Commercial Code

The Commercial Code is established as set out in the Separate Volume.

The date on which this Act comes into effect is specified by Imperial Ordinance.

The Commercial Code (Act No. 32 of 1890) is repealed, except for Book III, as of the day on which this Act comes into effect.

(Separate Volume)

①The business of merchants, commercial transactions, and other commercial matters are governed by the provisions of this Code, except as otherwise provided by other laws.

②A commercial matter not provided for in this Code is governed by commercial custom, and if there is no commercial custom, it is governed by the provisions of the Civil Code (Act No. 89 of 1896).

Commercial transactions conducted by public corporations are governed by the provisions of this Code, except as otherwise provided for by laws and regulations.

①If an act constitutes a commercial transaction for one of the parties, this Code applies to both parties.

②If two or more persons form one of the parties and an act constitutes a commercial transaction for any one of them, this Code applies to all of them.

①The term "merchant" as used in this Code means a person in the business of conducting commercial transactions in its own name.

②A person in the business of selling goods at a store or other similar facility or a person engaged in the mining business is deemed to be a merchant even if that person is not in the business of conducting commercial transactions.

If a minor carries out a business referred to in the preceding Article, this must be registered.

①If a guardian carries out a business referred to in Article 4 on behalf of a ward, this must be registered.

②A limitation on a guardian's authority of representation may not be asserted against a third party in good faith.

The provisions of Article 5, the preceding Article, the following Chapter, Article 11, paragraph (2), Article 15, paragraph (2), the first sentence of Article 17, paragraph (2), Chapter V, and Article 22 do not apply to a small-scale merchant (meaning a merchant with an asset value as provided by the Ministry of Justice Order that does not exceed the amount prescribed by the Ministry of Justice Order, for assets that the merchant uses for its business).

The information that must be registered pursuant to the provisions of this Part is registered in the commercial register at the application of the party concerned, pursuant to the provisions of the Commercial Registration Act (Act No. 125 of 1963).

①Information that must be registered pursuant to the provisions of this Part may not be asserted against a third party in good faith until after the registration. The same applies after the registration if a third party had a legitimate reason for not knowing that the information was registered.

②A person that registers false information intentionally or through negligence may not assert the falsity of that information against a third party in good faith.

If information registered pursuant to the provisions of this Part changes or ceases to be applicable, the relevant party must register the change or lapse without delay.

①A merchant (other than a company or foreign company; hereinafter the same applies in this Part) may use the merchant's surname, full name, or any other name as a trade name.

②A merchant may register its trade name.

①It is prohibited for any person to use, with a wrongful purpose, a name or trade name that could give rise to the misconception that the person is another merchant.

②A merchant whose business interests have been or are likely to be infringed upon by the use of a name or trade name that violates the provisions of the preceding paragraph may demand that the person infringing or likely to infringe upon those business interests discontinue or refrain from the infringement.

A person violating the provisions of paragraph (1) of the preceding Article is subject to a civil fine of not more than one million yen.

A merchant that permits another person to carry on a business or engage in operations using the merchant's trade name is jointly and severally liable, together with that other person, to a party that has dealings with the other person based on the misconception that the merchant is the one carrying on the business, for performance of the obligations arising from those dealings.

①A merchant may transfer its trade name, but only if it transfers this together with its business or if it discontinues its business.

②The transfer of a trade name under the provisions of the preceding paragraph may not be asserted against a third party unless it is registered.

①Unless the parties manifest a different intention, a merchant that transfers business (hereinafter referred to as the "transferor" in this Chapter) must not engage in the same line of business within the limits of the same city, town, or village (including within the limits of the same special ward; or within the limits of the same ward or administratively consolidated ward, as it concerns designated cities referred to in Article 252-19, paragraph (1) of the Local Autonomy Act (Act No. 67 of 1947); the same applies hereinafter), or within the limits of a neighboring city, town, or village, for 20 years after the day of the business transfer.

②If a transferor specifically agrees not to engage in the same line of business, that special agreement is only valid for 30 years after the day of the business transfer.

③Notwithstanding the provisions of the preceding two paragraphs, the transferor must not engage in the same line of business with the intention of engaging in unfair competition.

①If a merchant to which business is transferred (hereinafter referred to as the "transferee" in this Chapter) continues to use the trade name of the transferor, the transferee is also liable for performance of obligations arising from the business of the transferor.

②The provisions of the preceding paragraph do not apply if, without delay after the business transfer, the transferee makes a registration indicating that the transferee is not liable for performance of the transferor's obligations. If the transferee and transferor notify third parties of this without delay after the business transfer, the same applies with respect to a third party that has been so notified.

③If the transferee is liable for performance of the transferor's obligations pursuant to the provisions of paragraph (1), the transferor's liability to an obligee that fails to demand performance or give advance notice of its claim within the two years after the business transfer date is extinguished once those two years have passed.

④In a case as prescribed in paragraph (1), any performance made to the transferee on a claim arising from the business of the transferor is valid if the party performing the obligation does so in good faith and without gross negligence.

