In creditor’s right to demand performance. A contract thus

In every free-market society people on daily basis make every sort of
agreements, from the simplest one, even without thinking for example buying a
newspapers or fuel, without any specific form, without saying any words to
those which are complex and demand professional assistance. People by doing
that, most of them without knowing are making contracts, consensual, real contracts,
etc… Contracts
generally permit the voluntary transfer and exchange of all types of
performances. By entering into a contract, the debtor assumes a duty to
perform, which corresponds to the creditor’s right to demand performance. A
contract thus involves contractual obligations, and the parties are bound to
perform their respective obligations.1


the contact is nothing else then the instrument in law that allows parties to
achieve what they wanted before entering in to contract. A legitimate question
may be asked:” Why do we need a contract after all?” An answer to that question
can be found in the principles of contract law, to get something back for what
we gave away. Contract law in every country is different, because every society
is different, and when societies are different needs of every society are
different. Contract law is a part of a private law and in different countries
can be found either in a civil codification (Japan, Germany, Italy), or in a
separate Code of Obligation (Serbia). Contract law, is a set of rules that most
notably governs the formation and enforcement of contracts. Contract law must
therefore determine the requirements for the formation of a contract and define
when a legally binding contract between the parties arises. Contract law also
has to ensure that contractual obligations will be performed if the creditor
demands so.2
Such rules would not exist if they are not based on the principles of Contract
law such as personal autonomy, freedom of contract and binding rule of

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difference between Japanese and England contract law, there is one distinction
that has to be made. England is a state that is based on common law doctrine,
in a sense of law that is based on court decisions. As far as Contract law is
concerned, England’s court accepted it quite late, although some contractual
disputes can be found centuries earlier when courts became heavily influenced
when feudal power degenerated and when mercantile interest of nation became
centre of economic power.3
On the other hand, Japan is a country based on a civil law doctrine with the
provisions of Japanese Civil Code from 1896 that is influenced by German law and
it was phrased in a synthetic language that had to be invented to transfer
unknown concepts in a symbols largely incomprehensible to an ordinary Japanese
 In nineteenth-century, in Meji
Revolution, provisions that were adopted were not derived from Japanese
business practice.5  The main reason behind this “transplantation”
of the norms into Japanese legal system was to support modernization and growth
of Japan.


Contract law is interesting to observe from European perspective because
provisions of Japanese Civil Code are strikingly different from the behaviour
and perception of agreement from the people. Many Japanese legal scholars tried
to explain such a phenomena, one of them is “Takeyoshi Kawashima (1909-1992), a famous
Japanese legal scholar often referred to when dealing with these issues, once
cited Shir? Hattori for the purpose of explaining Japanese legal consciousness,
who stated that “When a Japanese makes an agreement with another person, the
goodwill and friendship that gave rise to the agreement is more important to
him than the agreement itself…”, which implies that
obligations between individuals in Japan are more regulated by social relations
than by formal legal agreements. “6


differences can be found when Civil Code recognise informal contract as binding
in reality, among Japanese that simple agreement concluded without formalities
is not binding.7  Even though in reality there is a thought
that informal contract is not binding and among people only formal contract is
binding what’s more interesting it is expected that then in formal contract
there should be with “full and detailed statements of the agreement when is
written as Civil Code suggests but in practice Japanese people often rely on
incomplete contracts.”8


order to make a difference between the interpretation of contracts between
Japan and England, the first starting point should be the offer. In many
countries contract is concluded when there is an offer sent to the offeror and
the acceptance the offer by the oferee. Japan and England are not exception to
this matter. Offer is regulated under article 521 of Civil Code9.
Civil Code does not give any precise provision on so called “battle of the
forms”.  Under the provision of article
528 of Civil Code10
if the term of the acceptance and offer are the same, there will not be any
validity of the acceptance.  Nevertheless, in theory – with reference to
article 19 of the UN Convention on Contracts for the International Sale of
Goods – even if the ‘acceptance is modified’ when the modifications are not
major the contract shall be formed with the modified terms of acceptance,
unless the oferror objects.


