (including as applied mutatis mutandis pursuant to
Article 565).
(2) In the cases referred to in the preceding paragraph, if the obligor is insolvent,
the successful bidder may demand total or partial reimbursement of theproceeds against the obligees that received the distribution of the proceeds.
(3) In the cases set forth in the preceding two paragraphs, if obligors knew of theabsence of the object or right and did not disclose the same, or if obligees knew
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of the absence but demanded an auction, the successful bidder may claim
compensation for loss or damage against those persons.
(4) The provisions of the preceding three paragraphs do not apply to the non conformity with respect to the kind or quality of the subject matter of an
auction.
(Seller's Warranty for Claims)
Article 569 (1) If the seller of a claim warrants the solvency of the obligor, it ispresumed that the seller warranted the solvency as at the time o f the contract.
(2) If the seller of a claim which is not due yet warrants the future solvency ofthe obligor, it is presumed that the seller warranted the solvency as at the due
date.
(Buyer's Demand for Reimbursement of Expenses for Immovables Subject toMortgage)
Article 570 If any statutory lien, pledge or mortgage that does not conform to theterms of the contract exists on immovables that have been purchased, and thebuyer incurs expenses to preserve ownership of the immovables, the buyer m ay
demand the reimbursement of the expenses from the seller.
Article 571 Deleted(Special Agreement Disclaiming Warranty)
Article 572 Even if the seller makes a special agreement to the effect that theseller does not warrant in the case prescribed in the main clause of Article 562,
paragraph (1) or Article 565, the seller may not be released from that
responsibility with respect to any fact that the seller knew but did not disclose,
and with respect to any right that the seller personally created for or assigned
to a third party.
(Due Date for Payment of Price)
Article 573 If there is a due date for the delivery of the subject matter of the sale,
it is presumed that the same due date was also agreed upon for the payment of
the price.
(Place of Payment of Price)
Article 574 If price is to be paid simultaneously with delivery of the subject
matter of a sale, payment must be made at the place of delivery.
(Ownership in Fruits and Payment of Interest on Price)
Article 575 (1) If the subject matter of a sale which has not yet been delivered
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bears fruits, the fruits vest in the seller.
(2) The buyer bears the obligation to pay interest on the price beginning from theday of delivery; provided, however, that if a due date is provided for thepayment of the price, it is not necessary to pay the interest until that due datearrives.
(Buyer's Refusal to Pay Price When There Is a Likelihood That the Buyer WillBe Unable to Acquire Rights)
Article 576 If the buyer is likely to be unable to acquire or likely to lose therights that the buyer has bought, in whole or in part, due to grounds such as
the existence of persons asserting rights to the subject matter of the sale, thebuyer may refuse to pay the price, in whole or in part, in proportion to thedegree of that likelihood; provided, however, that this does not apply if theseller has provided reasonable security.
(Refusal by Buyer to Pay Price in Cases Registration of Mortgage Is Found)
Article 577 (1) If a mortgage that does not conform to the terms of the contract isregistered on immovables that have been purchased, the buyer may refuse to
pay the price until the completion of the procedures of the claim forextinguishment of the mortgage. In such cases, the seller may demand that thebuyer file the claim for extinguishment of the mortgage without delay.
(2) The provisions of the preceding paragraph apply mutatis mutandis if astatutory lien or pledge that does not conform to the terms of the contract isregistered on the immovables that have been bought.
(Seller's Demand for Deposit of Proceeds)
Article 578 In the cases referred to in the preceding two Articles, the seller may
demand that the buyer deposit the proceeds.
Subsection 3 Redemption(Special Agreement on Redemption)
Article 579 The buyer of immovables may cancel the sale by refunding the price(or any amount specified by agreement if otherwise agreed upon; the same
applies in Article 583, paragraph (1)) and costs of the contract paid by thebuyer in accordance with a special agreement on redemption executed
simultaneously with the contract for sale. In such a case, unless a particularintention is manifested by the parties, it is deemed that the fruit of theimmovables and the interest on the price have been set off against each other .
(Period for Redemption)
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Article 580 (1) A redemption period may not exceed 10 years. If any special
agreement provides for any period longer than this, that period is considered tobe 10 years.
(2) If a period for the redemption is agreed upon, no further extension may beeffected subsequently.
(3) If no period for the redemption is agreed upon, the redemption must be
effected within five years.
(Perfection of Special Agreement on Redemption)
Article 581 (1) If the special agreement on redemption is registeredsimultaneously with the contract for sale, the redemption may be duly asserted
against third parties.
(2) The rights of a lessee that satisfies the requirements for perfection prescribedin Article 605-2, paragraph (1) after the registration referred to in thepreceding paragraph is completed may be duly asserted against the seller
while the lease remains effective, limited to a period not exceeding one year;
provided, however, that this does not apply if the lease is entered into w ith the
purpose of harming the seller.
(Exercise of Right of Redemption by Subrogation)
Article 582 If an obligee of a seller seeks to effect redemption on behalf of theseller pursuant to the provisions of Article 423, the buyer may extinguish theright of redemption by paying the debts of the seller, to the extent of thebalance obtained by deducting the amount the seller is to pay from the current
value of the immovables as evaluated by a court-appointed appraiser, and, if
any positive balance remains, by refunding the same to the seller.
(Implementation of Redemption)
Article 583 (1) A seller may not effect redemption unless the seller provides theprice and the costs of the contract within the period provided for in Article 580.
(2) If a buyer or subsequent acquirer incurs expenses with respect to immovables,
the seller must reimburse those expenses in accordance with the provisions ofArticle 196; provided, however, that with respect to beneficial expenses, thecourt may, at the seller's request, grant a reasonable period of time for the
reimbursement.
(Sale of Co-Ownership Interest with Special Agreements on Redemption)
Article 584 If one of the co-owners of immovables sells the equity interest
thereof with a special agreement on its redemption and the immovables arethen divided or auctioned, the seller may redeem with respect to the part orprice that the buyer receives or is to receive; provided, however, that any
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division or auction effected without notice to the seller may not be duly
asserted against the seller.
Article 585 (1) In a case as referred to in the preceding Article, if the buyer isthe successful bidder at the auction of the immovables, the seller may effectthe redemption by paying the auction price and the costs provided for in Article
583. In such cases, the seller acquires full ownership of the immovables.
(2) If a buyer became the successful bidder at an auction as the result of therequest for division by another co-owner, the seller may not effect theredemption with respect only to the seller's own interest.
Section 4 Exchange
Article 586 (1) An exchange becomes effective by the mutual promises by theparties to transfer any property right other than the ownership of money.
(2) If one of the parties to an exchange promises to transfer the ownership ofmoney together with other rights, the provisions for sale contracts apply
mutatis mutandis to that money.
Section 5 Loans for Consumption(Loans for Consumption)
Article 587 A loan for consumption becomes effective when a first party receives
money or any other thing from a second party, having promised to return athing of the same type, quality, and quantity.
(Loan for Consumption Made in Writing)
Article 587-2 (1) Notwithstanding the provisions of the preceding Article, a loan
for consumption made in writing becomes effective when a first party promises
to deliver money or any other thing and a second party promises to return athing of the same type, quality, and quantity as the thing delivered.
(2) The borrower of a loan for consumption made in writing may cancel thecontract until the borrower receives the money or other thing from the lender.
In such a case, if the lender sustains any damage from the cancellation of thecontract, the lender may claim compensation therefor.
(3) A loan for consumption made in writing ceases to be effective if either of theparties receives an order commencing bankruptcy proceedings before theborrower receives the thing such as money from the lender.
(4) If a loan for consumption is made by means of an electronic or magnetic
record in which its content is recorded, the loan for consumption is deemed tohave been made in writing, and the provisions of the preceding three138