①Even if a transferee does not continue to use the trade name of the transferor, if the transferee advertises that it will assume the obligations arising from the business of the transferor, the obligees of the transferor may demand that the transferee perform those obligations.

②If the transferee is liable for performance of the transferor's obligations pursuant to the provisions of the preceding paragraph, the transferor's liability to an obligee that fails to demand performance of the obligations or give advance notice of its claim within the two years after the day that the transferor advertises as referred to in that paragraph is extinguished once those two years have passed.

①If a transferor transfers business knowing that this will harm the obligee of an obligation not assumed by the transferee (hereinafter referred to as a "person that remains the obligee" of the transferor in this Article), the person that remains the obligee of the transferor may demand that the transferee perform that obligation, up to the value of the assets to which the transferee has succeeded; provided, however, that this does not apply if the transferee, at the time the business transfer becomes effective, is unaware that the transfer will harm the persons that remain the obligees of the transferor.

②If a transferee is liable to perform the obligations referred to in the preceding paragraph pursuant to the provisions of that paragraph, its liability towards a person that remains the obligee of the transferor but that fails to demand performance of the obligation or give advance notice of its claim within the two years after the day on which it learns that the transferor has transferred the business with the knowledge that it harms the persons that remain its obligees is extinguished once those two years have passed. The same applies once ten years have passed since the day on which the business transfer becomes effective.

③A person that remains the obligee of the transferor may not exercise the right to a claim against the transferee pursuant to the provisions of paragraph (1) if an order commencing bankruptcy proceedings or order commencing rehabilitation proceedings involving the transferor has been issued.

①A merchant's accounting is subject to the accounting practices that are generally accepted as fair and appropriate.

②A merchant must prepare accurate commercial books for the assets that the merchant uses for its business (meaning accounting books and balance sheets; hereinafter the same applies in this Article) in a timely manner and as provided by the Ministry of Justice Order.

③A merchant must keep commercial books and important business materials on file for ten years from the time of the closing of the books.

④The court, upon petition or by its own authority, may order the parties to a suit to submit all or part of their commercial books.

A merchant may appoint a manager and have that manager carry out its business at its place of business.

①A manager has the authority to engage in all acts in and out of court on behalf of the merchant in connection with the merchant's business.

②A manager may appoint and dismiss other employees.

③A limitation on a manager's authority to act as the merchant's agent may not be asserted against a third party in good faith.

If a merchant appoints a manager, this must be registered. The same applies if a manager ceases to have the authority to act as the merchant's agent.

①A manager must not engage in any of the following conduct without the permission of the merchant:

②If a manager has engaged in the conduct set forth in item (ii) of the preceding paragraph in violation of the provisions of that paragraph, the amount of profit that the manager or third party has earned as a result of the conduct is presumed to be the amount of damage that the merchant has incurred.

An employee with a title indicating that employee to be responsible for operations at a merchant's place of business is deemed to have the authority to engage in all acts out of court in connection with the operations of that place of business; provided, however, that this does not apply if the other party knows this not to be the case.

①An employee that is delegated with performing functions of a certain type, or with performing specific functions, that are connected with the merchant's business has the authority to engage in all acts out of court in connection with those functions.

②A limitation on the authority of the employee referred to in the preceding paragraph to represent the merchant may not be asserted against a third party in good faith.

The employee of a store at which it is intended that goods will be sold or otherwise transferred (meaning sold, rented out, or subject to any other similar action; hereinafter the same applies in this Article) is deemed to have the authority to sell or otherwise transfer the goods located in the store; provided, however, that this does not apply if the other party knows this not to be the case.

Having acted as agent or intermediary in a transaction, a commercial agent (meaning a person that is not the employee of a merchant but that acts on behalf of the merchant as the agent or intermediary in a transaction that is in the merchant's ordinary line of business; hereinafter the same applies in this Chapter) must issue notice of this to the merchant without delay.

①A commercial agent must not engage in any of the following conduct without the permission of the merchant:

②If a commercial agent has engaged in the conduct set forth in item (i) of the preceding paragraph in violation of the provisions of that paragraph, the amount of profit that the agent or third party has earned as a result of the conduct is presumed to be the amount of damage that the merchant has incurred.

A commercial agent entrusted with the sale of goods or the role of intermediary for their sale has the authority to receive a notice as referred to in Article 526, paragraph (2) or any other notice regarding the sale.

①If a merchant and a commercial agent do not fix the term of a contract, either may cancel that contract with two months' advance notice.

②Notwithstanding the provisions of the preceding paragraph, if there is a compelling reason, a merchant or a commercial agent may cancel the contract between them at any time.

If performance is due on a claim arising from a commercial agent's actions as an agent or intermediary in a transaction, the agent may retain property or negotiable instruments of value that the agent is holding for the merchant until the claim is satisfied; provided, however, that this does not apply if the parties have manifested a different intention.

The following actions are commercial transactions:

The following actions are commercial transactions only if they are taken as a part of business; provided, however, that this does not apply if the action is taken by a person that manufactures a product or engages in labor for the sole purpose of earning wages:

①An action taken by a merchant for the benefit of its business is a commercial transaction.