          Even if such a rule is
not clearly adopted, in a situation in which both parties think a contract has
been formed and act according to that assumption, notwithstanding that the
offer and acceptance are not in agreement, the court can be expected to recognize
the formation of contract by construing the intent of the parties to find terms
consistent with fairness between the parties.11 On the other hand, in
England provisions for accepting the offer are clearer. An offer must be
accepted in accordance with its precise terms if it is to form an
agreement.  It must exactly match the
offer and all terms must be accepted.


          When it comes to
formation of the contract in Japanese and English Contract Law, both countries
have in their jurisdictions provisions that proclaim that contract can be
concluded in informal way, unless the law proclaims otherwise. Basically, the
logic behind this provision is faster way to conduct business. In English law
for example, there are statutory exceptions to this rule: 1. “A lease for more
than 3 years must be made by deed”12, 2. Most contract for the
sale or disposition of an interest in land must be “made in writing”13, 3. Contracts of
guarantee are required to be evidenced in writing14. For Japan the formation
of contracts does not require documentation in principle. Even when litigating
a claim for formation of contract the evidence is not restricted to
documentation. On the other hand, as in the case of a real estate transaction
by a housing construction business operator there are cases when there are
legal obligations for a written contract to be delivered to the client (Real
Estate Business Law Art. 37). In practice it is frequently quite difficult to
prove formation of contracts without documentation. However, for example even
when there is a written contract for the interpretation of additional
provisions and written provisions in the contract, oral agreement can be
asserted with the decision being reached from various types of evidence. In
addition, there are also cases where both parties think there is no formation
of contract until a written contract has been created. In such a case the
absence of formation of contract until a written contract has been created is
not counter to consensualism.15


          One of main principle of
the Contract law and one of the prerequisite for making one contract being
legal is an autonomy of a will of the parties. Under this principle parties can
arrange and construct terms in contract unless they make contract void or
illegal. Japan and England are not exception from this rule.


          In English Contract law,
those terms can be divided into express and implied terms. Express terms are
those terms decided by the parties by themselves. When express terms are set by
the parties, then it is a question of interpretation of the contract. “It is not a question of what one party actually intended or what the
other party actually understood to have been intended but of what a reasonable
person in the position of the parties would have understood the words to mean.
The starting point for ascertaining the objective meaning is the words used by
the parties. These are interpreted according to their meaning in conventional usage,
unless there is something in the background showing that some other meaning
would have been conveyed to the reasonable person.”16  Implied terms are terms that are not expressly
stated by the parties but they are a part of a contract on a different basis such
as statutory implied terms or terms implied in facts.


Civil Code also recognizes the difference between mandatory provisions and those
made by parties. Also, as a consequence in a case of a breach of mandatory provisions,
Civil Code proclaims that contract will be void.  Japanese Civil Code contains a provision that contract
is void due public policy, such a contract is void on the “bases on the
application of article 90 of the Civil Code. That article provides that “A juristic act with any
purpose which is against public policy is void,” and the above
contract is void because it breaches this provision. However, it is very
difficult to determine specifically what types of contracts violate public
policy.”17 There are various other examples, but in general, the determination of
validity and invalidity takes the following factors into consideration.
Specifically, whether or not there is a need to suppress such acts to the
extent of voiding a contract based on consideration of the interests to be
harmed were the contract invalidated, and taking account of the safety of the
transaction and the good faith between the parties.


2 Ibid

3 Wagatsuma H. Rosett A. Cultural
attitudes towards Contract law: Japan and United States comapred, 1983, page 80

4 Op. cit., page 81

5 Op. cit. page 81

6 Op. cit.

7 Op. cit

8 Ibid

Article 521 (1) “An offer which specifies a period for acceptance may not be revoked.”

10 Article 528 
“If the offeree has accepted the offer by adding any condition or by making
any other modification, it shall be deemed that the offeree has refused the offer and
has made a new offer”.

11 Op. cit.

12 Law of Property act 1925, ss52,54 (2)

13 Law of Property act 1989, s2

14 Statutes of Frauds, s4

15 Op. cit.

17 Op.cit.