paragraphs apply thereto.
(Quasi-Loans for Consumption)
Article 588 If any person has an obligation to pay money or deliver other thing
under any arrangement, and the parties agree to regard such thing as the
subject matter of a loan for consumption, it is deemed that this establishes aloan for consumption.
(Interest)
Article 589 (1) In the absence of any special agreement, the lender may not
demand interest from the borrower.
(2) If there is any special agreement referred to in the preceding paragraph, thelender may demand from the borrower interest that accrues from the day on
which the borrower receives the thing such as money.
(Lender's Obligation to Deliver)
Article 590 (1) The provisions of Article 551 apply mutatis mutandis to a loan for
consumption without a special agreement referred to in paragraph (1) of thepreceding Article.
(2) Irrespective of whether there is any special agreement referred to inparagraph (1) of the preceding Article, if the thing delivered from the lender
does not conform to the terms of the contract with respect to the kind or
quality, the borrower may return the value of the delivered thing.
(Timing of Returns)
Article 591 (1) If the parties do not define the time for return of borrowed things,
the lender may demand their return, specifying a reasonable period of tim e.
(2) The borrower may return the borrowed thing at any time, irrespective ofwhether the parties have defined the time of return of the thing.
(3) If the parties defined the time of return of the borrowed thing, and the lendersustains any damage because the borrower returns the thing prior to the timeof return, the lender may claim compensation therefor from the borrower.
(Reimbursement of Value)
Article 592 If the borrower has become unable to return things in the same kind,
quality and quantity as that of the things the borrower received from thelender, the borrower must reimburse the current value of the things; provided,
however, that this does not apply in the cases provided for in Article 402,
paragraph (2).
Section 6 Loans for Use
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(Loans for Use)
Article 593 A loan for use becomes effective if one of the parties promises todeliver a certain thing, and the other party promises to return the thing when
the contract is terminated after the other party gratuitously uses and makes
profit of the borrowed thing.
(Lender's Right to Cancel Loan for Use Before the Receipt of Borrowed Thing)
Article 593-2 The lender may cancel the contract up until the borrower receives
the borrowed thing; provided, however, that this does not apply to a loan f oruse made in writing.
(Borrower's Use and Profit)
Article 594 (1) A borrower must make use of and take the profits of the thing incompliance with the method of use specified by the contract or by the nature of
the thing which is the subject matter of the contract.
(2) A borrower may not allow third parties to make use of or take the profits ofthe thing without obtaining the approval of the lender.
(3) If a borrower has made use of or taken the profits of the thing in violation of
the provisions of the preceding two paragraphs, the lender may cancel thecontract.
(Responsibility for Costs of Borrowed Thing)
Article 595 (1) The borrower bears the ordinarily necessary expenses ofborrowed thing.
(2) The provisions of Article 583, paragraph (2) apply mutatis mutandis to costs
other than the ordinarily necessary expenses referred to in the preceding
paragraph.
(Lender's Obligation to Deliver)
Article 596 The provisions of Article 551 apply mutatis mutandis to loans for use.
(Termination of Loan for Use upon Expiration of Period of Loan)
Article 597 (1) If the parties specify a period of a loan for use, the loan for use isterminated upon the expiration of the period.
(2) If the parties do not specify a period of a loan for use, but they specify the
purpose of using and making profit from the borrowed thing, the loan for use isterminated when the borrower finishes using and making profit from the thingin line with the purpose.
(3) A loan for use is terminated upon the death of the borrow er.

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(Cancellation of Loan for Use)
Article 598 (1) In the case prescribed in paragraph (2) of the preceding Article,
upon the passage of a period that is sufficient for the borrower to use and makeprofit from the borrowed thing in line with the purpose referred to in thatparagraph, the lender may cancel the contract.
(2) If the parties do not specify a period of a loan for use or a purpose of using
and making profit from the borrowed thing, the lender may cancel the contract
at any time.
(3) The borrower may cancel the contract at any time.
(Removal by Borrower)
Article 599 (1) If the borrower attaches anything to the borrowed thing after
receiving it, the borrower has an obligation to remove the attached thing when
the loan for use is terminated; provided, however, that this does not apply toanything that is unable to be detached from the borrowed thing or that
requires excessive expenses for the detachment.
(2) The borrower may remove anything that the borrower has attached to theborrowed thing after receiving it.
(3) If any damage is caused to the borrowed thing after the borrower receives it,
the borrower has an obligation to restore the damaged thing when the loan foruse is terminated; provided, however, that this does not apply if the damage iscaused due to any grounds not attributable to the borrower.
(Restriction on Period to Claim Compensation for Loss or Damage andReimbursement of Costs)
Article 600 (1) Claims for compensation for loss or damage resulting from using
or taking profits of the thing inconsistent with the main purport of the contractand for the reimbursement of expenditures incurred by the borrower must be
submitted within one year from the time when the lender receives the return ofthe borrowed things.
(2) With regard to the claim for compensation for loss or damage referred to in
the preceding paragraph, the prescription period does not expire until one year
has elapsed from the time when the lender receives the return of the borrowed
thing.
Section 7 Leases
Subsection 1 General Provisions(Leases)
Article 601 A lease becomes effective if one of the parties promises to make acertain thing available for the other party to use and make profit, and the141other party promises to pay rent for the leased thing and return the del ivered
thing when the contract is terminated.
(Short-Term Leases)
Article 602 If a person with no authority of disposition makes a lease contract,
the leases set forth in the following items must not exceed the terms specified
in those items; any longer term specified by a contract is reduced to the term
specified in the relevant item:(i) leases of forest for the purpose of planting or felling trees: 10 years;(ii) leases of land other than the leases set forth in the preceding item: five
years;(iii) lease of a building: three years; and(iv) lease of movables: six months.
(Renewal of Short-Term Leases)
Article 603 The terms prescribed in the preceding Article may be renewed;
provided, however, that the renewal must be carried out within one year prior
to the expiration of the term for land, and within three months prior to the
expiration of the term for a building, and within one month prior to the
expiration of the term for movables.
(Duration of Lease)
Article 604 (1) The duration of a lease may not exceed 50 years. Even if thecontract prescribes a longer term, that term is considered to be 50 years.
(2) The duration of a lease may be renewed; provided, however, that the term
may not exceed 50 years from the time of the renewal.
Subsection 2 Effect of Lease(Perfection of Lease of Immovables)
Article 605 A lease of immovables, when registered, may be duly asserted
against a third party such as a person that subsequently acquires real rights
with respect to the immovables.
(Transfer of Status of Lessor of Immovables)
Article 605-2 (1) If a lease is perfected in accordance with the laws andregulations including the preceding Article, and Articles 10 and 31 of the Act
on Land and Building Leases (Act No. 90 of 1991), and the relevant
immovables are assigned, the status of the lessor of the immovables istransferred to its assignee.
(2) Notwithstanding the provisions of the preceding paragraph, if the assignor
142

