Clifford Chance

Japan's Civil Code Reform: Key Implications for Your Business

30 March 2020

A reform to the Civil Code of Japan (the Reform) becomes effective on 1 April 2020 (the Effective Date). We have picked out three key areas which foreign investors and corporates need to be aware of: defect liability (non-latent defects may need to be compensated for; buyers may request completion or a reduction in the purchase price), guarantees (guarantees for a category of unspecified obligations by individuals must have a cap on the guaranteed amount) and assignment of receivables (restricted claims may be more easily tradable). Commercial parties need to make sure that agreements entered into on or after the Effective Date reflect these changes.

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