Construction Business Act

Transcription

1 Construction Business Act (Act No. 100 of May 24, 1949) Table of Contents Chapter I General Provisions (Article 1, Article 2) Chapter II Construction Business License Section 1 General Provisions (Article 3 - Article 4) Section 2 Ordinary Construction Business License (Article 5 - Article 14) Section 3 Special Construction Business License (Article 15 - Article 17) Chapter III Contracts for Construction Work Section 1 General Provisions (Article 18 - Article 24) Section 2 Duties of Main Contractor (Article Article 24-7) Chapter III-2 Dispute Resolution Procedures for Contracts for Construction Work (Article 25 - Article 25-26) Chapter IV Securing of Construction Technology (Article Article 27-22) Chapter IV-2 Evaluation, Etc., of Management of Construction Business Operators (Article Article 27-36) Chapter IV-3 Construction Trade Associations (Article 27-37, Article 27-38) Chapter V Supervision (Article 28 - Article 32) Chapter VI Central Council for Construction Business, Etc. (Article 33 - Article 39-3) Chapter VII Miscellaneous Provisions (Article Article 44-5) Chapter VIII Penal Provisions (Article 45 - Article 55) Chapter I General Provisions (Purpose) Article 1 The purpose of this Act is to ensure the proper execution of construction work and the protection of owners as well as to promote sound development of the construction industry and contribute to the furtherance of the public welfare by bettering the integrity of persons operating construction businesses and rationalizing construction work contracting. (Definitions) Article 2 (1) The term "construction work" as used in this Act shall mean the civil engineering and construction work listed in the upper column of Attached Table 1. (2) The term "construction business" as used in this Act shall mean a business to contract to complete construction work, regardless of whether it is a main 1

2 contractor, a subcontractor, or falls under any other designation. (3) The term "construction business operator" as used in this Act shall mean a person who operates a construction business under the license specified in paragraph (1) of Article 3 (4) The term "subcontract" as used in this Act shall mean a contract concluded between a person operating a construction business that has contracted for construction work from another party and another person operating another construction business for all or a part of said construction work. (5) The term "owner" as used in this Act shall mean a person who orders construction work (excluding a person who contracts for work from another party), "main contractor" as used in this Act shall mean a person who is the operator of a construction business and the orderer under subcontracts, and "subcontractor" as used in this Act shall mean the contractor under subcontracts. Chapter II Construction Business License Section 1 General Provisions (Construction Business License) Article 3 (1) In accordance with the provisions of this Chapter, any person who intends to operate a construction business shall obtain a license from the Minister of Land, Infrastructure, Transport and Tourism when the person establishes offices (head office, branch offices or equivalent based on the provisions of Cabinet Order, the same shall apply hereinafter) in two or more prefectures, or from the Prefectural Governor having jurisdiction over the area where the office is located when the person establishes an office(s) in one prefecture only. This provision shall not apply to operators who only contract for simple construction work that are provided for under the Cabinet Order. (i) A person who intends to operate a construction business other than those specified in the following item. (ii) A person intending to operate a construction business that intends to perform the work in the course of construction business by concluding subcontracts for all or part of construction work directly contracted for from an owner when the amount of the subcontract payment (total amount of subcontract payments when there are two or more subcontracts related to the work) exceeds the amount stipulated under Cabinet Order. (2) The license set forth in the preceding paragraph shall be granted for each of the construction businesses listed in the lower columns of Attached Table 1 for each of the construction work classifications listed in the upper columns of the same table. (3) The license in paragraph (1) shall cease to be effectived if not renewed every 2

3 five years. (4) When the application for renewal provided for in the preceding paragraph has been made and the disposition in response to that application has not been made by the date of expiry of the period in the same paragraph (hereinafter referred to as "valid period of license"), the previous license shall be valid after the expiry of the valid period of license until disposition is made. (5) In the case referred to in the preceding paragraph when a license has been renewed, its valid period of license shall be calculated from the day following the date of expiry of the valid period of the previous license. (6) When a person who received a license for the persons specified in item (i) of paragraph (1) (including the renewal of license provided for in paragraph (3); hereinafter referred to as "ordinary construction business license") receives a license for the persons specified in item (ii) of paragraph (1) regarding construction business concerning the said ordinary construction business license (including the renewal of license provided for in paragraph (3); hereinafter referred to as "special construction business license") the ordinary construction business license relating to said construction business of that person shall cease to be valid. (License Conditions) Article 3-2 (1) The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor may make the license provided for in paragraph (1) of the preceding Article subject to conditions and may amend such conditions. (2) The conditions in the preceding paragraph shall be limited to the minimum necessary to ensure the proper execution of construction work and the protection of owners and shall not impose unreasonable obligations on the operator receiving the license. (Appurtenant Work) Article 4 When contracting for construction work concerning the licensed construction business, the construction business operator may contract for construction work in another construction business appurtenant to said construction work. Section 2 Ordinary Construction Business License (Application for License) Article 5 Based on the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, a person wishing to receive an ordinary construction business license (hereinafter referred to as "license" with the exception of item (ii) and item (iii) of Article 8) shall submit the license application form, having 3