and the assignee of immovables agree that the assignor reserves the status oflessor and that the assignee leases the immovables to the assignor, the statusof lessor is not transferred to the assignee. In such a case, if a lease between
the assignor and the assignee or any successor thereof is terminated, thestatus of lessor that the assignor has reserved is transferred to the assignee or
any successor thereof.
(3) The status of lessor under the provisions of paragraph (1) or the second
sentence of the preceding paragraph may not be duly asserted against thelessee unless the transfer of ownership for the immovables under lease isregistered.
(4) If the status of lessor is transferred to the assignee or any successor thereof
pursuant to the provisions of paragraph (1) or the second sentence ofparagraph (2), the assignee or any successor thereof succeeds to the obligation
to reimburse expenses under the provisions of Article 608 and the obligation torefund the security deposit prescribed in Article 622-2, paragraph (1) under theprovisions of that paragraph.
(Transfer of Status of Lessor of Immovables by Agreement)
Article 605-3 If the assignor of immovables is the lessor, the status of lessor may
be transferred to the assignee by agreement between the assignor and theassignee, without the consent of the lessee. In such a case, the provisions ofparagraphs (3) and (4) of the preceding Article apply mutatis mutandis.
(Demand by Lessee of Immovables for Discontinuation of Disturbance)
Article 605-4 If the lessee of immovables satisfies the requirements for
perfection prescribed in Article 605-2, paragraph (1), the lessee may seek as
specified in each of the following items in the cases set forth in the respective
items:(i) a third party disturbs the lessee's possession of the immovables: demandingthat the third party discontinue disturbance; or(ii) a third party is in possession of the immovables: demanding that the third
party return it.
(Repairs by Lessor)
Article 606 (1) A lessor assumes an obligation to effect repairs necessary forusing and making profit of the leased thing; provided, however, that this does
not apply if repairs are necessary due to any grounds attributable to the lessee.
(2) A lessee may not refuse if the lessor seeks to engage in an act that isnecessary for the preservation of the leased thing.
(Act of Preservation against the Will of the Lessee)
143Article 607 If a lessor seeks to engage in an act of preservation against the willof the lessee and the lessee cannot achieve the purpose of the lease as a resultof this, the lessee may cancel the contract.
(Repairs by Lessee)
Article 607-2 If repairs are necessary for the leased thing, the lessee may makerepairs in the following cases:(i) the lessee notifies the lessor of the necessity of repairs or the lessor becomesaware of the necessity of repairs, but the lessor does not make the necessary
repairs within a reasonable period of time; or(ii) there are pressing circumstances.
(Lessee's Demand for Reimbursement of Costs)
Article 608 (1) If a lessee has defrayed necessary expenses with respect to theleased thing which ought to be borne by the lessor, the lessee may immediately
demand the reimbursement of the same from the lessor.
(2) If the lessee has incurred beneficial expenses with respect to the leased thing,
the lessor must reimburse those expenses on termination of the lease incompliance with the provisions of Article 196, paragraph (2); provided, however,that the court may, at the lessor's request, grant a reasonable period of time
for the reimbursement of the same.
(Demand for Reduction of Rent Due to Decrease in Profits)
Article 609 If a lessee of land that is meant for cultivation or livestock farming
obtains profits less than the rent due to force majeure, the lessee may demandthat the amount of the rent be reduced to the level of the amount of the profits.
(Cancellation Due to Decrease in Profits)
Article 610 In the cases referred to in the preceding Article, the lessee referred
to in that Article may cancel the contract if the lessee has made profits lessthan the rent for at least two consecutive years due to force majeure.
(Reduction of Rent Due to Partial Loss of a Leased Thing)
Article 611 (1) If it comes to no longer be possible to use or profit from part of aleased thing due to grounds such as loss and this is caused by grounds not
attributable to the lessee, the rent is reduced in proportion to the value of thepart that can no longer be used or profited from.
(2) If it comes to no longer be possible to use or profit from part of a leased thing
due to grounds such as loss and the lessee is unable to achieve the purpose of
the lease with the remaining part alone, the lessee may cancel the contract.

144

(Restrictions on Assignment of Lease and Subleasing)
Article 612 (1) A lessee may not assign the lease or sublease a leas ed thing
without obtaining the approval of the lessor.
(2) If the lessee allows any third party to make use of or take the profits of aleased thing in violation of the provisions of the preceding paragraph, thelessor may cancel the contract.
(Effect of Subleases)
Article 613 (1) If a lessee lawfully subleases a leased thing, the sublessee isliable to perform an obligation based on the sublease directly to the lessor, tothe extent of the scope of the lessee's obligation based on the lease be tween thelessor and the lessee. In such a case, advance payment of rent may not be duly
asserted against the lessor.
(2) The provisions of the preceding paragraph do not preclude the lessor fromexercising rights against the lessee.
(3) If the lessee lawfully subleases a leased thing, the lessor may not duly assert
against the sublessee the cancellation by agreement of the lease with thelessee; provided, however, that this does not apply if, at the time of thecancellation, the lessor has a right to cancel due to non-performance on thepart of the lessee.
(Timing of Payment of Rent)
Article 614 Rent must be paid at the end of the month with respect to movables,buildings and land for residential purpose, and at the end of the year withrespect to other land; provided, however, that with respect to anything with aharvest season, the rent must be paid without delay after that season.
(Obligation of Lessee to Give Notice)
Article 615 If a leased thing requires any repair or if a person asserts a rightwith respect to a leased thing, the lessee must notify the lessor without delay;
provided, however, that this does not apply if it is already known to the lessor.
(Use and Making of Profit by Lessee)
Article 616 The provisions of Article 594, paragraph (1) apply mutatis mutandis
to leases.
Subsection 3 Termination of Leases(Termination of Lease Due to Loss of the Whole of a Leased Thing)
Article 616-2 If it comes to no longer be possible to use or profit from the wholeof a leased thing due to grounds such as loss, the lease is terminated thereby.
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(Notice of Termination of Leases with Indefinite Terms)
Article 617 (1) If the parties do not specify the term of a lease, either party may
give a notice of termination at any time. In such cases, a lease as s et forth in
one of the following items terminates when the term prescribed in that item
has passed after the day of the notice of termination:(i) leases of land: one year;(ii) leases of buildings: three months; and(iii) leases of movables and party room: one day.
(2) With respect to leases of land with harvest seasons, the notice of terminationmust be given after the end of that season and before the next start ofcultivation.
(Reservation of Rights to Terminate Leases with Definite Terms)
Article 618 Even if the parties specify the term of a lease, the provisions of thepreceding Article apply mutatis mutandis if one party reserves, or both parties
reserve, the right to terminate during that period.
(Presumption of Renewal of Leases)
Article 619 (1) If a lessee continues to make use or take the profits of the thing
after the expiration of the term of the lease and a lessor that knows of thesame raises no objection, it is presumed that a further lease is entered into
under conditions identical to those of the previous lease. In such cases, eachparty may give a notice of termination pursuant to the provisions of Article 617.
(2) If one of the parties has provided security for the previous lease, the security
is extinguished upon expiration of the term; provided, however, that this does
not apply to a security deposit prescribed in Article 622-2, paragraph (1).
(Effect of Cancellations of Leases)
Article 620 If a lease is cancelled, the cancellation becomes effective solely
toward the future. In such a case, the cancellation does not preclude a claim forcompensation for loss or damage.
(Lessee's Obligation of Restoration)
Article 621 If any damage is caused to the leased thing after the lessee receivesit (excluding any wear of the leased thing caused by the ordinary manner ofusing and making profit from it and any aging degradation of the leased thing;hereinafter the same applies in this Article), the lessee has an obligation to
restore the damaged thing when the lease is terminated; provided, however,that this does not apply if the damage is caused due to any grounds not
attributable to the lessee.
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(Application Mutatis Mutandis of Provisions on Loan for Use)
Article 622 The provisions of Article 597, paragraph (1), Article 599, para graphs(1) and (2), and Article 600 apply mutatis mutandis to leases.
Subsection 4 Security Deposit
Article 622-2 (1) If a lessor receives a security deposit (meaning money to bedelivered by the lessee to the lessor under any name, for the purpose of
securing an obligation to pay money that is owed by the lessee to the lessor
based on a lease, such as an obligation to pay rent; hereinafter the same
applies in this Article), the lessor must return to the lessee the amount thatremains after deducting the amount of the obligation to pay money that is
owed by the lessee to the lessor based on the lease, from the amount of security
deposit received, in the following cases:(i) if the lease is terminated, and the lessor receives the return of the leased
thing; or(ii) if the lessee assigns the lease lawfully.
(2) If the lessee fails to perform an obligation to pay money based on the lease,the lessor may appropriate the security deposit to the payment of theobligation. In such a case, the lessee may not demand that the lessor
appropriate the security deposit to the payment of the obligation.
Section 8 Employment(Employment)
Article 623 An employment contract becomes effective when a first party
promises to a second party that the first party will engage in work and thesecond party promises to pay remuneration for this.
(Timing of Payment of Remuneration)
Article 624 (1) An employee may not demand remuneration until the work theemployee promised to perform has been completed.
(2) Remuneration specified with reference to a period may be claimed after thepassage of that period.
(Remuneration in Proportion to Performance)
Article 624-2 In the following cases, an employee may demand remuneration in
proportion to the obligation already performed thereby:(i) if the employee is no longer able to engage in work due to any grounds not
attributable to the employer; or147