②The actions of a merchant are presumed to be done for the benefit of its business.

Even if the agent for a commercial transaction conducts the transaction without representing that it is doing so on behalf of the principal, the actions of the agent bind the principal; provided, however, that if the other party does not know that the agent is conducting the transaction on behalf of the principal, these provisions do not preclude the other party from demanding that the agent perform the obligations arising from the transaction.

A person entrusted with conducting a commercial transaction may take actions that the person is not entrusted with taking, to the extent that this does not conflict with the main purpose of the entrustment.

A person's authority to act as the agent of a principal based on that person's entrustment with conducting a commercial transaction does not lapse upon the death of the principal.

①If merchants are at a distance from each other and the party receiving an offer to contract not specifying a period for acceptance does not issue notice of its acceptance within a reasonable period of time, the offer ceases to be valid.

②The provisions of Article 524 of the Civil Code apply mutatis mutandis to a case as referred to in the preceding paragraph.

①If a merchant receives an offer to contract that is in its line of business from a person with which it has regular dealings, the merchant must issue notice of its acceptance or refusal of the offer to contract without delay.

②If a merchant neglects to issue a notice as referred to in the preceding paragraph, it is deemed to have accepted the offer to contract referred to in that paragraph.

If, along with the offer that a merchant receives for a contract that is in its line of business, the merchant also receives goods, it must store those goods at the expense of the offeror, even if it refuses the offer; provided, however, that this does not apply if the value of the goods is insufficient to compensate for the costs of the storage, or if the merchant will incur damage from the storage.

①When two or more persons assume an obligation by way of an action that constitutes a commercial transaction for any one or all of them, they assume that obligation jointly and severally.

②If there is a guarantor and an obligation arises from a commercial transaction by the principal obligor or the guarantee constitutes a commercial transaction, the principal obligor and the guarantor assume the obligation jointly and severally, even if they have assumed the obligation by way of separate actions.

When a merchant takes an action for another person that is within the scope of the merchant's business, it may claim reasonable remuneration.

①If money is lent between merchants, the lender may claim statutory interest.

②If a merchant pays money on behalf of another person within the scope of the merchant's business, the merchant may claim statutory interest for the period beginning on the date of the payment.

The provisions of Article 349 of the Civil Code do not apply to a pledge created to secure an obligation arising from a commercial transaction.

If the place where an obligation arising from a commercial transaction is to be performed cannot be specified owing to the nature of the transaction or the manifestation of the intentions of the parties, the delivery of a specific thing must be effected at the place where the thing is at the time of the transaction, and any other obligation must be performed at the current place of business of the obligee (or at the obligee's domicile, if the obligee has no place of business).

If performance is due on a claim arising between merchants from an action that constitutes a commercial transaction for both parties, the obligee may retain an object or negotiable instrument of value belonging to the obligor that the obligee has gained possession of in the commercial transaction with the obligor, until the claim is satisfied; provided, however, that this does not apply if the parties have manifested a different intention.

①If, in a sales transaction between merchants, the buyer refuses to receive or is unable to receive the object of the sale, the seller may deposit the object or put it up for auction after demanding that the buyer receive the object within a reasonable period of time. In such a case, once the seller deposits the object or puts it up for auction, the seller must issue notice of this to the buyer without delay.

②If the price of an object is likely to decline for reasons such as damage, the seller may put it up for auction without making the demand referred to in the preceding paragraph.

③If a seller puts the object of a sales transaction up for auction pursuant to the provisions of the preceding two paragraphs, the seller must deposit the proceeds of the auction; provided, however, that this does not preclude the seller from allocating all or part of the proceeds to cover the purchase price.

In a sales transaction between merchants in which, due to the nature of the sale or the manifestation of intention of the parties, the purpose of the contract cannot be achieved unless the obligation is performed at a specified date and time or within a fixed period of time, if one of the parties fails to perform the obligation before the date and time or period passes, the other party is deemed to cancel the contract unless it immediately demands that the non-performing party perform the obligation.

①In a sales transaction between merchants, upon receiving the object of the sales transaction the buyer must inspect it without delay.

②In a case prescribed in the preceding paragraph, if the buyer, as a result of the inspection under the provisions of that paragraph, discovers that the object of the sales transaction does not conform to the terms and conditions of the contract in terms of its type, quality, or quantity, the buyer may not use that nonconformity as grounds to demand a cure of the breach, demand a reduction of the price, file a claim for damages, or cancel the contract, unless the buyer immediately issues notice of the nonconformity to the seller. The same applies if it is impossible to immediately discover that the object of a sales transaction does not conform to the terms and conditions of the contract in terms of its type or quality, when the buyer discovers that nonconformity within six months.

③The provisions of the preceding paragraph do not apply if the seller knows that the object of the sales transaction does not conform to the terms and conditions of the contract in terms of its type, quality, or quantity.

①In a case prescribed in paragraph (1) of the preceding Article, the buyer must store or deposit the object of the sales transaction at the expense of the seller, even if the buyer cancels the contract; provided, however, that if the object is likely to be lost or damaged, the buyer must put it up for auction with the permission of the court and store or deposit the proceeds from the auction.

