JAPAN BIZLAW LITE 4 GAIJIN
CONSUMER PROTECTION
In recent in years there have been a number of scandalous events in Japan creating anxiety among consumers and damaging even reputable firms. This is not only bad for consumers, it can cause grave damage to companies as when they lose the confidence of consumers the company's are almost immediately closed out of the market by consumers and such companies may not even survive.
While it is natural that successful firms remember that the customer is king, consumers are increasingly aware of their rights. Thus it is important to bear in mind that as the society as a whole is moving in the direction of giving greater importance to consumer protection, the legal system is also moving in that direction.
In this kind of changing environment it is increasingly important to disclose information to consumers and work to obtain their confidence.
From a legal viewpoint, "consumer" means an individual who buys products or services for his life or interests. This does not however include sole proprietorships as in one man businesses where transactions are for business purposes. Organizations, such as businesses, government organizations, or even non-profit organizations are also not considered to be consumers. Thus most business transactions by corporations are not covered by these laws. One could probably argue that this is a quite narrow application of such laws as compared to many Western nations.
CONSUMER PROTECTION LAWS.
In Japan a variety of laws have been enactet for consumer protection with the objective of preventing consumers from being damaged or to provide immediate relief if they are damaged.
Examples include the Food Hygiene Law of 1947, the Consumer Basic Protection Law of 1968, the Consumer Goods Safety Law of 1973 and the Product Liability Law of 1994.
There are also several laws targetting certain industries but with the objective of protecting consumers. Examples of these include the Financial Products Sales Law of 2000 and the Housing Construction Transactions Law of 1952.
One of the most pertinent laws regulating sales methods targetting consumers is the Designated Products Transaction Law of 1976 (amended in 2000). This law regulates six methods of sales to consumers, including door-to-door sales, mail order sales. telephone sales, designated continuous provision of services, and tied sales transactions.
Other laws provide for cooling off periods on certain sales. Under this system the consumer can cancel a sales contract, even without reason, and without penalty to the consumer. covering such fields as credit installment sales, life insurance, real estate problems, in addition to those covered by the Designated Products Transaction Law.
BASIC KNOWLEDGE OF CONSUMER CONTRACT LAW
What is Consumer Contract Law?
What if a stock broker goes to a customer and claims that the recent strengthening of the yen was not likely to continue, so now was the time to buy foreign bonds. Then the yen strengthens even more and the consumer calls the stock broker and says he wants to cancel the transaction where he bought foreign bonds. Would this be permissible under the Consumer Contract Law? Under present Japanese law, yes the contract could be cancelled.
In recent years consumer conciousness has increased and the voices of consumer groups have grown increasing powerful. Previously, consumer protection had been under a ram shackle variety of general laws such as the Civil Cde. Nevertheless, the rules were not uniform, and in effect full of holes and unfairness.
To remedy this, in 2001 the Consumer Contract Law was enacted with new civil rules aimed at all contracts between consumers and businesses (consumer contracts). Previously contracts between consumers and businesses, were all equally subject to the principle of freedom of contract of the Civil Code. The new Consumer Contract Law provides special cases providing protection of consumers. Consumers are generally recognized to be in inferior position in terms of information and negotiating power.
Consumer Deception-Confusion
The most important point of the Consumer Contract Law is that when a consumer misunderstands or is confused about an important matter due to the sales method or the content of the contract, then the consumer can unconditionally cancel the contract. Situations where the consumer can unconditionally cancel a contract includes where the business engages in the following conduct:
---Misunderstanding
1. Representations which are not true. (Making untrue statements about important facts)
2. Providing Conclusive Judgments (Providing conclusive judgments about future matters that can not yet be confirmed.)
3. Intentionally not informing about disadvantageous facts. (Intentionally not mentioning matters disadvantageous to consumers)
---Disturbance/Trouble
4. Not Leaving (Not leaving the consumer's residence. Or in American concepts the notorious salesman who sticks his foot in the door and won't go away).
5. Confinement, detention (Enticing a consumer to a place and then not letting them leave).
The period during which the consumer can cancel the contract is six months from the time they noticed the misunderstanding or suffered the trouble.