4 filled in the items listed below, to the Minister of Land, Infrastructure, Transport and Tourism when the person intends to establish offices in two or more prefectures and to the Prefectural Governor having jurisdiction over the location of office(s) when the operator intends to establish an office(s) in one prefecture only. (i) Trade name or name (ii) Name of office and address (iii) When the applicant is a juridical person, the amount of stated capital (including total capital, hereinafter the same) and the names of officers (iv) When the applicant is an individual, the name of the person and the name of the manager when applicable (v) The construction business for which a license is sought (vi) When another business is operated, the category of the business. (Documents to be Attached to License Application Form) Article 6 (1) Based on the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, the applicant shall attach the documents listed below to the license application form provided for in the preceding Article. (i) Record of construction work (ii) Documents recording the amount of construction work executed in each of the previous three business years (iii) Documents recording the number of employees (iv) Documents certifying that the applicant (when the applicant is a juridical person, said juridical person, its officers and employees provided for by Cabinet Order and when the applicant is an individual, that person and employees provided for by Cabinet Order) and the statutory agent are not disqualified under the provisions of each item of Article 8 (v) Documents certifying compliance with the requirements listed in item (i) and item (ii) of the following Article (vi) Other documents as provided for by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism in addition to those listed in each of the preceding items. (2) Notwithstanding the provisions of the preceding paragraph, an applicant for renewal of a license shall not be required to attach the documents listed in item (i) through item (iii) of said paragraph. (License Requirements) Article 7 The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor shall not grant a license unless the applicant is found to conform to the following requirements. (i) When the applicant is a juridical person, one full-time officer (here and 4

5 below refers to an employee who executes company business, a board director, an executive director or equivalent person; the same shall apply below) and when the applicant is an individual, that person or one of the managers shall be one of the persons specified below: (a) A person who possesses five years or more experience of being responsible for managing construction operations in the classification of construction work for which the applicant wishes to be licensed. (b) A person certified by the Minister of Land, Infrastructure, Transport and Tourism to possess abilities equivalent or higher than those in sub-item (a). (ii) The applicant shall post a full-time engineer who complies with one of the items below in each office: (a) A person who has business experience in the licensed classification for not less than five years following graduation from a senior high school or a secondary school under the School Education Law (Act No. 26 of 1947) (includes vocational schools under the former Secondary School Ordinance, Imperial Ordinance No. 316 of 1943; the same shall apply below) or a person who has business experience in the licensed classification for not less than three years after graduation from a university (includes universities under the former University Ordinance, Imperial Ordinance No. 388 of 1918; the same shall apply below) or a college (includes colleges under the former College Ordinance, Imperial Ordinance No. 61 of 1903; the same shall apply below) with credit in the subjects specified by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. (b) A person who has business experience in the licensed classification for not less than ten years. (c) A person who has been certified by the Minister of Land, Infrastructure, Transport and Tourism to possess experience or qualifications equivalent to or higher than those in sub-item (a) or (b). (iii) When the applicant is a juridical person, the corporation, its officers and the representatives of its branches or offices, or when the applicant is an individual, the individual or his/her managers, shall not be considered likely to commit an unfair or dishonest act with regard to any contract. (iv) The applicant shall not lack sufficient financial standing or financial credibility to execute contracts (excluding simple construction work as provided for under Cabinet Order in the proviso of paragraph (1) of Article 3). Article 8 The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor shall not grant a license when the applicant falls under the definitions of any of the following items (any of item (i) or item (vii) through item (xi) when applying for a renewal of license), when there are false entries concerning important items on the application form or the attached 5