②A case in which a person seeks the permission referred to in the proviso to the preceding paragraph is subject to the jurisdiction of the district court having jurisdiction over the locality of the object of the sales transaction referred to in that paragraph.

③Once the buyer puts the object of a sales transaction up for auction pursuant to the provisions of paragraph (1), it must issue notice of this to the seller without delay.

④The provisions of the preceding three paragraphs do not apply if the seller's and buyer's places of business (or their domiciles, if they do not have places of business) are located within the limits of the same municipality.

The provisions of the preceding Article apply mutatis mutandis to goods delivered by the seller to the buyer which are different from the goods ordered, and also apply mutatis mutandis to any part of the goods delivered by the seller to the buyer which exceeds the quantity of goods ordered.

When merchants, or a merchant and a person that is not a merchant, have regular dealings, an open account becomes effective by virtue of their agreeing to set off the total amounts of claims and obligations arising from their dealings during a fixed period of time and to pay the balance.

If claims and obligations arising from bills and notes and other commercial instruments are included in an open account, and the obligor of a commercial instrument does not perform its obligation, the parties may exclude the item that concerns that obligation from the open account.

If the parties do not specify a term during which a set-off must be made, the term is six months.

Once a party acknowledges an account statement showing each of the items under claims and obligations, it may not object to those items; provided, however, that this does not apply if an entry in the account statement contained a mistake or omission.

①An obligee may claim statutory interest on the balance after set-off beginning on the date of the closing of the account.

②The provisions of the preceding paragraph do not preclude the accrual of interest from the day on which each of the items under the claims and obligations subject to the set-off were included in the open account.

Either of the parties to an open account may cancel the account at any time. In such a case, the party cancelling the open account may immediately close the account and demand payment of the balance.

A silent partnership agreement becomes effective by virtue of a first party promising to make a contribution to a second party's business, and the second party promising to distribute profits arising from its business to the first party.

①A silent partner's contribution is part of the assets of the proprietor.

②A silent partner may only make money and other assets the subject matter of the contribution.

③A silent partner may not be engaged in executive management of the proprietor's business and may not act as the proprietor's representative.

④A silent partner holds no rights against or obligations towards a third party in connection with the actions of the proprietor.

If a silent partner permits the use of their own surname or full name in the trade name of the proprietor or permits the use of its own trade name as the trade name of the proprietor, the partner is liable, jointly and severally with the proprietor, for any obligations arising once the name is in use.

If a contribution decreases due to a loss, a silent partner may not claim a dividend of profits until after compensating for the loss.

①At the end of the business year, during the business hours of the proprietor, a silent partner may make the following requests and check on the state of the proprietor's business and assets:

②If there are material grounds for a silent partner to do so, the partner may check on the state of the business and assets of the proprietor at any time, with the permission of the court.

③A case in which a person seeks the permission referred to in the preceding paragraph is subject to the jurisdiction of the district court having jurisdiction over the locality of the proprietor's place of business (or its domicile, if it has no place of business).

①If a silent partnership agreement does not specify the duration of the silent partnership or if it provides that the silent partnership is to continue to exist for the life of either party, either party may cancel the agreement at the end of a business year; provided, however, that the party cancelling the agreement must give six months' advance notice.

②Regardless of whether or not the duration of a silent partnership is specified, either party may cancel the silent partnership agreement at any time, if there is a compelling reason to do so.

Other than in cases as referred to in the preceding Article, a silent partnership agreement ends as a result of the following circumstances:

Once a silent partnership agreement has ended, the proprietor must return the value of the contribution to the silent partner; provided, however, that if the contribution has decreased due to a loss, it is sufficient for the proprietor to return the remaining value.

The term "broker" as used in this Chapter means a person in the business of brokering commercial transactions between other persons.

A broker may not receive a payment or other such performance on a party's behalf for an act that the broker has formed and effected through its brokerage; provided, however, that this does not apply if a party manifests a different intention or if custom dictates otherwise.

If a broker receives a sample in connection with an act that is subject to the brokerage, the broker must retain the sample until the act is completed.

①Once an act subject to brokerage is formed and effected between the parties, the broker, without delay, must prepare documents containing the following information (hereinafter referred to as "transaction brokerage notice" in this Chapter), and deliver those notices to the parties after affixing the broker's signature or name and seal to them:

②In the case referred to in the preceding paragraph, unless the parties are required to perform their obligations immediately, the broker must have each party sign or affix its name and seal to one set of the transaction brokerage notice, and must deliver this to the other party.

③In the case referred to in the preceding two paragraphs, if one of the parties will not receive the transaction brokerage notices or does not sign or affix its name and seal to them, the broker must notify the other party of this without delay.

①A broker must enter the information set forth in paragraph (1) of the preceding Article in its books.

②A party may at any time request a broker to issue a certified copy of the books referred to in the preceding paragraph regarding an act that the broker has formed and effected through brokerage on the party's behalf.

