Amendments to the Civil Code (Laws on Monetary Claims)

Provisions concerning obligations, such as contracts, in the current Civil Code have hardly been revised for about 120 years since their enactment in 1896. This is because the laws on monetary claims were supplemented by special laws and judicial precedents, and many of the provisions of the laws on monetary claims were voluntary and could be amended by the parties through contracts, so they were not very important.

Since then, however, society and the economy have changed dramatically, and many judicial precedents and interpretations have become established in practice regardless of the provisions of the Civil Code, making it difficult to see the basic rules. Therefore, on May 26, 2017, amendments to the laws on monetary claims were enacted in order to respond to social and economic changes, and to make the Civil Code easier for the public to understand. In this article, we will briefly introduce five of the most important topics.

[Extinctive prescription]

・The short-term statute of limitations, which varies by industry, has been abolished, and in principle, the statute of limitations will now be completed at the earlier of five years from the time it was known or 10 years from the time the rights could be exercised, whichever comes first.

・The difficult-to-understand concepts of “interruption” and “suspension” of the current law have been organized into “renewal of prescription period” and “postponement of expiry of prescription period”.

[Statutory interest rate]

・The statutory interest rates have been reduced from the current 5% and the commercial interest rate of 6% to 3% for both, and a system has been introduced in which interest rates can fluctuate in 1% increments every three years in line with market interest rate trends.


・Regarding all revolving guarantees, (1) it is now obligatory to set a maximum amount, and (2) the principal of the main debt now crystallizes by compulsory execution on the guarantor, bankruptcy of the guarantor, or death of the guarantor or main obligor.

・Regarding business loans, (1) there are now procedures by a notary public for confirming intent for guarantors (individuals) other than managers, and (2) the main obligor now has an obligation to provide information (status of assets, income and expenditures, details of collateral, etc.) to the guarantor (individual).

・If the main obligor loses the benefit of time, the obligee is now obliged to provide information to the guarantor (individual).

・The obligee now has an obligation to provide information to the entrusted guarantor (status of main obligor’s performance).

[Assignment of claims]

・It was clarified that future claims can be assigned (set as collateral).

・Regarding claims with special contracts on transfer restrictions, a system was created to protect the obligor and the assignee by stipulating that in principle, the assignment of claims is permitted to facilitate the obligee’s financing, while the obligor’s creditor (assignor) can continue to make payments even after the assignment of the claims, and that the assignee can make a claim directly against the obligor.


・It was clarified that, for example, when there is an agreement that the contract will be a standard form contract (requirements for inclusion), the specific content of the contract will be its content even if the other party is not aware of it.

・It was clarified that clauses that unilaterally harm the interests of the other party (unfair clauses) in violation of the principle of good faith (Article 1.2 of the Civil Code) are invalid.

・It provided statutory requirements for unilateral amendments to standard form contracts, such as when amendments to the articles of incorporation conform to the general interests of the other party.

The above revised Civil Code (Laws on Monetary Claims) came into effect on April 1, 2020. However, there are two exceptions to the effective date.

・With respect to standard form contracts, the amended Civil Code will also apply to contracts concluded before the date of enforcement, but the revised Civil Code will not apply if one expressed their opposition before the effective date (by March 31, 2020).

・With respect to the procedures to confirm intention to guarantee by a notary public, as a general rule, guarantees whose main obligations are business loans or other obligations are invalid unless a notarized document is prepared in advance. From March 1, 2020, it will be possible to create a notarized deed so that the guarantee can be concluded smoothly from the date of enforcement.