Cancellation of Contracts
If the contract is thus cancelled based on the above laws, the parties must return the goods or money they received in the transaction, returning both parties to the conditions prior to the contract. In other words the consumer will return the goods bought, and the business will return the money received from the consumer. The business must bear the expenses for the return of the goods. In the situation where services are involved, it can be troublesome. For example in the repair of a residence if the work is finished, it must be returned to its original condition. If that is not realistic, in addition to returning the money received, monetary compensation must be made.
Although most reputable businesses will not engage in such activities as disturbance/trouble activities noted above, causing misunderstandings is a much slippier problem but must be given heed. Missteps in this area as well can lead to contract cancellations and, more seriously, a loss of consumer confidence.
Invalidation of Provisions Disadvantageous to Consumers
The second point on the Consumer Contract Law is that where there is a provision in the contract that unilaterally damages the interest of the consumer, that provision, in part or in toto, is invalidated.
There are two basic types of provisions that are often cancelled:
1. The company unilaterally excuses itself from any liability.
Traditionally, when a company does not perform its obligations, engages in illegal conduct (traffic accidents, product accidents, etc. whether intentional or negligent) or there are hidden defects in a product, in other words problems caused by the company, and the consumer is damaged, then the company has a legal liability for compensation or to make repairs. In this problem case the contract exempts the company from such liability in part or in toto.
2. This is where the company in the contract imposes remarkably disadvantageous conditions on the consumer for compensation for damages, as where it charges very high interest rates for late payment.
Preparation of Good Contracts
A contract is a promise to buy and sell (sales contract), lend and borrow (rental contract), request work or accept work (subcontracting contracts) and the government gives force to it through the courts.
In most cases a contract is a mutuality of an agreement in intentions. The law does not specifically make demands as to form. Thus oral contracts, or contracts made via email are binding.
When trouble arises however, if the contract is oral or made over the telephone, there is little proof, little evidence, giving rise to disputes. Thus it is of necessity that a contract document be prepared and preserved for evidence.
Many companies prepare documents that are in the company's interest, such as sales basic contracts, sales agreements, order forms, and product receipts as well as sales manuals. But it is also important to determine whether these documents violate the demands of the consumer contract law. Make certain there are no provisions that would be invalid under the Consumer Contract Law and that the contract is clear and easy to understand. In particular, heed should be given to whether the provisions disadvantageous to the consumer are very clear.
SAFETY AND MANIFESTATIONS/LABELLING
Laws Relating to Safety and Manifestations/Labelling
While the 1968 Consumer Protection Basic Law is clearly for the protection of the consumer, the keynote is safety of goods, but manifestations/labelling was also an advance.
There are a number of laws relating to safety, such as the Electric Goods Safety Law, the Consumer Lifestyle Goods Safety Law, the Food Hygiene Law, the Pharmaceuticals Law, the Construction Standards Law, the Road Transport Vehicle Law and the Gas Business Law.
On top of those, the Product Liability Law strengthens the legal liability for compensation for damages caused by accidents by products from the manufacturers or importers of such products.
At the same time, laws related to manifestations including the Law on Measuring, the Law Prohibiting the Unfair Giveaways and Unfair Manifestations/Labelling Law, the Household Goods Quality Manifestations Law. Japan Industrial Standards and Japan Agricultural Standards also serve as public standards.
Thus every business should give the highest heed to the safety of consumers as well as the benefits to the company as well as the consumers on clear and truthful manifestations, not to mention that it is required by law.
Product Liability Law Strengthens Liability for Compensation for Damages
Product liability law began to spread throughout the West during the 1970s. Under those laws, where major accidents such as death, injury, or fires, etc occur due to defects in the product, relief for the victim is of paramount importance. Whether it was an accident or not, liability for compensating for damages to relieve the victim on the part of the maker or importer who put the product in the market became the rule.
Japan introduced similar laws in 1994. The Product Liability Law provides for civil liability for compensation for damages. There is no provision covering criminal liability or government dispositions.
Distributors are not subject to the Product Liability Law, except for importers. Nevertheless, there is often liability for compensation for damages by the distributor based on contract (but that is separate from liability based on this law).
Laws Restricting Unfair Manifestations/Labelling
In recent years in Japan there has been increasing criticism against companies for false manifestations/labelling of the grade of food or where they came from. Thus strong measures have been demanded from producers as well as distributors to restore consumer confidence.
There are two forms of legal regulation of manifestations/labelling.