(ii) if employment is terminated during the course of performance.
(Restrictions on Assignment of Employer's Rights)
Article 625 (1) An employer may not assign the rights of the employer to a third
party without obtaining the employee's consent.
(2) An employee may not cause a third party to work on behalf of the employee
without obtaining the employer's consent.
(3) If an employee causes a third party to work in violation of the provisions of
the preceding paragraph, the employer may cancel the contract.
(Cancellation of Employment with Definite Term)
Article 626 (1) If the term of employment exceeds five years, or the en d of theterm is not fixed, either party may cancel the contract at any time after thepassage of five years.
(2) If a person seeking to cancel a contract pursuant to the provisions of thepreceding paragraph must give notice three months in advance if the person isan employer, or two weeks in advance if the person is an employee.
(Notice of Termination of Employment with Indefinite Term)
Article 627 (1) If the parties have not specified a term of employment, either
party may give notice of termination at any time. In such cases, employment
terminates on the expiration of two weeks from the day of the notice oftermination.
(2) If remuneration is specified with reference to a period, an employer's notice oftermination may be given with respect to the following period of time onward;
provided, however, that the notice of termination must be given in the first halfof the current period.
(3) If remuneration is specified with reference to a period of six months or more,
the notice of termination referred to in the preceding paragraph must be given
three months before the termination.
(Cancellation of Employment Due to Compelling Reasons)
Article 628 Even if the parties have specified a term of employment, either party
may immediately cancel the contract if there is a compelling reason to do so. Insuch cases, if the reasons arise from the negligence of either one of the parties,
that party is liable to the other party for compensation for loss or damage.
(Presumption of Renewal of Employment)
Article 629 (1) If an employee continues to engage in that employee's work after
the expiration of a term of employment and the employer knows of this andraises no objection, it is presumed that the further employment is entered into
148

under conditions identical to those of the previous employment. In such cases,
each party may give a notice of termination pursuant to the provisions ofArticle 627.
(2) If either party has provided security for the previous employment, thesecurity is extinguished on the expiration of the term; provided, however, that
this does not apply to fidelity guarantee deposit.
(Effect of Cancellation of Employment)
Article 630 The provisions of Article 620 apply mutatis mutandis to employment.
(Notice of Termination Due to Commencement of Bankruptcy Proceeding for
Employer)
Article 631 If the employer is subject to an order commencing bankruptcy
proceeding, the employee or the bankruptcy trustee may give a notice oftermination pursuant to the provisions of Article 627 even if the employment isfor a definite term. In such cases, neither party may claim compensation fromthe other party for loss or damage suffered as a result of the termination.
Section 9 Contracts for Work(Contracts for Work)
Article 632 A contract for work become effective when one of the parties
promises to complete work and the other party promises to pay remuneration
for the outcome of the work.
(Timing of Payment of Remuneration)
Article 633 Remuneration must be paid simultaneously with delivery of thesubject matter of work performed; provided, however, that if no delivery of athing is required, the provisions of Article 624, paragraph (1) apply mutatis
mutandis.
(Remuneration in Proportion to Benefit Received by Party Ordering Work)
Article 634 In the following cases, if the party ordering work receives any benefit
from the performance of any divisible portion of the outcome of the work thatthe contractor has already completed, that portion is deemed to be thecompleted work; in this case, the contractor may demand remuneration in
proportion to the benefit to be received by the party ordering work:(i) if the contractor is no longer able to complete the work due to any grounds
not attributable to the party ordering work; or(ii) if the contract for work is cancelled before the completion of work.

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Article 635 Deleted(Limitation on Contractor's Warranty)
Article 636 If the contractor delivers to the party ordering work of a content the
subject matter of work that does not conform to the terms of the contract withrespect to the kind or quality (in the case of the subject matter of work that is
not required to be delivered, if the subject matter of work does not conform to
the terms of the contract with respect to the kind or quality when the work i sfinished), the party ordering work may not demand cure of the non -conformityof performance, demand a reduction of the remuneration, claim compensation
for loss or damage, or cancel the contract, on the grounds of the non-conformity
caused by the nature of the materials that the party ordering work has
provided or any instructions that the relevant party has given; provided,
however, that this does not apply if the contractor knew that the materials or
instructions were inappropriate but did not notify the ordering party of this.
(Limitation on Period of Warranty with Respect to Kind or Quality of Subject
Matter)
Article 637 (1) In the case prescribed in the main clause of the preceding Article,
if the party ordering work fails to notify the contractor of the non-conformity to
the terms of the contract within one year from the time when the party
becomes aware of it, the party ordering work may not demand cure of the non conformity of performance, demand a reduction of the remuneration, claim
compensation for loss or damage, or cancel the contract.
(2) The provisions of the preceding paragraph do not apply if the contractor knew
or did not know due to gross negligence the non-conformity referred to in thatparagraph at the time when the contractor delivers the subject matter of work(in the case of the subject matter of work that is not required to be delivered,
when the work is finished).
Articles 638 to 640 Deleted(Cancellation of Contract by Party Ordering Work)
Article 641 The party ordering work may cancel the contract at any time whilst
the contractor has not completed the work by paying compensation for loss ordamage.
(Cancellation on Commencement of Bankruptcy Proceeding for Party Ordering
Work)
Article 642 (1) If the party ordering work receives an order commencing
bankruptcy proceeding, the contractor or the bankruptcy trustee may cancel
150the contract; provided, however, that this does not apply to the cancellation of
the contract by the contractor after the work is completed.
(2) In the case prescribed in the preceding paragraph, the contractor may
participate in the distribution of the bankruptcy estate with respect to the
remuneration for the work already completed and expenses not included
therein.
(3) In the cases referred to in paragraph (1), claims for compensation for loss ordamage suffered as a result of the cancellation of the contract are permitted
only for contractors under contracts cancelled by the bankruptcy trustee. In
such a case, the contractors participate in the distribution of the bankruptcy
estate with respect to such compensation for loss or damage.
Section 10 Mandates(Mandates)
Article 643 A mandate becomes effective when a first party asks a second party
with performing a juridical act, and the second party accepts this.
(Duty of Care of Mandatary)
Article 644 A mandatary bears a duty to administer the mandated business withthe due care of a prudent manager in compliance with the main purport of themandate.
(Appointment of Sub-Mandatary)
Article 644-2 (1) A mandatary may not appoint a sub-mandatary unless the
mandatary obtains the permission of the mandator or there is a compelling
reason to do so.
(2) In the case of mandate upon which the mandator grants authority torepresent to the mandatary, if the mandatary appoints a sub-mandatary withauthority to represent, the sub-mandatary has the same rights and obligations
as those of the mandatary in relation to the mandator within the scope of
authority thereof.
(Reports by Mandatary)
Article 645 A mandatary must, if so requested by the mandator, report thecurrent status of the administration of the mandated business at any time, andmust report the process and results without delay upon termination of themandate.
(Delivery of Received Things by Mandatary)
Article 646 (1) A mandatary must deliver to the mandator monies and other151