6 documents, or when essential information has not been provided. (i) An adult ward, a derelict or an undischarged bankrupt (ii) An applicant who has had an ordinary construction business license or a special construction business license canceled under the provisions of item (v) or item (vi) of paragraph (1) of Article 29, when less than five years have elapsed since the date of rescission (iii) An applicant who, from the date of notice under the provisions of Article 15 of the Administrative Procedures Law (Act No. 88 of 1993) with relation to rescission proceedings for a ordinary construction business license or a special construction business license corresponding to item (v) or item (vi) of paragraph (1) of Article 29, until the date of said proceedings or the date of the decision not to take proceedings, has issued a notification under the provisions of the same Article corresponding to item (v) of Article 12, when less than five years have elapsed since the date of said notification. (iv) When there has been a notification under the provisions of the same Article corresponding to item (v) of Article 12 within the period provided for in the preceding item and the applicant was an officer or an employee under the provisions of Cabinet Order of the juridical person to which said notification relates or an employee under the provisions of Cabinet Order of the individual to whom said notification relates within 60 days prior to the notification in the preceding paragraph and when less than five years have elapsed since the date of said notification (v) An applicant who has been ordered to suspend operations under the provisions of paragraph (3) or paragraph (5) of Article 28, when the term of the suspension has not been completed (vi) An applicant who has been prohibited from operating in the licensed classification under the provisions of Article 29-4, when the term of the prohibition has not been completed (vii) An applicant who has been sentenced to a term of imprisonment and has finished serving that sentence, when less than five years have elapsed since the date when said sentence finished (viii) An applicant who has been fined under the provisions of this Act or under the provisions of Cabinet Order based on laws and regulations concerning the execution of construction work and the employment of laborers in construction work or under the provisions of the Act on Prevention of Unjust Acts by Organized Crime Group Members (Act No. 77 of 1991) (excluding the provisions of paragraph (7) of Article 32-2 of the same Act) or who has committed a crime under Article 204, Article 206, Article 208, Article 208-3, Article 222 or Article 247 of the Penal Code (Act No. 45 of 1907) of under the Act on Punishment of Physical Violence and Others (Act No. 60 of 1926) and has served said sentence, when less than five years have elapsed since the 6

7 sentence was served (ix) An applicant who is a minor who does not have the same capabilities with regards to business as an adult and whose statutory agent is covered by any one of the preceding items (x) An applicant that is a juridical person when any of its officers or employees under the provisions of Cabinet Order are covered by item (i) through item (iv) or item (vi) through item (viii) (excluding those persons covered by item (ii), item (iii) and item (iv), and item (vi) who were employees of said juridical person under the provisions of Cabinet Order prior to the rescission of a license under the provisions of Article 29, the notification in item (v) of Article 12 corresponding to the provisions of the same Article and prior to the prohibition of operations under the provisions of Article 29-4, respectively) (xi) An applicant who is a private individual when any employees under the provisions of Cabinet Order are covered by item (i) through item (iv) or item (vi) through item (viii) (excluding those persons covered by item (ii), item (iii) and item (iv), and item (vi) who were employees of said private individual under the provisions of Cabinet Order prior to the rescission of a license under the provisions of Article 29, the notification in item (v) of Article 12 corresponding to the provisions of the same Article and prior to the prohibition of operations under the provisions of Article 29-4, respectively). (Validity of Former License in Case of License Transfer) Article 9 (1) When a licensed operator who intends to operate a further licensed construction business corresponding to any of those listed in the following items receives a license from the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor under the provisions of paragraph (1) of Article 3, the former license issued by the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor with regard to said operator shall cease to be valid. (i) When an operator who has received a license from the Minister of Land, Infrastructure, Transport and Tourism has office(s) in one prefecture only. (ii) When an operator who has received a license from the Prefectural Governor closes the office in the prefecture concerned and establishes an office in another single prefecture. (iii) When an operator who has received a license from the Prefectural Governor operates offices in two or more prefectures. (2) Under the provisions of paragraph (4) of Article 3, when there has been an application under the provisions of Article 5 by an operator who intends to operate a further licensed construction business corresponding to any of the classifications listed in each of the preceding items, the provision of paragraph (2) of Article 6 shall apply mutatis mutandis to said applicant. 7

