Japan Business Law: The main points of the newly established “Standard Terms and Conditions”.

Due to the spread of the Internet etc., transactions between many and unspecified parties are increasing. Under such circumstances, in order to conclude a contract efficiently, the use of “Terms and Conditions” in which the terms of the contract are defined in advance has increased. Transactions based on Terms and Conditions are becoming commonplace in business. However, when the counterparty in the transaction has made a transaction without reading the Terms and Conditions properly, trouble often arises, and this often becomes a dispute on whether the other party has agreed to the contents of Terms and Conditions.

The “Standard Terms and Conditions” regulation was newly established in the revised Civil Code, and will be enforced from April 1, 2020. In this article, the main points of “Standard Terms and Conditions” will be explained.

１． The Definition of Standard Terms and Conditions

The revised Civil Code defines the following terms relating to the Standard Terms and Conditions (Article 548-2, paragraph 1).

 『Standard Transaction』

(1) A transaction in which a certain person deals with many and unspecified persons as the counterparties, and

(2) it is rational to both parties that all or part of the content is uniform.

 『Standard Terms and Conditions』

The totality of provisions prepared by that particular person for the purpose of preparing the content of the contract in a Standard Transaction.

 ２． Deemed Agreement of Standard Terms and Conditions

(1) If the parties agreed with that the content of agreement is same as Standard Terms and Conditions, or (2) in case that the person who prepares Standard Terms and Conditions indicated to the counterparty about that an agreement is same as Standard Terms and Conditions, those who have agreed to do Standard Transaction are deemed to have agreed on the individual provisions of the Standard Terms and Conditions (Article 548-2, paragraph 1).

It was conventionally interpreted that a contract based on the Terms and Conditions could be concluded for the first time when the individual provisions of the Terms and Conditions were actually agreed.

However, under the revised Civil Code, the individual provisions are considered to be agreed with under the above conditions.

Nevertheless, even if the above conditions are met, it is unfair for the counterparty that the agreement based on the individual provisions is significantly against the counterparty is deemed to be agreed.

Therefore, it is deemed to be disagreed when a provision that limits the rights of the counterparty or weights the obligations of the counterparty and unilaterally harms the interests of the counterparty in contradiction to the rules of faith (the same article, paragraph 2).

 ３． Presenting the Contents of Standard Terms and Conditions

If the preparer of Standard Terms and Conditions who has or is going to conduct deals under Standard Transaction receives a request from the counterparty within a reasonable period of time before or after the agreement, the person must present the content of Standard Terms and Conditions in a respectable way without delay (Article 548-3, paragraph 1).

If the person refuses the request from the counterparty, the agreement of individual provisions is not deemed to be agreed (the same article, paragraph 2).

However, it is not necessary to present the contents once again if delivery of a document in which a Standard Terms and Conditions has already been described or provision of an electronic record has been made (the same paragraph 1 proviso).

 ４． Amendment of Standard Terms and Conditions

After creating Standard Terms and Conditions and establishing an agreement with the counterparty on individual provisions, amendment of the content of the contract can be made without the agreement of the counterparty if the following substantive requirements and procedure requirements are satisfied (Article 548-4, paragraph1).

 Substantive Requirements（１）

In the case where a amendment in the Standard Terms and Conditions “conforms to the counterparty’s general interests” (the same Article 1, paragraph 1-1)

 Substantive Requirements（2）

If the amendment in the Standard Terms and Conditions meets the following requirements (the same Paragraph 2).

(1) Do not violate the purpose of the contract.

(2) the amendment is reasonable in light of the following circumstances

・ Necessity of amendment

・ The appropriateness of the content after amendment

・ Describe in the Standard Terms and Conditionsthat amendment may be made in accordance with Article 548-4.

・ Describe the circumstances concerning the other amendments, procedure requirements, the time when the change takes effect, and ensure that the counterparty is informed of (1) purport amendments, (2) content, and (3) disseminate the time of effect through the Internet or other appropriate method (the same Paragraph 2).

In addition, when amendments are made by Substantive Requirement (2), it is necessary to take a dissemination procedure by the time of the amendments becoming effective (the same Paragraph 3).

As mentioned above, there are many abstract requirements for the rules of the Standard Terms and Conditions of the revised Civil Code, and case-by-case handling is necessary to prepare the Standard Terms and Conditions according to the rule. It is recommended to start preparing the Standard Terms and Conditions in advance.

※ The content described in this article is based on the laws, information, etc. as of May 2019.