things received during the course of administering the mandated business. The
same applies to fruits the mandatary has reaped.
(2) A mandatary must transfer to the mandator rights that the mandatary has
acquired in the mandatary's own name on behalf of the mandator.
(Mandatary's Responsibility for Consumption of Monies)
Article 647 If the mandatary has personally consumed monies that were to bedelivered to the mandator or used for the benefit of the mandator, themandatary must pay interest for the period from the day of that consumption.
In such cases, if loss or damage persists, the mandatary is liable to compensate
for the same.
(Remuneration for Mandatary)
Article 648 (1) In the absence of any special agreements, the mandatary may notclaim remuneration from the mandator.
(2) If a mandatary is to receive remuneration, the mandatary may not claim thisuntil after having performed the mandated business; provided, however, that if
the remuneration is specified with reference to period, the provisions of Article
624, paragraph (2) apply mutatis mutandis.
(3) In the following cases, the mandatary may demand remuneration in
proportion to the performance already completed:(i) if the mandatary is no longer able to perform the mandated business due toany grounds not attributable to the mandator; or(ii) if the mandate is terminated during the course of performance.
(Remuneration for Result)
Article 648-2 (1) If the parties agree that remuneration will be paid for any
result that may be obtained through the performance of the mandated business,and the result is required to be delivered, remuneration must be paid
simultaneously upon the delivery of the result.
(2) The provisions of Article 634 apply mutatis mutandis if the parties agree that
remuneration will be paid for any result that may be obtained through theperformance of the mandated business.
(Mandatary's Claims for Advance for Costs)
Article 649 If costs will be incurred in administering the mandated business, themandator must, at the request of the mandatary, pay an advance for thosecosts.
(Mandatary's Claims for Reimbursement of Expense)
Article 650 (1) If the mandatary has expended costs found to be necessary for the152administration of the mandated business, the mandatary may claim
reimbursement of those costs from the mandator and any interest on the samefrom the day the costs were expended.
(2) If the mandatary has borne any obligation found to be necessary for theadministration of the mandated business, the mandatary may demand that the
mandator perform the obligation on the mandatary's behalf. In such cases, if
the obligation has not yet fallen due, the mandatary may require the mandator
to tender reasonable security.
(3) If a mandatary incurs loss or damage that is not due to the negligence of themandatary in order to administer the mandated business, the mandatary may
claim compensation for this from the mandator.
(Cancellation of Mandate)
Article 651 (1) A mandate may be cancelled by either party at any time.
(2) In the following cases, a party that has cancelled a mandate pursuant to theprovisions of the preceding paragraph must compensate for damage suffered by
the other party; provided, however, that this does not apply if there was acompelling reason for the cancellation:(i) if the party cancels the mandate at a time that is detrimental to the otherparty; or(ii) if the mandator cancels the mandate for which the purpose includes theinterests for the mandatary (excluding the profit to be obtained exclusively
by receiving remuneration).
(Effect of Cancellation of Mandate)
Article 652 The provisions of Article 620 apply mutatis mutandis to mandates.
(Grounds for Termination of Mandate)
Article 653 A mandate terminates when:(i) the mandator or mandatary dies;(ii) the mandator or mandatary is subject to an order commencing bankruptcy
proceeding;(iii) the mandatary is subject to a decision for the commencement ofguardianship.
(Disposition after Termination of Mandate)
Article 654 If a mandate has terminated but there are pressing circumstances,the mandatary or the heir or legal representative thereof must effect thenecessary actions until the time when the mandator or the heir or legal
representative of the mandatary is able to take charge of the mandated
business.
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(Requirements for Assertion of Termination of Mandate)
Article 655 The grounds of termination of mandate may not be asserted against
the other party unless the other party was notified of or knew of the same.
(Quasi-Mandate)
Article 656 The provisions of this Section apply mutatis mutandis toentrustments of business that do not constitute juridical acts.
Section 11 Bailment(Bailment)
Article 657 A bailment becomes effective if one of the parties asks the otherparty to keep a certain thing in custody, and the other party gives consent tokeeping it in custody.
(Cancellation of Bailment by Bailor Prior to Receipt of Bailed Thing)
Article 657-2 (1) A bailor may cancel the contract up until the bailee receives thebailed thing. In such a case, if the bailee sustains any damage due to thecancellation of the contract, the bailee may demand compensation for damage
from the bailor.
(2) A gratuitous bailee may cancel the contract up until the bailee receives thebailed thing; provided, however, that this does not apply to a bailment made inwriting.
(3) If the bailor does not deliver the bailed thing even after the passage of thescheduled time of receipt of the bailed thing, and the bailee (in the case of a
gratuitous bailment, limited to the bailee of a bailment made in writing)demands the delivery by specifying a reasonable period of time but the bailor
fails to deliver the thing, the bailee may cancel the contract.
(Use of Bailed Thing and Custody by Third Parties)
Article 658 (1) A bailee may not use the bailed thing without obtaining theconsent of the bailor.
(2) The bailee may not have a third party keep the bailed thing in custody unlessthe bailee obtains the consent of the bailor or there is a compelling reason to doso.
(3) A sub-bailee has the same rights and obligations as those of the bailee in
relation to the bailor within the scope of authority thereof.
(Duty of Care of Gratuitous Bailee)
Article 659 A gratuitous bailee bears a duty to keep the bailed thing while154

