Contract Law Reform in Asia Symposium

Transcription

1 Contract Law Reform in Asia Symposium Law school Japan Specific Topics 2: Misrepresentation Prof. Kenji SAIGUSA Waseda University Law Faculty Misrepresentation: One of controversial issues in the revision Point 1: Is Fraud Enough? Point 2: Is (Traditional) Mistake Enough? Point 3: Is The Duty of Information Enough? Point 4: Is Misrepresentation Rule in Consumer Contract Law Enough? New proposal The preliminary summary of issues on 12 April 2011 >Public comments (1 June to 1 August 2011) Interim Proposal on 26 February 2013 >Public comments (16 April to 17 June 2013) 1

2 Point 1: Is Fraud Enough? Point 2: Is (Traditional) Mistake Enough? ~Japanese Civil Code Article 96 (Fraud or Duress) (1) Manifestation of intention which is induced by any fraud or duress may be rescinded. Article 95 (Mistake) Manifestation of intention has no effect when there is a mistake in any element of the juristic act in question; provided, however, that the person who made the manifestation of intention may not assert such nullity by himself/herself if he/she was grossly negligent. Point 3: Is The Duty of Information Enough? Point 4: Is Misrepresentation Rule in Consumer Contract Law Enough? ~Consumer Contract Law 1 Article 2(Definitions) (1) The term "Consumer" as used in this Act means an individual (however, the same shall not apply in cases where said individual becomes a party to a contract as a business enterprise or for the purposes of a business enterprise). (2) The term "Business Operator" as used in this Act (excluding Article 43, section (2), subsection (ii)) means a corporation or association, or an individual who becomes a party to a contract as a business enterprise or for the purposes of a business enterprise. (3) The term "Consumer Contract" as used in this Act means a contract concluded between a Consumer and a Business Operator. 2

3 cont d Article 4 (Rescission of the Manifestation of an Intention to Offer or Accept a Consumer Contract) (1) A consumer may rescind the manifestation of his/her intention to offer or accept a Consumer Contract if either of the actions listed in the following subsections in which the Business Operator engaged when soliciting the Consumer to enter into such a Consumer Contract caused the Consumer to be under the mistaken belief listed in the relevant item, based on which the Consumer manifested the intention to offer or accept the relevant Consumer Contract: (i) Misrepresentation as to a Material Matter: Mistaken belief that said misrepresentation is true; or (ii) Providing conclusive evaluations of future prices, amounts of money that a Consumer should receive in the future and other uncertain items subject to future change with respect to goods, rights, services and other matters that are to be the subject of a Consumer Contract: Mistaken belief that the content of said conclusive evaluations is certain. cont d manifested the intention to offer or accept the relevant Consumer Contract (2) A Consumer may rescind the manifestation of his/her intention to offer or accept a Consumer Contract if a Business Operator, when soliciting said Consumer to enter into said contract, represents only the advantages of a Material Matter or a matter related thereto but intentionally omits disadvantageous facts (limited to facts that a Consumer would normally consider to be non existent by such omission), about such Important Matter, causing said Consumer to mistakenly believe the non existence of such facts. However, this shall not apply where said Business Operator has attempted to communicate such facts to said Consumer and said Consumer refused to hear such attempted communications. 3

4 cont d (4) The term Material Matter" as used in subsection (i) under sections (1) and (2) means the following matters that, if included in a Consumer Contract, would normally affect a Consumer's decision as to whether to conclude such Consumer Contract: (i) Quality, purpose of use and other details of the objects of a Consumer Contract, such as goods, rights and services; and (ii) Price and other conditions of a transaction involving the objects of a Consumer Contract, such as goods, rights and services. Interim Proposal in February Proposed Amendment of Article 95 (Mistake) (1)Manifestation of intention may be rescinded for mistake if the other party knew or ought to have known that the mistaken party, had he known the truth, would not have entered such a manifestation, nor the ordinary person would. (2)Manifestation of intention may be rescinded for mistake as to the quality and conditions of the object and any other assumption for such a manifestation if the other party knew or ought to have known that the mistaken party, had he known the truth, would not have entered such a manifestation, nor the ordinary person would, when (i)the knowledge of the mistaken party about the assumption in question constitutes the subject matter of the juristic act; or (ii)the mistake is caused by the misrepresentation of the other party. 4

5 Other reference 1: Misrepresentation Act 1967 Article 2 ( Damages for misrepresentation) (1)Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.. (2)Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded, the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party. Other reference 2: Restatement (second) of Contract 164 When a Misrepresentation Makes a Contract Voidable (1) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient. (2) If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction. 5

6 Other reference 3: Draft Common Frame of Reference II. 3:103 ( Duty to provide information when concluding contract with a consumer who is at a particular disadvantage ) (1) In the case of transactions that place the consumer at a significant informational disadvantage because of the technical medium used for contracting, the physical distance between business and consumer, or the nature of the transaction, the business has a duty, as appropriate in the circumstances, to provide clear information about the main characteristics of any goods, other assets or services to be supplied, the price, the address and identity of the business with which the consumer is transacting, the terms of the contract, the rights and obligations of both contracting parties, and any available right of withdrawal or redress procedures. This information must be provided a reasonable time before the conclusion of the contract. II. 3:109 (Remedies for breach of information duties) ((2) If a business has failed to comply with any duty imposed by the preceding Articles of this Section and a contract has been concluded, the business has such obligations under the contract as the other party has reasonably expected as a consequence of the absence or incorrectness of the information. Remedies provided under Book III, Chapter 3 apply to non performance of these obligations. 6