If a party orders a broker not to disclose its name to the other party, the broker may not enter that party's name in the transaction brokerage notice or in the certified copy referred to in paragraph (2) of the preceding Article.

If a broker does not disclose a party's name to another party, the broker is personally liable for performance to that other party.

①A broker may not claim remuneration until completing the process referred to in Article 546.

②A broker's remuneration is borne equally by the parties.

The term "commission merchant" as used in this Chapter means a person in the business of selling or purchasing goods in its own name on behalf of another person.

①A commission merchant acquires rights against and bears obligations toward the other party personally by reason of a sale or purchase that the commission merchant makes on behalf of another person.

②In addition to the provisions of this Chapter, the provisions on mandates and agency apply mutatis mutandis between a commission merchant and a consignor.

A commission merchant is personally liable for performance if the other party fails to perform an obligation in a sale or purchase that the merchant has made on a consignor's behalf; provided, however, that this does not apply if the parties manifest a different intention or if custom dictates otherwise.

If a commission merchant sells goods at a price lower than that designated by the consignor or purchases goods at a price higher than that designated by the consignor but the merchant personally bears the difference, the sale or purchase is valid for the consignor.

①When a commission merchant is entrusted to sell or purchase goods for which there is a quotation on an exchange, the merchant may personally stand as the purchaser or seller. In this case, the sale or purchase price is determined by the quotation on the exchange at the time the commission merchant issues notice that it will stand as the purchaser or seller.

②In the case referred to in the preceding paragraph, the commission merchant may claim remuneration from the consignor.

The provisions of Article 524 apply mutatis mutandis if a commission merchant is entrusted with purchasing goods but the consignor refuses or is unable to receive the goods that the merchant has purchased.

The provisions of Article 27 and Article 31 apply mutatis mutandis to commission merchants.

The provisions of this Chapter apply mutatis mutandis to a person in the business of undertaking acts other than selling or purchasing goods in its own name on behalf of another person.

①The term "freight forwarder" as used in this Chapter means a person in the business of commissioning the transportation of goods in its own name.

②Unless otherwise provided in this Chapter, the provisions on commission merchants prescribed in Article 551 apply mutatis mutandis to freight forwarders.

If, between the receipt of goods and their delivery to the consignee, those goods are lost or damaged or something occurs that causes them to be lost or damaged, or if their arrival is delayed, a freight forwarder is liable to compensate for the resulting loss or damage; provided, however, that this does not apply if a freight forwarder proves that it did not neglect to exercise due care in performing acts in commissioning the transportation, such as the receipt, storage, or delivery of the goods, or the choice of carrier.

①A freight forwarder may claim remuneration immediately upon delivery of the goods to a carrier.

②If the amount of freight charges is specified in a freight forwarding contract, the freight forwarder may not claim any additional remuneration separately unless there is a special agreement to the contrary.

A freight forwarder may retain goods only against the remuneration, ancillary costs, and freight charges and other such money advanced which are receivable for the goods, until the freight forwarder is paid for these in full.

①A freight forwarder may transport goods personally. In this case, the freight forwarder has the same rights and obligations as a carrier.

②If a freight forwarder prepares a bill of lading or multimodal bill of lading at the request of a consignor, the freight forwarder is deemed to transport the goods personally.

The provisions of Article 572, Article 577, Article 579 (excluding paragraph (3)), Article 581, Article 585, Article 586, Article 587 (limited to the parts concerning the application mutatis mutandis of the provisions of Article 577 and 585), and Article 588 apply mutatis mutandis to the freight forwarding business. In this case, the term "preceding carrier" in Article 579, paragraph (2) is deemed to be replaced with "preceding freight forwarder or carrier," and the phrase "goods are delivered" in Article 585, paragraph (1) is deemed to be replaced with "goods are delivered to the consignee.".

In this Code, the meanings of the terms set forth in the following items are as prescribed respectively in those items:

A freight transportation contract becomes effective by virtue of a carrier promising to receive goods from a shipper and deliver them to a consignee, and the shipper promising to pay freight charges for that outcome.

①A shipper must issue a document containing the following information (referred to as an "invoice" in the following paragraph) at the request of a carrier:

②In lieu of issuing an invoice, the shipper referred to in the preceding paragraph may provide the information that is required to be contained in an invoice by electronic or magnetic means (meaning a means of using an electronic data processing system, or of otherwise employing information and communications technology, which is specified by Ministry of Justice Order; the same applies hereinafter), with the carrier's consent, pursuant to the provisions of Ministry of Justice Order. In this case, the shipper is deemed to have issued an invoice.

If the goods to be transported are goods of an inflammable, explosive or otherwise dangerous nature, a shipper, before delivering them, must notify a carrier of this fact and of the information necessary for their safe transportation, including the product name and nature of the goods.

①Freight charges must be paid at the time the goods are delivered at the destination.

②If goods are lost or damaged due to the nature of or defect in the goods, the shipper may not refuse to pay freight charges.

A carrier may retain goods only against the freight charges, ancillary costs, and money advanced receivable for the goods (hereinafter referred to as "freight charges and other receivables" in this Section), until the carrier is paid for these in full.