8 (Registration and License Tax and License Fee) Article 10 An applicant who wishes to receive a license from the Minister of Land, Infrastructure, Transport and Tourism shall pay the registration and license tax provided for in the Registration and License Tax Act (Act No. 35 of 1967) or the licensing fee provided for by Cabinet Order based on the classifications below. (i) An applicant wishing to receive a license who is not covered by the following item shall pay registration and license tax. (ii) An applicant wishing to receive a renewal of license under paragraph (3) of Article 3, and an applicant who has already received a license from the Minister of Land, Infrastructure, Transport and Tourism with regard to another construction business shall pay the license fee. (Notification of Change, Etc.) Article 11 (1) When there have been any changes to the items listed in item (i) through item (iv) of Article 5, the licensed operator shall submit notification of change to the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor within thirty days as provided for by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. (2) At the end of each business year, a licensed operator shall submit documents listed in item (i) and item (ii) of paragraph (1) of Article 6, and other documents as provided for by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism to the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor within four months of the end of each business year. (3) When there have been any changes to items entered on documents listed in item (iii) of paragraph (1) of Article 6 or other documents as provided for by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, the licensed operator shall submit documents recording those changes to the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor within four months of the end of each business year. (4) When the person, an officer in the case of a juridical person and the manager in the case of a private individual, who was certified as conforming to sub-item (a) or (b) of item (i) of Article 7 leaves or ceases to conform to sub-item (b) of the same item, or when a person assigned to the office who was recognized as conforming to sub-item (a), (b) or (c) of item (ii) of the same Article ceases to be assigned to the office or ceases to conform to sub-item (c) of the same item and there is a replacement, the licensed construction business operator shall submit the documents listed in item (v) of paragraph (1) of Article 6 concerning that person to the Minister of Land, Infrastructure, Transport and Tourism or 8

9 the Prefectural Governor within two weeks based on the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. (5) When the criteria listed in item (i) or item (ii) of Article 7 are no longer met or when any of the items listed in item (i) and item (vii) through item (xi) of Article 8 apply, the licensed construction business operator shall submit documents to that effect to the Minister of Land, Infrastructure, Transport and Tourism or to the Prefectural Governor within two weeks based on the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. (Notification of Cessation of Business, Etc.) Article 12 When the licensed construction business operator corresponds to one of the following items, the person listed in each item shall submit documents to that effect to the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor within thirty days. (i) When the licensed operator dies, his/her heir. (ii) When a juridical person has ceased to exist due to merger, a person who was an officer. (iii) When a juridical person is dissolved due to a decision to commence bankruptcy proceedings, the administrator in bankruptcy. (iv) When a juridical person is dissolved for a reason other than merger or a decision to commence bankruptcy proceedings, the liquidator. (v) When the licensed construction business has been discontinued, the individual who was the said licensee or an officer of the juridical person which was the said licensee. (Public Inspection of Submitted Documents) Article 13 The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor shall, in accordance with the provisions of Cabinet Order, establish a reading room for public inspection of documents provided for in Article 5, paragraph (1) of Article 6, and paragraph (1) through paragraph (4) of Article 11, or copies of said documents. (Delegation to the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism) Article 14 Necessary matters concerning applications for licenses shall be determined by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, other than those matters provided for in this Section. Section 3 Special Construction Business License (Licensing Standards) 9

10 Article 15 The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor shall not grant a license unless the applicant for a special construction business license is found to conform to the following standards. (i) The applicant complies with item (i) and item (iii) of Article 7. (ii) The applicant assigns a full-time worker who complies with any one of the following items in each office. However, in view of the comprehensive nature of construction technology (hereinafter refers to the necessary specialist knowledge needed to correctly implement construction work in accordance with a design blueprint and the ability to apply such knowledge), the status of dissemination of construction technology and other circumstances, for a person wishing to receive a license for a construction business specified by Cabinet Order (called "specified construction business" below), the full time worker assigned to each office shall conform to sub-item (a) or under the provisions of sub-item (c) be deemed by the Minister of Land, Infrastructure, Transport and Tourism to have equivalent or higher ability than the persons listed in sub-item (a). (a) A person who has passed the technical certification under the provisions of paragraph (1) of Article 27 or examination based on the provisions of other laws and ordinances provided for by the Minister of Land, Infrastructure, Transport and Tourism in accordance with the classification of the construction business license applied for, or a person who has received certification under the provisions of other laws and ordinances in line with the classification of construction business license applied for and based on the provisions of the Ordinance of the Minister of Land, Infrastructure, Transport and Tourism. (b) A person who conforms to sub-item (a), (b) or (c) in Article 7 who has two or more years business experience in contracting directly from owners when the amount of the contract fee is above that amount provided for by Cabinet Order in the field of construction work related to the construction business in which application has been made for a license. (c) A person who has been certified by the Minister of Land, Infrastructure, Transport and Tourism as possessing equivalent abilities to those listed in sub-item (a) or (b). (iii) The applicant shall have a sufficient financial basis to execute contracts with owners when the contract fee is above that provided for by Cabinet Order. (Restrictions on the Conclusion of Subcontracts) Article 16 Only the holder of a special construction business license shall conclude the subcontracts that correspond to those in each of the items below in order to execute construction work directly contracted from an owner. 10