There is active label/manifestations regulation where there is an obligation to provide required fixed labels necessary for purchasers to choose their product. There is also restrictive label/manifestations regulation, restricting false manifestations or labels making expansive claims. As an example of the latter, product or service labels which mislead consumers violate the Unfair Giveaways and Unfair Manifestations/Labelling Law, the Japan Agricultural Standards (JAS) Law as well as consumer protection regulations put out by local governments.
There are even cases where false /manifestations/labelling have resulted in criminal prosecution as fraud, or civil cases leading to cancellation of contracts or orders to pay compensation for damages.
From time to time the Fair Trade Commission, which is in charge of the administration of the Unfair Giveaways and Unfair Manifestations/Labelling Law, has issued cease and desist orders as it did in May, 2003 against a life insurance company due to its misleading ads about when it would pay out benefits on cancer claims.
These are cases where labels or ads cause misunderstandings for consumers or hide disadvantages for consumers. and are thus viewed as lacking fairness.
These regulations were further strengthened with the 2003 amendment to the Unfair Giveaways and Unfair Manifestations/Labelling Law, which in addition to giving local governments the power to inspect and give orders, but also imposed an obligation for filing data proving claims of superiority.
Claims by a company such as "100% natural..." or "20% under market prices" may be in violation of the Unfair Giveaways and Unfair Manifestations/Labelling Law. In determing this it is advisable to check with guidelines or operational standards put out by the Fair Trade Commission. Where an industry has made a "Fair Competition Regulatory Pact" as a measure of self-reguation, but approved by the Fair Trade Commission, any labels or manifestations made in accord therewith will not be subject to Fair Trade Commission procedures such as advisory opinions or hearings.
In addition, the Consumer Lifestyle Goods Safety Law requires manufacturers and importers of prescribed products such as some kinds of beds, mountain climbing ropes, and passenger helmets, etc to meet legally prescribed safety standards. Under the system, products meeting those standards can attached certain safety marks.
In conclusion, never forget the application of product liability law as well where there may be liability for failing to give adequate warnings of danger (McDonalds--"Coffee is hot") as that failure in and of itself may be called a defect of the product. Thus here as well, do not forget the importance of labelling dangerous products.
In recent in years there have been a number of scandalous events in Japan creating anxiety among consumers and damaging even reputable firms. This is not only bad for consumers, it can cause grave damage to companies as when they lose the confidence of consumers the company's are almost immediately closed out of the market by consumers and such companies may not even survive.
While it is natural that successful firms remember that the customer is king, consumers are increasingly aware of their rights. Thus it is important to bear in mind that as the society as a whole is moving in the direction of giving greater importance to consumer protection, the legal system is also moving in that direction.
In this kind of changing environment it is increasingly important to disclose information to consumers and work to obtain their confidence.
From a legal viewpoint, "consumer" means an individual who buys products or services for his life or interests. This does not however include sole proprietorships as in one man businesses where transactions are for business purposes. Organizations, such as businesses, government organizations, or even non-profit organizations are also not considered to be consumers. Thus most business transactions by corporations are not covered by these laws. One could probably argue that this is a quite narrow application of such laws as compared to many Western nations.
CONSUMER PROTECTION LAWS.
In Japan a variety of laws have been enactet for consumer protection with the objective of preventing consumers from being damaged or to provide immediate relief if they are damaged.
Examples include the Food Hygiene Law of 1947, the Consumer Basic Protection Law of 1968, the Consumer Goods Safety Law of 1973 and the Product Liability Law of 1994.
There are also several laws targetting certain industries but with the objective of protecting consumers. Examples of these include the Financial Products Sales Law of 2000 and the Housing Construction Transactions Law of 1952.
One of the most pertinent laws regulating sales methods targetting consumers is the Designated Products Transaction Law of 1976 (amended in 2000). This law regulates six methods of sales to consumers, including door-to-door sales, mail order sales. telephone sales, designated continuous provision of services, and tied sales transactions.
Other laws provide for cooling off periods on certain sales. Under this system the consumer can cancel a sales contract, even without reason, and without penalty to the consumer. covering such fields as credit installment sales, life insurance, real estate problems, in addition to those covered by the Designated Products Transaction Law.
BASIC KNOWLEDGE OF CONSUMER CONTRACT LAW
What is Consumer Contract Law?
What if a stock broker goes to a customer and claims that the recent strengthening of the yen was not likely to continue, so now was the time to buy foreign bonds. Then the yen strengthens even more and the consumer calls the stock broker and says he wants to cancel the transaction where he bought foreign bonds. Would this be permissible under the Consumer Contract Law? Under present Japanese law, yes the contract could be cancelled.