exercising the same level of care that the bailee would exercise for their own
property.
(Obligation of Bailee to Give Notice)
Article 660 (1) If a third party claiming rights with respect to the bailed thinghas filed a lawsuit against the bailee, or has effected an attachment,
provisional seizure, or provisional disposition, the bailee must notify the bailorof that fact without delay; provided, however, that this does not apply if thebailor already knows it.
(2) Even if a third party claims a right for the bailed thing, the bailee must
return the bailed thing to the bailor unless the bailor gives instructions to thecontrary; provided, however, that this does not apply if the bailee notifies thebailor in advance as referred to in the preceding paragraph or is not required
to notify pursuant to the provisions of the proviso to that paragraph, and thebailee delivers the bailed thing to a third party based on a final and binding
judgment (including anything that has the same effect as a final and binding
judgment) ordering the delivery of the bailed thing to that third party.
(3) If the bailee is required to return the bailed thing to the bailor pursuant to
the provisions of the preceding paragraph, the bailee is not liable tocompensate any damage sustained by a third party due to the delivery of thebailed thing to the bailor.
(Compensation for Loss or Damage by Bailor)
Article 661 The bailor must compensate the bailee for damage that occur due tothe nature of or defects in the bailed things; provided, however, that this does
not apply if the bailor did not, without negligence, know of such nature or
defect, or the bailee knew of the same.
(Bailor's Demand for Return)
Article 662 (1) Even if the parties specify the time for the return of the bailed
things, the bailor may demand the return of the same at any time.
(2) In the case prescribed in the preceding paragraph, if the bailee sustains any
damage because the bailor demands the return of the bailed thing prior to thetime of return, the bailee may claim compensation therefor from the bailor.
(Timing of Return of the Bailed Thing)
Article 663 (1) If the parties have not specified the timing of the return o f thebailed thing, the bailee may return the same at any time.
(2) If the timing of the return is specified, the bailee may not return thedeposited thing prior to the due date unless there is a compelling reason to doso.
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(Place for Return of Bailed Thing)
Article 664 Bailed thigs must be returned at the place where they are to beretained; provided, however, that if the bailee has changed the place ofretention for a legitimate reason, the bailed thing may be returned at thatcurrent place of retention.
(Limitation on Period of Claims for Compensation for Loss or Damage andReimbursement of Expenses)
Article 664-2 (1) Claims for compensation for loss or damage sustained by thebailor due to the loss or damage to part of the bailed thing and f or
reimbursement of expenses incurred by the bailee must be submitted within
one year from the time when the bailor receives the return of the bailed thing.
(2) With regard to the claim for compensation for loss or damage referred to in
the preceding paragraph, the prescription period does not expire until one year
has elapsed from the time when the bailor receives the return of the bailed
thing.
(Mutatis Mutandis Application of Provisions on Mandate)
Article 665 The provisions of Articles 646 through 648, Article 649, and Article
650, paragraphs (1) and (2) apply mutatis mutandis to bailments.
(Bailments of Mixed Things)
Article 665-2 (1) If the things bailed by two or more persons are the same in kindand quality, the bailee may keep these things in custody by mixing them only if
the bailee obtains the consent of the respective bailors.
(2) If the bailee keeps the bailed things by two or more bailors in custody by
mixing them based on the provisions of the preceding paragraph, each bailor
may demand the return of the thing in the same quantity as the thing bailed
by respective bailor.
(3) In the case prescribed in the preceding paragraph, if any part of the bailed
things is lost, each bailor may demand the return of the thing at thepercentage of the thing bailed by respective bailor to all bailed things mixed
and kept in custody by the bailee. In such a case, no bailor is precluded fromclaiming compensation for loss or damage.
(Deposit of Fungibles)
Article 666 (1) If a bailee may consume the bailed thing by contract, the bailee
must return the thing that is the same kind, quality and quantity as the bailed
thing.
(2) The provisions of Articles 591 and 592 apply mutatis mutandis to the case156

prescribed in the preceding paragraph.
(3) The provisions of Article 591, paragraphs (2) and (3) apply mutatis mutandis
to the case of a bailment of money by a contract concerning deposits.
Section 12 Partnerships(Partnership Contracts)
Article 667 (1) A partnership contract becomes effective when each of the par ties
promises to make a contribution and engage in a joint undertaking.
(2) The subject of the contribution may be services.
(Non-Performance of Other Partners)
Article 667-2 (1) The provisions of Articles 533 and 536 do not apply to apartnership contract.
(2) A partner may not cancel a partnership contract on the grounds that otherparties do not perform the obligations based on the partnership contract.
(Nullity of Manifestation of Intention by One Partner)
Article 667-3 Even if there are any grounds for the nullity or rescission of amanifestation of intention by one of the partners, the validity of thepartnership contract is not impaired in relation to other partners.
(Co-Ownership in Partnership Property)
Article 668 The contributions of the partners and other partnership property is
co-owned by all partners.
(Responsibility for Failure to Provide Monetary Contribution)
Article 669 If monies are the subject of contribution and a partner fails to makethe contribution, that partner must pay interest on the same and otherwisecompensate for loss or damage.
(Methods of Deciding and Executing Business)
Article 670 (1) The partnership business is decided by the majority of thepartners and executed by each partner.
(2) The decision and execution of the partnership business may be delegated to
one or more partners or a third party, pursuant to the provisions of thepartnership contract.
(3) The person delegated as referred to in the preceding paragraph (hereinafterreferred to as a "person who executes business") decides and executes thepartnership business. In such a case, if there are two or more persons who
execute business, the partnership business is decided by the majority of these157

persons who execute business and is executed by each of them.
(4) Notwithstanding the provisions of the preceding paragraph, the partnershipbusiness is not precluded to be decided based on the consent of all partners or
executed by all partners.
(5) Notwithstanding the provisions of the preceding paragraphs, t he ordinary
business of a partnership may be performed by each partner or each person
who executes business independently; provided, however, that this does not
apply if other partners or persons who execute business raise objections prior
to the completion of the business.
(Agency of Partnership)
Article 670-2 (1) In executing the partnership business, each partner may act asan agent of other partners with the consent of the majority of partners.
(2) Notwithstanding the provisions of the preceding paragraph, if any person isdelegated to be a person who executes business, only the person who executes
business may act as an agent of partners. In such a case, if there are two or
more persons who execute business, each person who executes business may
act as an agent of partners only if the person obtains the consent of the
majority of the persons who execute business.
(3) Notwithstanding the provisions of the preceding two paragraphs, eachpartner and each person who executes business may act as an agent ofpartners independently when performing the ordinary business of thepartnership.
(Mutatis Mutandis Application of Provisions on Mandates)
Article 671 The provisions of Articles 646 through 650 apply mutatis mutandis
to partners who decide or execute the business of a partnership.
(Resignations and Dismissals of Partners Who Execute Business)
Article 672 (1) If one or more partners are delegated to decide and execute
partnership business pursuant to the provisions of the partnership contract,
those partners may not resign without a legitimate reason.
(2) The partners referred to in the preceding paragraph may be dismissed by theunanimous agreement of the other partners, but only for just cause.
(Inspections by Partners of Status of Partnership Business and Property)
Article 673 Each partner may inspect the status of the business and property ofthe partnership even if the partner does not have the right to decide andexecute the business of the partnership.
(Proportions of Partners' Distributions of Profits and Losses)
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Article 674 (1) If parties have not specified the proportions of distributions of thepartnership's profits and losses, these proportions are determined inaccordance with the value of each partner's contribution.
(2) If the proportions of distributions have been specified solely with respect toeither profits or losses, it is presumed that those proportions are common to
profits and losses.
(Exercise of Right of Creditors of Partnership)
Article 675 (1) A creditor of a partnership may exercise the rights of the creditor
against the partnership property.
(2) A creditor of a partnership may, at the choice of the creditor, exercise therights of the creditor against each partner in proportion to their shares of loss
or in equal proportions; provided, however, that if a creditor of a partnershipknew the proportion of each partner's share of loss at the time of occurrence ofthe claim, the exercise of the creditor's rights is based on those proportions.
(Disposition of Partners' Interests and Division of Partnership Property)
Article 676 (1) If a partner has disposed of the interest of the partner withrespect to the partnership property, that partner may not duly assert that
disposition against the partnership or third parties that had dealings with thepartnership.
(2) A partner may not independently exercise the rights with regard to a claimthat is included in the partnership property based on that partner's interest in
the claim.
(3) A partner may not seek the division of the partnership property before
liquidation.
(Prohibition of Exercise of Rights by Creditors of Partners against Partnership
Property)
Article 677 A partner's creditor may not exercise the rights of that creditor
against the partnership property.
(Admission of Partners)
Article 677-2 (1) Partners may admit a new partner to a partnership based on
the consent of all partners or pursuant to the provisions of the partnershipcontract.
(2) A partner that is admitted to a partnership pursuant to the pr ovisions of thepreceding paragraph after it is formed is not liable to perform the obligationsof the partnership that arose before that partner's admission.
(Withdrawal of Partners)
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Article 678 (1) If a partnership contract does not specify the duratio n of thepartnership, or specifies that the partnership is to continue for the life of acertain partner, each partner may withdraw at any time; provided, however,that unless there is a compelling reason to do so, a partner may not withdraw
at a time that is detrimental to the partnership.
(2) Even if the duration of the partnership is specified, each partner may
withdraw if there is a compelling reason to do so.
Article 679 Beyond the cases referred to in the preceding Article, partners
withdraw on the following grounds:(i) the partner dies;(ii) the partner is subject to an order commencing bankruptcy proceeding;(iii) the partner is subject to a decision for the commencement of guardianship;(iv) the partner has been expelled.
(Expulsion of Partners)
Article 680 The expulsion of a partner may be effected by the unanimous
agreement of the other partners, but only for just cause; provided, however,that the expulsion may not be duly asserted against a partner who is expelledunless a notice to that effect is given to that partner.
(Liability of Withdrawing Partner)
Article 680-2 (1) A withdrawing partner is liable to perform obligations of thepartnership that have arisen before that partner's withdrawal, to the extent ofthat partner's previous liability. In such a case, until a creditor receives thefull performance of the obligation, the withdrawing partner may demand thatthe partnership provide security or exempt the partner from liability inrelation to the partnership.
(2) A withdrawing partner acquires a right to reimbursement from thepartnership if the partner performs an obligation of the partnership prescribedin the preceding paragraph.
(Returns of Interests of Withdrawing Partners)
Article 681 (1) Accounts as between the withdrawing partner and other partners
must be settled according to the status of the partnership property as at thetime of the withdrawal.
(2) The interest of the withdrawing partner may be refunded in money,
regardless of the kind of the withdrawing partner's contribution.
(3) With respect to any matter not yet completed at the time of the withdrawal,
accounts may be made up subsequent to the completion of that matter.