11 (i) Subcontracts when the amount of the subcontract fee related to the subcontract is more than the amount prescribed by the Cabinet Order referred to in item (ii) of paragraph (1) of Article 3 for one contract. (ii) Subcontracts when the total amount of the subcontracting fees for all other subcontracts in order to execute said construction work would exceed the amount provided for under the Cabinet Order for item (ii) of paragraph (1) of Article 3 with the conclusion of said subcontract. (Mutatis Mutandis Application) Article 17 The provisions of Article 5, Article 6 and Article 8 through Article 14 shall apply mutatis mutandis to a special construction business license and the recipient of a special construction business license (hereinafter referred to as "special construction business operator"). In such case, "item (i) and item (ii) in the following Article" in item (v) of paragraph (1) of Article 6 shall be read "item (i) of Article 7 and item (ii) of Article 15"; "sub-item (a), (b) or (c) of the same Article" and "the sub-item (c) of the same item" in paragraph (4) of Article 11 shall be read "sub-item (a), (b) or (c) of item (ii) of Article 15" and "the sub-item (a), (b) or (c) of the same item," respectively; and "item (i) or item (ii) of Article 7" in paragraph (5) of the same Article shall be read "item (i) of Article 7 or item (ii) of Article 15." Chapter III Contracts for Construction Work Section 1 General Provisions (General Rules for Contracts for Construction Work) Article 18 The parties to a contract for construction work shall conclude the contract fairly based on agreement made on terms of equality and shall fulfill the contract honestly and in good faith. (Content of Contracts for Construction Work) Article 19 (1) The parties to a contract for construction work shall record the following items in writing, sign or affix a registered seal and exchange documents when making a contract based on the principles of the preceding Article. (i) The content of the construction work. (ii) The amount of the contract fee. (iii) The date for the commencement of the construction work and the date for the completion of the construction work. (iv) When agreements are made concerning the pre-payment of all or part of the contract fee or payments based on completion, the date and the method of the payment. 11

12 (v) Provisions regarding changes to the period of construction, changes to the amount of the contract fee and payment of damages and the method of calculation for the amount in the event of an offer from one of the parties for design changes, delay to the commencement of construction or suspension of all or part of the construction work. (vi) Provisions regarding changes to the period of construction due to natural disasters and other Acts of God and the payment of damages and the method for calculating the amount. (vii) Changes in the amount of the contract fee or the content of the construction work based on fluctuations or changes in prices, etc., (refers to prices, etc., provided for in Article 2 of the Price Control Ordinance (Imperial Ordinance No. 118 of 1946). (viii) Provisions regarding the payment of compensation in the event of losses or damage to a third party caused by the execution of the construction work. (ix) Provisions regarding the details and system used when the orderer supplies materials used in the construction work or leases construction and other machinery. (x) The date and method for the orderer to conduct an inspection in order to confirm total or partial completion of the construction work and the date of transfer. (xi) The date and method for payment of the contract fee following completion of the construction work. (xii) When a guarantee and insurance agreement is concluded or other measures are stipulated regarding liability for faults in the object of the construction work and the fulfillment of said liability, the content of the agreement or measures. (xiii) Interest for arrears, damages for breach of contract and other damages in the event of delays in fulfillment by either party or non-fulfillment of other obligations. (xiv) Method of resolution for disputes concerning the contract. (2) When there are changes to the content of the contract which concern the items listed in the preceding paragraph, the parties to the contract shall record the changes in writing, sign or affix a registered seal and exchange documents. (3) As specified by Cabinet Order, a party to a contract for construction work may obtain the agreement of the other party to said contract and employ methods using electronic data processing equipment and telecommunications technology stipulated as conforming to the measures taken for in each of the relevant paragraphs by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism in place of the measures taken for in the preceding two paragraphs. In this case, a person who employs measures specified by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism 12

