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International Joint Research on Contract Law

Tatsuya Kitai
Professor, Faculty of Law, Chuo University
Areas of Specialization: Anglo-American Law, Comparative Contract Law, Legal History

Introduction

In Report No. 1, Professor Nobuyuki Sato already discussed how the Chuo University joint research project “Comprehensive Analysis on Diversity of Legal Systems in Asia-Pacific Region and Convergence towards Establishment of the Rule of Law” was selected for the Private University Research Branding Project operated by the MEXT.

The research targets the six legal jurisdictions of Japan, South Korea, Thailand, Hong Kong, Singapore, and Australia, and the three legal fields of international transactions (contract), dispute resolution, and data privacy. I am in charge of creating a questionnaire for use in a survey on the formation of contracts, which is part of contract law. Currently, I have yet to receive answers from each of my counterparts, so I would like to discuss realizations of mine during the process of creating the questionnaire.

Regarding the target legal jurisdictions

In comparative legal research, legal jurisdictions throughout the world are often categorized based on certain characteristics. In such cases, it is most common for categorization to take place based on the term “legal family” (in Japanese, houzoku). A little-known fact is that the first person to use this term was Nobushige Hozumi, one of the founders of Chuo University. In 1884, Hozumi released the work Explanation of Five Major Legal Families. His genealogical theory of legal families explained the successive relationship of laws by comparing it to a mother and daughters. This concept was both unique and representative of Asian thought in its premise.

According to Hozumi’s theory, Japan, Thailand, and South Korea can be said to be in a sister relationship, at least in regards to the birth of civil code, since the countries have all adopted the German Pandekten system of civil code. On the other hand, Australia, Singapore, and Hong Kong can be said to be in a sister relationship, at least in regards to contract law, since the countries have all adopted the English common law.

In the first place, categorization into legal families is strictly an academic exercise. For actual practice, information on specific legal norms in each legal jurisdiction is most useful. Even when belonging to the same group, the principles of each legal jurisdiction have developed uniquely and naturally differ in their respective details. Although global surveys on contracts and the sale of goods have already been performed, the survey in this research project focuses only on countries in the Asia-Pacific region. This will enable even more detailed and in-depth research.

Formation of contracts

Within the project, I am in charge of formation of contracts. Actually, I didn’t have much trouble devising questions for the survey; instead, I found it difficult to create information on Japanese law as example answers. In June of this year, the considerable portion of the Japanese Civil Code pertaining to law of obligations and contract law was amended for the first time in 120 years—perhaps this timing was fortuitous and perhaps not. The current Civil Code will remain in effect for the time being and the amended Civil Code will take effect in 2020 (the exact date has yet to be determined). Therefore, when providing example answers concerning Japanese law, I had to provide two types of information: an answer based on current law and an answer based on the amended law. Firstly, this made creating the example answers a great deal of work. Secondly, although this may seem to be a contradiction, I was troubled by the small amount of information available to provide. I had trouble finding sufficient information due to the lack of legal precedents and theories in the area for which I was responsible.

In their work The Japanese Legal System (2012), Milhaupt, Ramseyer, and West compared American law and Japanese law. The authors appropriately made the following observation: “Most of the rules on offer and acceptance mastered by first-year law students in the United States simply do not generate much attention in Japanese courts or law faculties.” This became painfully clear to me as I searched for information in law reports and legal treatises.

The recent amendment on the law of obligations was by no means insignificant. For example, in regards to the time of formation of contracts, Article 526, paragraph (1) of the current Civil Code provides that “a contract between persons at a distance shall be formed upon dispatch of the notice of acceptance.” This article was adopted by applying the posting rules of English law while considering the commercial customs that existed in Tokyo and Osaka at that time. The recent amendment deletes this provision from the code and changes the time of formation of contracts to when notice of acceptance is received by the other party, not the time when that notice is sent. This change was most likely made to comply with the position of the CISG or UNIDROIT principles. However, despite the great significance of this change, there seems to have been a lack of active discussion among legal professionals.

I heard absolutely no debate regarding the advertisement offering prizes. For example, assume that an advertisement is posted offering a reward of 100,000 yen for finding a lost pet. In this case, the issue is whether or not that reward can be claimed by a person who returned the pet to the owner without knowing of the advertisement. In common law, acceptance does not occur when a specified act is performed without knowing of the offer. In other words, a contract is not formed in this case. Conversely, German law views this advertisement as a unilateral juristic act and has recognized the right of the person who found the pet to claim 100,000 yen, even when that person was not aware of the advertisement. Scholars (including Nobushige Hozumi) who drafted the Japanese Civil Code 120 years ago considered both viewpoints and intentionally selected a resolution based on common law. However, in the recent amendment, rules in conformity with the purport of German law were adopted with almost no debate. I find it disappointing how the fundamental theory of contracts was neglected. It is almost as if changing provisions in the Civil Code is simply superficial and there will be hardly any impact on the daily lives of Japanese citizens—something which is obviously not true.

Conclusion

When creating the questionnaire, I found it relatively easy to obtain basic information on provisions of statutes and precedents in each country. My immediate interest is, even in other legal jurisdictions, whether or not a disparity between appearance and fact exists as it does in Japanese law. If this disparity does exist, then I look for differences between regions and search for reasons why the disparity occurs. This is a profound question in regards to legal culture, and it is no easy task to find an answer simply by exchanging questions and responses with legal professionals in that region. In the future, the question requires intensive discussion at events such as international symposiums. Although our joint research project has just begun, I firmly believe that it will open a new chapter in comparative law research at Chuo University.

Tatsuya Kitai
Professor, Faculty of Law, Chuo University
Areas of Specialization: Anglo-American Law, Comparative Contract Law, Legal History
Tatsuya Kitai was born in Aichi Prefecture in 1964.
He completed the Doctoral Program in the Graduate School of Law, Chuo University in 1996.
He served as an Assistant Professor in the Faculty of Law, Toin University of Yokohama and an Associate Professor in the Faculty of Law, Chuo University before assuming his current position in 2014.
In 2016, he taught a course in Japanese Law as a Visiting Professor in the Tulane University Law School.
Recently published academic papers are listed below.
Ben Bruce Blakeney: An American Lawyer, Chuo Law Review, Issue No. 7, Vol. 123 (2017); Controversy over the Jury System in early Meiji Japan, Chuo Law Review, Issue No. 9-10, Vol. 121 (2015); Good Faith in English Contract Law, Chuo Law Review, Issue No. 7-8, Vol. 121 (2014); Intention to Create Legal Relations in English Contract Law, Chuo Law Review, Issue No. 9-10, Vol. 119 (2013).