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(Causes of Dissolution of Partnerships)
Article 682 A partnership is dissolved on any of the following grounds:(i) the successful completion of the business that is the object of thepartnership;(ii) the expiration of the duration of the partnership specified by thepartnership contract;(iii) the occurrence of any cause of dissolution specified by the partnershipcontract; or(iv) the consent of all partners.
(Request for Dissolution of Partnerships)
Article 683 Each partner may request the dissolution of the partnership if there
is a compelling reason to do so.
(Effect of Cancellation of Partnership Contracts)
Article 684 The provisions of Article 620 apply mutatis mutandis to partnershipcontracts.
(Liquidation of Partnerships and Appointment of Liquidators)
Article 685 (1) When a partnership is dissolved, liquidation is administeredjointly by all partners or by a liquidator appointed by the partner.
(2) A liquidator is appointed by a majority of all partners.
(Methods of Deciding and Executing Liquidators' Business)
Article 686 The provisions of Article 670, paragraphs (3) through (5), and Article670-2, paragraphs (2) and (3) apply mutatis mutandis if there is more than one
liquidator.
(Resignations and Dismissals of Liquidators Who Are Partners)
Article 687 The provisions of Article 672 apply mutatis mutandis if t heliquidator is appointed from among the partners pursuant to the provisions of
the partnership contract.
(Duties and Authority of Liquidators and Method of Division of Residual
Assets)
Article 688 (1) The duties of a liquidator are to:(i) conclude current business;(ii) collect debts and perform obligations; and(iii) deliver residual assets.
(2) The liquidator may perform any and all acts in order to perform the duties set
forth in the items of the preceding paragraph.
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(3) Residual assets are distributed in proportion to the value of the contributionsof each partner.
Section 13 Life Annuities(Contracts for Life Annuities)
Article 689 Contracts for life annuities become effective when one of the parties
promises to pay monies or deliver other things to the other party or a third
party periodically until the death of the first party, the other party or the third
party.
(Computation of Life Annuities)
Article 690 Life annuities are calculated on a daily basis.
(Cancellation of Contracts for Life Annuities)
Article 691 (1) If the obligor in a life annuity has received the principal for thelife annuity but fails to pay the life annuity or fails to perform otherobligations, the other party may demand the return of the principal. In suchcases, the other party must return to the obligor of the life annuity the amountof the life annuity already received, after deducting the amount of the intereston that principal.
(2) The provisions of the preceding paragraph do not preclude claims forcompensation for loss or damage.
(Cancellation of Contracts for Life Annuities and Simultaneous Performance)
Article 692 The provisions of Article 533 apply mutatis mutandis to cases
referred to in the preceding Article.
(Declaration of Continuation of Claim for Life Annuity)
Article 693 (1) If a death provided for in Article 689 occurs due to grounds
attributable to the obligor in a life annuity, the court may, at the request of theobligee in the life annuity or the obligee's heirs, pronounce that the life a nnuity
claim continues for a reasonable period of time.
(2) The provisions of the preceding paragraph do not preclude the exercise of therights provided in Article 691.
(Bequests of Life Annuities)
Article 694 The provisions of this Section apply mutatis mutandis to bequests oflife annuities.
Section 14 Settlements
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(Settlements)
Article 695 A settlement becomes effective when the parties to a dispute promise
to settle the dispute through reciprocal concessions.
(Effect of Settlements)
Article 696 If it has been acknowledged in a settlement that one of the parties
has the rights that are the subject of the dispute or that the other party did nothave those rights, and conclusive evidence is then obtained indicating that thefirst party did not have those rights in the past or that the other party did
have those rights, the rights are regarded as either having been transferred to
the first party or extinguished in the settlement.
Chapter III Benevolent Intervention in Another's Business(Benevolent Intervention in Another's Business)
Article 697 (1) A person that has begun to manage a business for another person
without being obligated to do so (hereinafter in this Chapter referred to as a"manager") must manage that business, in accordance with the nature of thebusiness, in the way that best suits the interests of the principal (hereinafterreferred to as "benevolent intervention in another's business").
(2) A manager must engage in benevolent intervention in another's business inaccordance with the intentions of the principal if the manager knows, or is able
to conjecture that intention.
(Urgent Benevolent Intervention in Another's Business)
Article 698 If a manager engages in benevolent intervention in another'sbusiness in order to allow a principal to escape imminent danger to theprincipal's person, reputation, or property, the manager is not liable tocompensate for damage resulting from this unless the manager has acted inbad faith or with gross negligence.
(Obligation of Managers to Give Notice)
Article 699 A manager must notify the principal without delay that the manager
has commenced benevolent intervention in the principal's business; provided,
however, that this does not apply if the principal already knows of this.
(Continuation of Benevolent Intervention in Another's Business by Managers)
Article 700 A manager must continue the benevolent intervention in another'sbusiness until the principal or an heir or legal representative thereof is able toundertake it; provided, however, that this does not apply if it is evident that163

the continuation of the benevolent intervention in another's business iscontrary to the will of the principal, or is disadvantageous to the principal.
(Mutatis Mutandis Application of Provisions on Mandates)
Article 701 The provisions of Article 645 through Article 647 apply mutatis
mutandis to the benevolent intervention in another's business.
(Managers' Claims for Reimbursement of Costs)
Article 702 (1) If a manager has incurred beneficial expenses for a principal, themanager may claim reimbursement of those costs from the principal.
(2) The provisions of Article 650, paragraph (2) apply mutatis mutandis if amanager has incurred beneficial obligations on behalf of the principal.
(3) If a manager has engaged in the benevolent intervention in another'sbusiness against the will of the principal, the provisions of the preceding two
paragraphs apply mutatis mutandis, solely to the extent currently enriched.
Chapter IV Unjust Enrichment(Obligation to Return Unjust Enrichment)
Article 703 A person that has benefited (hereinafter in this Chapter referred toas "beneficiary") from the property or labor of another person without legalcause and has thereby caused a loss to another person bears the duty to re turnthat benefit, to the extent the benefit exists.
(Obligation of Beneficiaries in Bad Faith to Return)
Article 704 A beneficiary in bad faith must return the benefit received together
with interest thereon. In such cases, if any damage still remains, thebeneficiary is liable to compensate for this.
(Performance Knowing of Absence of Obligation)
Article 705 A person that has paid money or delivered anything as performanceof an obligation may not demand the return of the money paid or thingdelivered if the person knew, at the time, that the obligation did not exist.
(Performance before Due Date)
Article 706 If an obligor has paid money or delivered anything as performance ofan obligation that has not yet fallen due, the obligor may not demand thereturn of the money paid or thing delivered; provided, however, that if theobligor tendered anything by mistake, the obligee must return the benefit
gained as a result.