13 shall be deemed as having employed the measures taken for in each of the relevant paragraphs. (Notice Concerning Appointment of On-Site Representative) Article 19-2 (1) When assigning an on-site representative to a construction site in relation to fulfillment of the contract, the contractor shall notify the orderer in writing of matters regarding the limit of authority of said on-site representative and the method for reporting the opinions of the orderer concerning the acts of said on-site representative to the contractor (called "matters concerning the on-site representative" in paragraph (3)). (2) When assigning a supervisor to a construction site in relation to fulfillment of the contract, the orderer shall notify the contractor in writing of matters regarding the limit of authority of said supervisor and the method for reporting the opinions of the contractor concerning the acts of said supervisor to the orderer (called "matters concerning the supervisor" in paragraph (4)). (3) As specified by Cabinet Order, in place of the written notice provided for in paragraph (1), the contractor may obtain the agreement of the orderer specified in the same paragraph and give notice of matters concerning the on-site representative employing methods using electronic data processing equipment and telecommunications technology stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. In this case, said contractor shall be deemed as having given said written notice. (4) As specified by Cabinet Order, in place of the written notice provided for in paragraph (2), the orderer may obtain the agreement of the contractor in the same paragraph and give notice of matters concerning the supervisor, employing methods using electronic data processing equipment and telecommunications technology stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. In this case, said orderer shall be deemed as having given said written notice (Prohibition of Unreasonably Low Contract Fees) Article 19-3 The orderer shall not take unfair advantage of the orderer's position in a transaction to make a contract for a contract fee that does not cover the generally required costs needed to complete the ordered construction work. (Prohibition of Unreasonable Compulsory Purchase of Materials, Etc.) Article 19-4 After making a contract, an orderer shall not take unfair advantage of the orderer's position in the transaction to specify purchase outlets for material or machinery to be used in the ordered construction work and direct the contractor to purchase them to the disadvantage of the contractor. 13

14 (Recommendations to Owners) Article 19-5 When an owner who has made a contract with a construction business operator (except for business operators provided in paragraph (1) of Article 2 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947)) has violated the provisions of the preceding two Articles, the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor who licensed said construction business operator may make the necessary recommendations to said owner when found particularly necessary. (Estimates for Construction Work, Etc.) Article 20 (1) When making a contract for construction work, a construction business operator shall provide a clear breakdown of material expenses, labor expenses and other expenses for each type of construction based on the content of the work and shall endeavor to carry out an estimate for the construction work. (2) When requested by an orderer of construction work, a construction business operator shall submit a written estimate for construction work before the contract is concluded. (3) The orderer of construction work shall, prior to the conclusion of the contract when the contract method is by discretionary contract and prior to the submission of bids when the contract method is competitive tendering, indicate as clearly as possible the details with regard to the matters listed in item (i) and item (iii) through item (xiv) of paragraph (1) of Article 19 and allow the specified period provided for by Cabinet Order needed for the construction business operator to make an estimate for said construction work between said indication of details and conclusion of said contract or tendering. (Contract Guaranty) Article 21 (1) When a contract for construction work includes provision for prepayment of all or a part of the contract fee, the orderer may request the construction business operator to establish a guarantor before the pre-payment is made. This provision shall not apply to construction work covered by the guaranty of surety companies provided for under paragraph (4) of Article 2 of the Act On Guaranty Service Related to Advance Payment of Public Works (Act No. 184 of 1952) or simple construction work as stipulated by Cabinet Order. (2) A construction business operator who has received the request provided for set forth in the preceding paragraph shall establish a guarantor as specified in one of the items below. (i) A guarantor for payment of arrears interest in the event of default by the construction business operator, damages for breach of contract and any other 14

15 damages. (ii) Another construction business operator who will guarantee the completion of the construction work in place of the said construction business operator. (3) If the construction business operator does not establish a guarantor despite being requested to do so under the provisions of paragraph (1), the orderer may decline to make the pre-payment regardless of the provisions of the contract. (Prohibition of Blanket Subcontracting) Article 22 (1) A construction business operator shall not blanket subcontract construction work contracted for to another operator whatever method is used. (2) A person who operates a construction business shall not undertake a blanket subcontract for construction work from a construction business operator which has been contracted for by said construction business operator. (3) When the construction work in the preceding two paragraphs is construction work other than a facility utilized by a large number of people or important construction work related to building provided for by Cabinet Order, the provisions shall not apply when the main contractor for the said construction project has obtained the written consent of the owner in advance. (4) As specified by Cabinet Order, in place of the written consent provided for in the preceding paragraph, the owner may obtain the agreement of the main contractor specified in the same paragraph and give notice of the consent specified in the same paragraph employing methods using electronic data processing equipment and telecommunications technology stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. In this case, said owner shall be deemed as having given said written consent. (Request for Replacement of Subcontractor) Article 23 (1) When the orderer deems that a subcontractor is unsuitable for the execution of the construction work, the orderer may request the contractor to replace said subcontractor. This shall not apply to subcontractors selected with the advance written consent of the orderer. (2) As specified by Cabinet Order, in place of the written consent provided for in the proviso of the preceding paragraph, the orderer may obtain the agreement of the person selecting the subcontractor specified in the proviso of the same paragraph and give notice of the consent specified in the proviso of the same paragraph employing methods using electronic data processing equipment and telecommunications technology stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. In this case, said orderer shall be deemed as having given said written consent. (Reporting of Construction Supervision) 15