In recent years consumer conciousness has increased and the voices of consumer groups have grown increasing powerful. Previously, consumer protection had been under a ram shackle variety of general laws such as the Civil Cde. Nevertheless, the rules were not uniform, and in effect full of holes and unfairness.
To remedy this, in 2001 the Consumer Contract Law was enacted with new civil rules aimed at all contracts between consumers and businesses (consumer contracts). Previously contracts between consumers and businesses, were all equally subject to the principle of freedom of contract of the Civil Code. The new Consumer Contract Law provides special cases providing protection of consumers. Consumers are generally recognized to be in inferior position in terms of information and negotiating power.
Consumer Deception-Confusion
The most important point of the Consumer Contract Law is that when a consumer misunderstands or is confused about an important matter due to the sales method or the content of the contract, then the consumer can unconditionally cancel the contract. Situations where the consumer can unconditionally cancel a contract includes where the business engages in the following conduct:
---Misunderstanding
1. Representations which are not true. (Making untrue statements about important facts)
2. Providing Conclusive Judgments (Providing conclusive judgments about future matters that can not yet be confirmed.)
3. Intentionally not informing about disadvantageous facts. (Intentionally not mentioning matters disadvantageous to consumers)
---Disturbance/Trouble
4. Not Leaving (Not leaving the consumer's residence. Or in American concepts the notorious salesman who sticks his foot in the door and won't go away).
5. Confinement, detention (Enticing a consumer to a place and then not letting them leave).
The period during which the consumer can cancel the contract is six months from the time they noticed the misunderstanding or suffered the trouble.
Cancellation of Contracts
If the contract is thus cancelled based on the above laws, the parties must return the goods or money they received in the transaction, returning both parties to the conditions prior to the contract. In other words the consumer will return the goods bought, and the business will return the money received from the consumer. The business must bear the expenses for the return of the goods. In the situation where services are involved, it can be troublesome. For example in the repair of a residence if the work is finished, it must be returned to its original condition. If that is not realistic, in addition to returning the money received, monetary compensation must be made.
Although most reputable businesses will not engage in such activities as disturbance/trouble activities noted above, causing misunderstandings is a much slippier problem but must be given heed. Missteps in this area as well can lead to contract cancellations and, more seriously, a loss of consumer confidence.
Invalidation of Provisions Disadvantageous to Consumers
The second point on the Consumer Contract Law is that where there is a provision in the contract that unilaterally damages the interest of the consumer, that provision, in part or in toto, is invalidated.
There are two basic types of provisions that are often cancelled:
1. The company unilaterally excuses itself from any liability.
Traditionally, when a company does not perform its obligations, engages in illegal conduct (traffic accidents, product accidents, etc. whether intentional or negligent) or there are hidden defects in a product, in other words problems caused by the company, and the consumer is damaged, then the company has a legal liability for compensation or to make repairs. In this problem case the contract exempts the company from such liability in part or in toto.
2. This is where the company in the contract imposes remarkably disadvantageous conditions on the consumer for compensation for damages, as where it charges very high interest rates for late payment.
Preparation of Good Contracts
A contract is a promise to buy and sell (sales contract), lend and borrow (rental contract), request work or accept work (subcontracting contracts) and the government gives force to it through the courts.
In most cases a contract is a mutuality of an agreement in intentions. The law does not specifically make demands as to form. Thus oral contracts, or contracts made via email are binding.
When trouble arises however, if the contract is oral or made over the telephone, there is little proof, little evidence, giving rise to disputes. Thus it is of necessity that a contract document be prepared and preserved for evidence.
Many companies prepare documents that are in the company's interest, such as sales basic contracts, sales agreements, order forms, and product receipts as well as sales manuals. But it is also important to determine whether these documents violate the demands of the consumer contract law. Make certain there are no provisions that would be invalid under the Consumer Contract Law and that the contract is clear and easy to understand. In particular, heed should be given to whether the provisions disadvantageous to the consumer are very clear.
SAFETY AND MANIFESTATIONS/LABELLING
Laws Relating to Safety and Manifestations/Labelling
While the 1968 Consumer Protection Basic Law is clearly for the protection of the consumer, the keynote is safety of goods, but manifestations/labelling was also an advance.