If, between the receipt of goods and their delivery, those goods are lost or damaged or something occurs that causes them to be lost or damaged, or if their arrival is delayed, a carrier is liable to compensate for the resulting loss or damage; provided, however, that this does not apply if a carrier proves that it did not neglect to exercise due care in the receipt, transportation, storage, or delivery of the goods.

①The amount of damages in the event of loss of or damage to goods is determined by the market price of the goods (or by quotations on an exchange, for goods for which this is applicable) at the place and time at which the goods are to be delivered; provided, however, that if there is no market price, this is determined by the normal price of goods of the same type and with the same quality at that place and time.

②Costs, including freight charges that are no longer payable due to the loss or damage to goods, are deducted from the amount of compensation for loss or damage referred to in the preceding paragraph.

③The provisions of the preceding two paragraphs do not apply if the loss or damage to goods arises at the carrier's intention or due to the carrier's gross negligence.

①A carrier is not liable for damages for loss of, damage to, or delayed arrival of cash, negotiable instruments, or other valuables, unless the shipper notifies the carrier of the type and value of the items in entrusting the carrier with transporting them.

②The provisions of the preceding paragraph do not apply in the following cases:

①The liability of a carrier to compensate for loss or damage arising as a result of loss, damage, or delay (meaning loss of, damage to, or delay in the arrival of the goods; hereinafter the same applies in this Section) if it has undertaken two or more modes of transportation from among land transportation, marine transportation, and air transportation under a single contract is to be governed by the provisions of Japanese laws and regulations or treaties which Japan has signed that are to be applied to each mode of transportation if the thing that causes the loss, damage, or delay occurs during that mode of transportation.

②The provisions of the preceding paragraph apply mutatis mutandis if a carrier, under a single contract, undertakes land transportation to which two or more different laws and regulations apply for each segment.

①If two or more carriers transport goods or passengers over land in succession, the second or subsequent carrier bears the obligation to exercise the rights of the previous carrier on its behalf.

②In the case referred to in the preceding paragraph, if the subsequent carrier pays the preceding carrier in full, the subsequent carrier acquires the rights of the previous carrier.

③If, for the benefit of a shipper, a second carrier, in succession, undertakes a part of the land transportation that a first carrier has undertaken, these carriers are jointly and severally liable to compensate for loss or damage arising as a result of loss, damage, or delay.

④The provisions of the preceding three paragraphs apply mutatis mutandis to marine transportation and air transportation.

A shipper may request a carrier to take measures such as discontinuing transportation or changing the consignee. In this case, a carrier may demand payment of freight charges, ancillary costs, money advanced, and costs incurred for the measures, in proportion to the transportation already completed.

①Once the goods arrive at the destination, or if all of the goods are lost, the consignee acquires the same rights as those of the shipper that have arisen based on a freight transportation contract.

②In the case referred to in the preceding paragraph, if the consignee seeks the delivery of goods or files a claim for damage to goods, the shipper may not exercise those rights.

③Once a consignee receives goods, the consignee bears the obligation to pay freight charges and other receivables to the carrier.

①A carrier may deposit goods with an official depository if the carrier is unable to ascertain the identity of the consignee.

②In the case referred to in the preceding paragraph, if the carrier demands that the shipper instruct it as to how to handle the goods within a reasonable period of time but the shipper does not give any such instructions, the carrier may put the goods up for auction.

③If the price of goods is likely to decline for reasons such as damage, the carrier may put the goods up for auction without making the demand referred to in the preceding paragraph.

④If a carrier puts goods up for auction pursuant to the provisions of the preceding two paragraphs, the carrier must deposit the proceeds from the auction with an official depository; provided, however, that this does not preclude the carrier from allocating all or part of the proceeds to cover the freight charges and other receivables.

⑤Once a carrier deposits goods with an official depository or puts goods up for auction pursuant to the provisions of paragraphs (1) through (3), the carrier must notify the shipper of this without delay.

The provisions of the preceding Article apply mutatis mutandis if a consignee refuses to receive or is unable to receive goods. In this case, the phrase "if the carrier demands that" in paragraph (2) of that Article is deemed to be replaced with "if the carrier demands that the consignee receive goods within a reasonable period of time, and after the expiration of that period "; and the term "shipper" in paragraph (5) of that Article is deemed to be replaced with "shipper and consignee".

①A carrier ceases to be liable for damage or partial loss of goods if the consignee receives the goods without raising any objection; provided, however, that this does not apply if the goods have incurred damage or a partial loss that cannot be immediately discovered, and the consignee notifies the carrier of this within two weeks from the date of delivery.

②The provisions of the preceding paragraph do not apply if the carrier, at the time of delivering the goods, knows of the damage or partial loss they have incurred.

③If a carrier entrusts a third party with transportation, and a consignee issues notice to the carrier as referred to in the proviso to paragraph (1) within the period referred to in the proviso to that paragraph, the period referred to in the proviso to that paragraph concerning a third party's liability to the carrier is deemed to have been extended to the final day in the two-week period that begins on the day on which the carrier received the notice.

