A contract for work become effective when one of the parties promises to complete work and the other party promises to pay remuneration for the outcome of the work.

Remuneration must be paid simultaneously with delivery of the subject matter of work performed; provided, however, that if no delivery of a thing is required, the provisions of Article 624, paragraph (1) apply mutatis mutandis.

In the following cases, if the party ordering work receives any benefit from the performance of any divisible portion of the outcome of the work that the contractor has already completed, that portion is deemed to be the completed work; in this case, the contractor may demand remuneration in proportion to the benefit to be received by the party ordering work:

If the contractor delivers to the party ordering work of a content the subject matter of work that does not conform to the contract terms with respect to the kind or quality (in the case of the subject matter of work that is not required to be delivered, if the subject matter of work does not conform to the terms of the contract with respect to the kind or quality when the work is finished), the party ordering work may not demand completion of the non-conformity of performance, demand a reduction of the remuneration, claim damages, or cancel the contract, on the grounds of the non-conformity caused by the nature of the materials that the party ordering work has provided or any instructions that the relevant party has given; provided, however, that this does not apply if the contractor knew that the materials or instructions were inappropriate but did not notify the ordering party of this.

①In the case prescribed in the main clause of the preceding Article, if the party ordering work fails to notify the contractor of the non-conformity to the terms of the contract within one year from the time when the party becomes aware of it, the party ordering work may not demand completion of the non-conformity of performance, demand a reduction of the remuneration, claim compensation for damage, or cancel the contract.

②The provisions of the preceding paragraph do not apply if the contractor knew or did not know due to gross negligence the non-conformity referred to in that paragraph at the time when the contractor delivers the subject matter of work (in the case of the subject matter of work that is not required to be delivered, when the work is finished).

The party ordering work may cancel the contract at any time whilst the contractor has not completed the work by paying compensation for damage.

①If the party ordering work receives an order commencing bankruptcy proceeding, the contractor or the bankruptcy trustee may cancel the contract; provided, however, that this does not apply to the cancellation of the contract by the contractor after the work is completed.

②In the case prescribed in the preceding paragraph, the contractor may participate in the distribution of the bankruptcy estate with respect to the remuneration for the work already completed and expenses not included in this.

③In the cases referred to in paragraph (1), claims for compensation for damage suffered as a result of the cancellation of the contract are permitted only for contractors under contracts cancelled by the bankruptcy trustee. In such a case, the contractors participate in the distribution of the bankruptcy estate with respect to that compensation for damage.