The principle of pacta sunt servanda and its exceptions under Japanese contract law

Abstract

Just as in many other jurisdictions, the principle of pacta sunt servanda is a basic tenet of Japanese contract law. When a binding contract is validly formed, the parties must fulfil their obligations arising from the contract. In this chapter, it is explained under which conditions a binding contract is formed and what remedies are available if a party does not perform its obligations under Japanese contract law. As fundamental as it may be, however, the principle of pacta sunt servanda has important exceptions. This chapter discusses when the contracting parties are allowed to invalidate a contract at their own will and when the parties’ non-performance is excused under Japanese contract law. It is also examined in what circumstances the pandemic of COVID-19 may affect the obligations of the parties.