16 Article 23-2 A contractor who is required to execute a contracted construction project in line with a design drawing from an architect under the provision of paragraph (3) of Article 18 of the Act on Architects and Building Engineers (Act No. 202 of 1950) must immediately report the reason to the orderer using the method provided for in paragraph (2) of Article 19-2 when there is a reason not to follow the design drawing. (Cases Regarded as Contracts) Article 24 A contract concluded for the purpose of completing construction work for remuneration regardless of whatever name is given to it shall be deemed as a contract for construction work, and the provisions of this Act shall apply. Section 2 Duties of Main Contractor (Hearing the Opinion of Subcontractors) Article 24-2 The main contractor shall take into account the opinions of subcontractors when deciding matters necessary for the execution of the contracted construction work, such as the details of the work process and the method of work. (Payment of Subcontracting Fees) Article 24-3 (1) After receiving payment for work completed or payment after completion of all work, the main contractor shall pay a subcontracting fee to the subcontractor that executed the construction work for which said payment has been made at an equivalent rate of the amount paid to the main contractor and equivalent to the amount of work completed by the subcontractor within one month or as short a period as possible after receiving the payment. (2) After receiving a pre-payment, the main contractor shall give adequate consideration to making an advance payment to the subcontractor for expenses necessary to commence the construction work, including the purchase of materials and the recruitment of workers. (Inspection and Transfer) Article 24-4 (1) After receiving notice from the subcontractor that the contracted construction work has been completed, the main contractor shall make an inspection in order to confirm the completion of the work within twenty days or within as short a period as possible from the date when said notice was received. (2) After confirming the completion of the construction work based on the inspection provided for in the preceding paragraph, the main contractor shall accept transfer of said construction work immediately on the request of the 16

17 subcontractor. This provision shall not apply when the subcontract contains the provision that the transfer shall be made on a specified date before the twentieth day after the completion of the work. (Date of Payment for Subcontracting Fees by Special Construction Business Operator) Article 24-5 (1) The date of payment for subcontracting fees for subcontracts (excludes cases in which the contractor in a subcontract is a special construction business operator or a juridical person with capital exceeding the amount stipulated by Cabinet Order, hereinafter in this Article the same) when a special construction business operator is the orderer shall be fixed to within fifty days of the date of the offer specified in paragraph (2) of the preceding Article (the specified date in the case of the proviso of the same paragraph, hereinafter in this Article the same) or within as short a period as possible. (2) For subcontracts in which a special construction business operator is the orderer, the date of the offer specified in paragraph (2) of the preceding Article when the date of payment for the subcontracting fee is not fixed or the fiftieth day from the date of the offer specified in paragraph (2) of the preceding Article when the date of payment is fixed in violation of the preceding paragraph shall be deemed the fixed date of payment for the subcontracting fees. (3) When a special construction business operator makes a payment for subcontracting fees related to a subcontract in which said special construction business operator is the orderer, the special construction business operator shall not deliver negotiable instruments deemed unlikely to receive a discount from an ordinary financial institution (refers to an organization which receives deposits or savings and engages in financing) before the payment date for said subcontracting fees. (4) The special construction business operator shall pay subcontracting fees concerning subcontracts in which the said special construction business operator is the orderer by the payment date specified under the provisions of paragraph (1) or the payment date provided for in paragraph (2). When the said special construction business operator does not make such payment, the special construction business operator shall pay to the subcontractor an amount equivalent to the unpaid amount multiplied by the rate specified by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism for the period from the fiftieth day after the offer specified in paragraph (2) of the preceding Article until the date of actual payment of the subcontracting fees concerned as arrears interest. (Guidance, Etc., from Special Construction Business Operator for 17

