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Sale and Purchase and Change of Japanese Law

1) Contract Non-Conformity Liability

According to change of Civil Code of Japan (date of enforcement : 1st April 2020), Defect Warranty Liability (Kashi Tanpo Sekinin=瑕疵担保責任) changed into Contract Non-Conformity Liability (Keiyaku Futekigo Sekinin = 契約不適合責任).

Assumed that a person sells a house to Mr. B.

On the sale and purchase contract paper, it says that there is not water leak from the roof.
(Seller does not know it with her negligence)

However if there is a water leak, it means that the actual situation does not conform, satisfies content of contract paper.

In that case, seller will need to bear Contract Non-Conformity Liability.

Influence of law is not limited to name of technical word.

It actually changes range of seller’s liability and purchaser’s right.

2) Purchaser’s right

In the case of amended law, when there is a situation of Contract Non-Conformity, Purchaser can claim the seller for not only compensation (損害賠償), revocation of contract (契約解除), but also demand for complete fulfillment (完全履行請求), replacement, decrease of sale price(代金減額).

However if there is not seller’s negligence, seller does not bear Contract Non-Conformity Liability.
(As for this respect, law was also changed)

So Purchaser may be able to demand seller to repair the roof.

Or Purchaser may be able to demand seller to replace defected roof.

And when seller does not fulfill Purchaser’s demand, Purchaser can demand for decrease of sales price (after request seller to fulfill seller’s responsibility).

And when seller does not fulfill Purchaser’s demand, Purchaser can revoke contract (after request seller to fulfill seller’s responsibility).

And even if the Purchaser knows such defect, seller still bears Contract Non-Conformity Liability.

If the Purchaser finds situation of Contract Non-Conformity, she needs to inform the seller of such situation within one year from his finding.

However if the seller knew such situation at the time of delivery of the house, this one year limitation is not applied.

However this legislation of Contract Non-Conformity Liability is not mandatory provision.

So usual contract paper will stipulate that seller needs to bear Contract Non-Conformity Liability within three month from delivery of the house.

And it is also possible to exclude seller’s Contract Non-Conformity Liability completely.

In the case of used house, it will be difficult to seller to know if there are any situations of Contract Non-Conformity.

There may be water leak without seller’s recognition.

3) Clarification of situation of object

In the case of amended law, it is important that contract paper clarifies detailed situation of object (“house).
(this Contract Non-Conformity Liability applies to other object. ex. Apple, Car, Book)

Seller needs to clarify quality, situation of the house on the contract paper.

Otherwise, seller and Purchaser can not determine if the actual situation is as same as situation indicated in the contract paper.

So seller will fill in the contract paper like, there is not crack on window. There is not water leak in sewage pipe…..

4) Special provisions in the case seller is Real Estate Company

In the case of renovated apartment, house, seller will be Real Estate Company.

In the case Purchaser is not Real Estate Company and seller is Real Estate Company, Contract Non-Conformity Liability can not be eliminated.

The Real Estate Company needs to bear Contract Non-Conformity Liability at least two years from delivery of the house.

Moreover, in the case of Brand New Real Estate, duration of Contract Non-Conformity Liability is at least ten years.