①A carrier ceases to be liable for loss, damage, or delay if no claim is filed with the courts within one year from the day on which the goods are delivered (or, in the event of a total loss of goods, the day on which the goods should have been delivered).

②The period referred to in the preceding paragraph may be extended by agreement only after damage has arisen as a result of the loss, damage, or delay.

③If a carrier entrusts a third party with transportation, and the carrier provides compensation for loss or damage or has had a claim filed against it with the courts within the period referred to in paragraph (1), the period referred to in that paragraph concerning a third party's liability to the carrier is deemed to have been extended to the final day in the three-month period that begins on the day on which the carrier provided the compensation or had the claim filed against it.

A claim held by a carrier against a shipper or consignee is extinguished by prescription if the carrier does not exercise it during the one-year period that begins once the carrier has the right to exercise it.

The provisions of Articles 576, 577, 584, and 585 apply mutatis mutandis to the liability of a carrier toward a shipper or consignee to compensate for damage in tort arising as a result of loss, damage, or delay; provided, however, that this does not apply to a carrier's liability to a consignee if the carrier undertakes transportation from the shipper even though the consignee had previously refused to have the goods transported through entrustment by the shipper.

①If, pursuant to the provisions of the preceding Article, a carrier is subject to a release from or reduction in the liability to compensate for loss or damage arising as a result of loss, damage, or delay, the carrier's employees are also subject to a release from or reduction in their liability to a shipper or consignee to compensate for damage in tort arising as a result of that loss, damage, or delay, to the extent of the carrier's release from or reduction in liability.

②The provisions of the preceding paragraph do not apply if the loss, damage, or delay arises at the intention of the carrier's employee or due to the gross negligence of the carrier's employee.

A passenger transportation contract becomes effective by virtue of a carrier promising to transport a passenger, and the other party promising to pay transportation charges for that outcome.

A carrier is liable to compensate for loss or damage a passenger incurs due to transportation; provided, however, that this does not apply if the carrier proves that it did not neglect to exercise due care in transporting the passenger.

①Any special agreement that makes the carrier subject to a release from or reduction in the liability to compensate for loss or damage to the life or person of a passenger (excluding the liability to compensate for loss or damage mainly arising from a delay in transportation) is void.

②The provisions of the preceding paragraph do not apply in the following cases:

①A carrier has the same liability as a carrier that is under a freight transportation contract with regard to the baggage that passengers have handed over to the carrier, even if the carrier does not claim any special freight charges for it.

②A carrier's employee has the same liability as the employee of a carrier that is under a freight transportation contract, as it concerns the baggage provided for in the preceding paragraph.

③If a passenger does not seek to have the baggage prescribed in paragraph (1) handed over within one week from the day on which the baggage arrives at the destination, a carrier may deposit the baggage with an official depository or may put it up for auction after issuing a notice for the passenger to seek to have it handed over within a reasonable period of time. In this case, once the carrier deposits the baggage with an official depository or puts it up for auction, the carrier must notify the passenger of this without delay.

④If the price of baggage is likely to decline for reasons such as damage, the carrier may put it up for auction without issuing the notice referred to in the preceding paragraph.

⑤If a carrier puts baggage up for auction pursuant to the provisions of the preceding two paragraphs, the carrier must deposit the proceeds from the auction; provided, however, that this does not preclude the carrier from allocating all or part of the proceeds to cover the freight charges.

⑥If a passenger's domicile or residence is unknown, the carrier is not required to issue the notice or notify the passenger as referred to in paragraph (3).

①A carrier is not liable to compensate for loss or damage arising as a result of loss or damage to the baggage that a passenger has not handed over to the carrier (including a passenger's personal belongings), unless the carrier has intentionally or negligently caused the loss or damage.

②The provisions of Article 576, paragraphs (1) and (3), Article 584, paragraph (1), Article 585, paragraphs (1) and (2), Article 587 (limited to the parts concerning the application mutatis mutandis of the provisions of Article 576, paragraphs (1) and (3), Article 584, paragraph (1), and Article 585, paragraphs (1) and (2)), and Article 588 apply mutatis mutandis if a carrier is liable to compensate for loss or damage that arises as a result of loss or damage to baggage as prescribed in the preceding paragraph. In this case: in Article 576, paragraph (1), the phrase "the goods are to be delivered" is deemed to be replaced with "the transportation is to be completed"; in Article 584, paragraph (1), the phrase "the consignee receives the goods without raising any objection" is deemed to be replaced with "the passenger has not raised any objection by the time of completion of transportation", and the phrase "the consignee notifies the carrier of this within two weeks from the date of delivery " is deemed to be replaced with "the passenger notifies the carrier of this within two weeks from the date of completion of transportation"; and in Article 585, paragraph (1), the phrase "the day on which the goods are delivered (or, in the event of a total loss of goods, the day on which the goods should have been delivered)" is deemed to be replaced with "the day of completion of transportation".

The provisions of Article 586 apply mutatis mutandis to passenger transportation.