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(Performance of Obligations of Others)
Article 707 (1) If a person that is not an obligor has performed an obligation by
mistake and the obligee, acting in good faith, has allowed the instrument to belost, has damaged the instrument, has waived the security, or has lost theclaim by prescription, the person performing the obligation may not demand
the return of subject matter of the performance.
(2) The provisions of the preceding paragraph do not preclude the person
performing an obligation from exercising the right to reimbursement against
the obligor.
(Denial of Claim for Return for Illegal Causes)
Article 708 A person that has paid money or delivered thing for an obligation for
an illegal cause may not demand the return of the money paid or thingdelivered; provided, however, that this does not apply if the illegal cause
existed solely in relation to the Beneficiary.
Chapter V Torts(Compensation for Loss or Damage in Torts)
Article 709 A person that has intentionally or negligently infringed the rights orlegally protected interests of another person is liable to compensate for damage
resulting in consequence.
(Compensation for Loss or Damage Other than of Property)
Article 710 A person liable for compensation for loss or damage pursuant to theprovisions of the preceding Article must also compensate for loss or damage
other than of property, regardless of whether that person infringed the body,
liberty or reputation of another person, or infringed property rights of anotherperson.
(Compensation for Loss or Damage to Close Relatives)
Article 711 A person that has taken the life of another must compensate for loss
or damage to the father, mother, spouse, and children of the victim, even if theproperty rights of the same have not been infringed.
(Capacity for Liability)
Article 712 If a minor has inflicted damage on another person but did not havesufficient intellectual capacity to appreciate their own liability for that act,
that minor is not liable to compensate for that act.
Article 713 A person who has inflicted damage on another person while in a165

condition wherein the person lacked the capacity to appreciate their own
liability for their acts due to a mental disability is not liable to compensate for
this; provided, however, that this does not apply if the person has temporarily
caused that condition, intentionally or negligently.
(Liability of Person Obligated to Supervise a Person without Capacity toAssume Responsibility)
Article 714 (1) When a person without capacity to be assume responsibility is notliable pursuant to the provisions of the preceding two Articles, the person withthe statutory obligation to supervise the person without capacity to assume
responsibility is liable to compensate for damage that the person without
capacity to be assume responsibility has inflicted on a third part y; provided,
however, that this does not apply if the person who has the obligation tosupervise has not failed to perform that person's obligation or if the damage
could not have been avoided even if that person had not failed to perform that
person's obligation.
(2) A person who supervises a person without capacity to be assume
responsibility on behalf of the person who has the obligation to supervise also
has the liability referred to in the preceding paragraph.
(Liability of Employers)
Article 715 (1) A person that employs another person for a business undertaking
is liable to compensate for damage inflicted on a third party by that person's
employees with respect to the execution of that business; provided, however,that this does not apply if the employer exercised reasonable care in appointing
the employee or in supervising the business, or if the damage could not havebeen avoided even if the employer had exercised reasonable care.
(2) A person that supervises a business on behalf of the employer also has theliability referred to in the preceding paragraph.
(3) The provisions of the preceding two paragraphs do not preclude the employer
or supervisor from exercising their right to reimbursement against theemployee.
(Liability of Party Ordering Work)
Article 716 A party ordering work is not liable to compensate for damage acontractor inflicted on a third party with respect to that work; provided,
however, that this does not apply if the party ordering work is negligent withregards to the order or instructions.
(Liability of Possessor and Owner of Structure on Land)
Article 717 (1) If a defect in the installation or preservation of a structure on
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land causes damage to another person, the possessor of that structure is liable
to the person incurring damage to compensate for the damage; provided,
however, that if the possessor has exercised the necessary care to prevent thedamage, the owner must compensate for the damage.
(2) The provisions of the preceding paragraph apply mutatis mutandis if there isa defect in the planting or supporting of bamboo or trees.
(3) In the cases referred to in the preceding two paragraphs, if there is anotherperson that is liable for the cause of the damage, the possessor or owner may
exercise their right to reimbursement against that person.
(Liability of Possessor of Animal)
Article 718 (1) A possessor of an animal is liable to compensate for damage thatthe animal inflicts on another person; provided, however, that this does not
apply if the possessor managed the animal while exercising reasonable careaccording to the kind and nature of the animal.
(2) A person who manages an animal on behalf of a possessor also assumes theliability referred to in the preceding paragraph.
(Liability of Joint Tortfeasors)
Article 719 (1) If more than one person has inflicted damage on another person
by a joint tort, each of them is jointly and severally liable to compensate for thedamage. The same applies if it cannot be ascertained which of the joint
tortfeasors inflicted the damage.
(2) A person who has abetted or aided a perpetrator is deemed to be a joint
tortfeasor, and the provisions of the preceding paragraph apply.
(Self-Defense and Necessity)
Article 720 (1) A person that, in response to the tortious act of anothe r, iscompelled to commit a harmful act to protect rights or legally protectedinterests of the person or of a third party, is not liable for compensation for loss
or damage; provided, however, that this does not preclude a victim from filing aclaim of compensation for loss or damage against the person that committed
the tortious act.
(2) The provisions of the preceding paragraph apply mutatis mutandis if theperson in question damages a thing belonging to another person in order toavert an imminent danger arising from that thing.
(Fetus' Capacity to Hold Rights Regarding Claim for Compensation for Loss or
Damage)Article 721 An unborn child is deemed to have been already born with respect tothe claim for compensation for loss or damage.
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(Method of Compensation for Loss or Damage, Deduction of Interim Interest,
and Comparative Negligence)
Article 722 (1) The provisions of Articles 417 and 417-2 apply mutatis mutandis
to compensation for loss or damage caused by tort.
(2) If a victim is negligent, the court may determine the amount of compensation
for loss or damage by taking that into consideration.
(Recovery in Defamation)
Article 723 The court may order a person that has defamed another person totake appropriate measures to restore the reputation of the victim in lieu of orin addition to compensation for loss or damage, at the request of the victim.
(Extinctive Prescription of Claim for Compensation for Loss or Damage Causedby Tort)Article 724 In the following cases, the claim for compensation for loss or damage
caused by tort is extinguished by prescription:(i) the right is not exercised within three years from the time when the victim
or legal representative thereof comes to know the damage and the identity ofthe perpetrator; or(ii) the right is not exercised within 20 years from the time of the tortious act.
(Extinctive Prescription of Claim for Compensation for Loss or Damage Arisingfrom Death to Person or Injury to Person Caused by Tort)
Article 724-2 For the purpose of the application of the provisions of item (i) of
the preceding Article with regard to the extinctive prescription of the claim forcompensation for loss or damage for death or injury to person caused by tort,
the term "three years" in the same item is deemed to be replaced with "fiveyears".

168