There are a number of laws relating to safety, such as the Electric Goods Safety Law, the Consumer Lifestyle Goods Safety Law, the Food Hygiene Law, the Pharmaceuticals Law, the Construction Standards Law, the Road Transport Vehicle Law and the Gas Business Law.
On top of those, the Product Liability Law strengthens the legal liability for compensation for damages caused by accidents by products from the manufacturers or importers of such products.
At the same time, laws related to manifestations including the Law on Measuring, the Law Prohibiting the Unfair Giveaways and Unfair Manifestations/Labelling Law, the Household Goods Quality Manifestations Law. Japan Industrial Standards and Japan Agricultural Standards also serve as public standards.
Thus every business should give the highest heed to the safety of consumers as well as the benefits to the company as well as the consumers on clear and truthful manifestations, not to mention that it is required by law.
Product Liability Law Strengthens Liability for Compensation for Damages
Product liability law began to spread throughout the West during the 1970s. Under those laws, where major accidents such as death, injury, or fires, etc occur due to defects in the product, relief for the victim is of paramount importance. Whether it was an accident or not, liability for compensating for damages to relieve the victim on the part of the maker or importer who put the product in the market became the rule.
Japan introduced similar laws in 1994. The Product Liability Law provides for civil liability for compensation for damages. There is no provision covering criminal liability or government dispositions.
Distributors are not subject to the Product Liability Law, except for importers. Nevertheless, there is often liability for compensation for damages by the distributor based on contract (but that is separate from liability based on this law).
Laws Restricting Unfair Manifestations/Labelling
In recent years in Japan there has been increasing criticism against companies for false manifestations/labelling of the grade of food or where they came from. Thus strong measures have been demanded from producers as well as distributors to restore consumer confidence.
There are two forms of legal regulation of manifestations/labelling.
There is active label/manifestations regulation where there is an obligation to provide required fixed labels necessary for purchasers to choose their product. There is also restrictive label/manifestations regulation, restricting false manifestations or labels making expansive claims. As an example of the latter, product or service labels which mislead consumers violate the Unfair Giveaways and Unfair Manifestations/Labelling Law, the Japan Agricultural Standards (JAS) Law as well as consumer protection regulations put out by local governments.
There are even cases where false /manifestations/labelling have resulted in criminal prosecution as fraud, or civil cases leading to cancellation of contracts or orders to pay compensation for damages.
From time to time the Fair Trade Commission, which is in charge of the administration of the Unfair Giveaways and Unfair Manifestations/Labelling Law, has issued cease and desist orders as it did in May, 2003 against a life insurance company due to its misleading ads about when it would pay out benefits on cancer claims.
These are cases where labels or ads cause misunderstandings for consumers or hide disadvantages for consumers. and are thus viewed as lacking fairness.
These regulations were further strengthened with the 2003 amendment to the Unfair Giveaways and Unfair Manifestations/Labelling Law, which in addition to giving local governments the power to inspect and give orders, but also imposed an obligation for filing data proving claims of superiority.
Claims by a company such as "100% natural..." or "20% under market prices" may be in violation of the Unfair Giveaways and Unfair Manifestations/Labelling Law. In determing this it is advisable to check with guidelines or operational standards put out by the Fair Trade Commission. Where an industry has made a "Fair Competition Regulatory Pact" as a measure of self-reguation, but approved by the Fair Trade Commission, any labels or manifestations made in accord therewith will not be subject to Fair Trade Commission procedures such as advisory opinions or hearings.
In addition, the Consumer Lifestyle Goods Safety Law requires manufacturers and importers of prescribed products such as some kinds of beds, mountain climbing ropes, and passenger helmets, etc to meet legally prescribed safety standards. Under the system, products meeting those standards can attached certain safety marks.
In conclusion, never forget the application of product liability law as well where there may be liability for failing to give adequate warnings of danger (McDonalds--"Coffee is hot") as that failure in and of itself may be called a defect of the product. Thus here as well, do not forget the importance of labelling dangerous products.
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DISCLAIMER Japan BizLawLite 4 Gaijin is intended purely for introductory, educational purposes. If you plan a transaction in Japan, consult with a licensed Japanese attorney. THIS PUBLICATION IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. THIS PUBLICATION COULD INCLUDE INACCURACIES OR ERRORS IN TYPOGRAPHY OR TRANSLATION .