If a merchant receives goods under bailment within the scope of its business, the merchant must store the bailed goods with the due care of a prudent manager even if it does not receive remuneration.

①If a person in the business of conducting transactions at a hotel, food and beverage establishment, bathhouse, or other such establishment at which it is intended for customers to gather (hereinafter referred to as an "establishment's proprietor" in this Section) receives goods under bailment from a customer, the establishment's proprietor is not entitled to be released from the liability to compensate the customer for loss or damage arising as a result of loss or damage to the bailed goods unless it proves that the loss or damage is due to force majeure.

②An establishment's proprietor is liable to compensate for loss or damage if the goods that the customer has carried into an establishment are lost or damaged due to the proprietor's failure to exercise due care, even if these are goods that a customer has not bailed to it.

③An establishment's proprietor may not be released from the liability referred to in the preceding two paragraphs even if it indicates that it does not assume liability for goods that customers carry into the establishment.

An establishment's proprietor is not liable to compensate for loss or damage to cash, negotiable instruments, or other valuables, unless a customer notifies the establishment's proprietor of the type and value of the items while making the bailment.

①A claim involving the liability of an establishment's proprietor as referred to in the preceding two Articles is extinguished by prescription if the customer does not exercise it during the one-year period after the establishment's proprietor returns the bailed goods or the customer leaves with the goods that they carried into the establishment (or, in the event of a total loss of goods, after the customer leaves the establishment).

②The provisions of the preceding paragraph do not apply if an establishment's proprietor has knowledge of the loss or damage to the goods prescribed in that paragraph.

The term "warehouse operator" as used in this Section means a person engaged in the business of storing goods at a warehouse facility on behalf of another person.

A warehouse operator must issue a warehouse receipt for bailed goods at the request of the bailor.

A warehouse receipt must contain the following information as well as its number, and bear the signature or the name and seal of a warehouse operator:

If a warehouse operator issues a warehouse receipt to a bailor, the warehouse operator must enter the following information in its books:

①The holder of a warehouse receipt may request a warehouse operator to divide the bailed goods and issue new warehouse receipts for each of the portions of the goods. In this case, the holder must return the initial warehouse receipt to the warehouse operator.

②The costs for dividing bailed goods and issuing warehouse receipts under the provisions of the preceding paragraph are borne by the holder of the warehouse receipt.

A warehouse operator may not assert the falsity of the information entered in a warehouse receipt against a holder in good faith.

If a warehouse receipt has been prepared, its holder must use it to dispose of the bailed goods.

Even if a warehouse receipt is issued to a named person, it may be negotiated or pledged by means of indorsement; provided, however, that this does not apply if the receipt indicates that its indorsement is prohibited.

If a warehouse receipt is delivered to a person who is entitled to use it to collect bailed goods, its delivery has the same effect as the delivery of the bailed goods as it concerns the acquisition of rights that are exercised in connection with the bailed goods.

If the holder of a warehouse receipt loses that warehouse receipt, they may provide reasonable security and request a reissuance. In this case, the warehouse operator must make an entry of this in its books.

At any time during a warehouse operator's business hours, the bailor or the holder of a warehouse receipt may ask to inspect bailed goods or to be provided with samples of them, and may take the necessary measures to preserve them.

A warehouse operator is not entitled to be released from the liability for damages for the loss of or damage to bailed goods, unless it proves that it did not neglect to exercise due care in storing the goods.

A warehouse operator may not request payment of storage fees, money advanced, and other such costs associated with the bailed goods (referred to as "storage fees and other monies" in Article 616, paragraph (1)) until at least the time at which the bailed goods leave the warehouse facility; provided, however, that if some of the bailed goods leave the warehouse facility, the warehouse operator may request payment in proportion to the goods that have left it.

If the parties do not specify a storage period, the warehouse operator may not return the bailed goods until after six months have passed since the day on which the bailed goods were placed in the warehouse facility; provided, however, that this does not apply if there are compelling reasons.

If a warehouse receipt has been prepared, a person may not demand the return of the bailed goods other than in exchange for the receipt.

If a warehouse receipt is pledged, the bailor, with the pledgee's consent, may demand the return of part of the bailed goods even before the claim secured by the pledge becomes due. In this case, the warehouse operator must enter the type, quality, and quantity of the returned part of the bailed goods on the warehouse receipt, and make an entry of this in its books.

The provisions of Article 524, paragraphs (1) and (2) apply mutatis mutandis if the bailor or the holder of a warehouse receipt refuses to receive or is unable to receive the bailed goods.

①A warehouse operator ceases to be liable for damage or partial loss of bailed goods if the bailor or the holder of a warehouse receipt receives the bailed goods without raising any objection and pays the storage fees and other monies; provided, however, that this does not apply if the bailed goods contain any damage or partial loss that cannot be immediately discovered and the bailor or the holder of the warehouse receipt issues notice of this to the warehouse operator within two weeks from the date of delivery.

②The provisions of the preceding paragraph do not apply if the warehouse operator has knowledge of any damage or partial loss of the bailed goods.