18 Subcontractors) Article 24-6 (1) A special construction business operator who contracts for construction work directly from an owner shall make efforts to guide the subcontractors so that they observe the provisions of this Act and the provisions of Cabinet Orders based on laws and regulations concerning the execution of construction work and the employment of workers who execute construction work with regard to the construction work of the subcontract concerned. (2) When the special construction business operator provided for in the preceding paragraph deems that the subcontractor for the contracted construction work has violated the provisions specified in the same paragraph, he/she shall indicate said violation to the operator of said construction business and make efforts to request rectification. (3) When the special construction business operator in paragraph (1) has requested rectification under the provisions of the preceding paragraph and the operator of said construction business has not rectified said violation, said special construction business operator shall promptry inform the same to the Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor who granted the license, in a case in which the person operating the construction business concerned is a construction business operator, or the Prefectural Governor who has jurisdiction over the site of the construction work concerned in a case in which the person operating the construction business concerned is other than a construction business operator. (Preparation of Work Ledger and Work Plan) Article 24-7 (1) When directly contracting for construction work from an owner and when the amount of the subcontracting fee in the subcontract concluded in order to execute said construction work is above the amount stipulated by Cabinet Order (the total amount of the contract fees when there are two or more subcontracts), the special construction business operator shall prepare a work ledger for the said construction work in accordance with the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, recording the trade name or the name of the subcontractor, the content of the construction work with regard to said subcontractor, the period of the work and other matters stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, in order to ensure the proper execution of the construction work, and place it in each construction site. (2) In accordance with the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism, the subcontractor for construction work in the preceding paragraph shall, when subcontracting the contracted construction work to another person operating a construction business, notify the special 18

19 construction business operator in the same paragraph of the business number or name of said other person operating a construction business, the content of the contracted construction work, the period of construction and other matters as stipulated by the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. (3) The special construction business operator in paragraph (1) shall when requested by the owner in the same paragraph submit the work ledger provided for under the provisions of the same paragraph for the inspection of said owner. (4) The special construction business operator in paragraph (1) shall prepare a work plan showing the distribution of work among each subcontractor for said construction work and indication it in an easily visible location at said construction site in accordance with the Ordinance of the Ministry of Land, Infrastructure, Transport and Tourism. Chapter III-2 Dispute Resolution Procedures for Contracts for Construction Work (Establishment of a Committee for Adjustment of Construction Work Disputes) Article 25 (1) The Committee for Adjustment of Construction Work Disputes shall be established in order to resolve disputes concerning contracts for construction work. (2) The Committee for Adjustment of Construction Work Disputes (hereinafter referred to as "Committee") shall have the authority to conduct mediation, conciliation and arbitration (hereinafter referred to as "dispute resolution procedures") in disputes concerning contracts for construction work (hereinafter referred to as "disputes") based on the provisions of this Act. (3) There shall be a Central Committee for Adjustment of Construction Work Disputes (hereinafter referred to as "Central Committee") and Prefectural Committees for Adjustment of Construction Work Disputes (hereinafter referred to as "Prefectural Committees"). The Central Committee shall be located in the Ministry of Land, Infrastructure, Transport and Tourism and the Prefectural Committees shall be located in the prefectures. (Organization of the Committee) Article 25-2 (1) The Committee shall consist of up to fifteen members. (2) The committee members shall be appointed by the Minister of Land, Infrastructure, Transport and Tourism for the Central Committee and by the Prefectural Governor for the Prefectural Committee from among people of good character and sound knowledge. (3) The Central Committee and the Prefectural Committees shall each have a 19

20 chairman co-opted from among the members. (4) The chairman shall be in charge of the affairs of the Committee. (5) If the chairman meets with an accident, he/she shall be represented in his/her duties by a person selected in advance from among the committee members. (Term of Appointment of Committee Members, Etc.) Article 25-3 (1) The term of appointment for committee members shall be two years. However, the term of appointment for alternate committee members shall be for the remaining term of the appointment of the previous member. (2) Committee members may be re-appointed. (3) Committee members shall carry out their duties until re-appointed committee members are appointed. (4) Committee members shall be part-time. (Disqualification of Committee Members) Article 25-4 A person who corresponds to any of the following items may not be a committee member. (i) Undischarged bankrupts. (ii) A person who has been sentenced to a term of imprisonment or a heavier punishment and when less than five years have elapsed since the completion of the sentence. (Dismissal of Committee Members) Article 25-5 (1) The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor shall dismiss any committee member found to correspond to any of the items of the preceding Article. (2) The Minister of Land, Infrastructure, Transport and Tourism or the Prefectural Governor may dismiss any committee member who corresponds to any of the following items. (i) When a member is deemed unable to execute duties due to mental or physical impairment. (ii) When a committee member is deemed to have violated the responsibilities of the position or engaged in other misconduct inappropriate to the position. (Meetings and Resolutions) Article 25-6 (1) The chairman shall convene committee meetings. (2) The Committee may not hold any meetings or pass any resolutions unless a majority of committee members are in attendance in addition to the chairman or the chairman's representative under the provisions of paragraph (5) of Article (3) The business of the Committee shall be decided by a majority of those in 20