In Japan the rights of Commercial Agents are protected by a combination of Government Legislation and case law. There are two relevant pieces of legislation:
Presently, no new legislation is planned to come into effect in the near future.
According to the Commercial Code, a commercial agent is defined as “a person who is not an employee of but ordinarily acts for, a particular Merchant as an agent or intermediary for transactions falling within the categories of such Merchant’s business”.
The definition of “Merchant’s business” includes the provision of both goods and services.
A principle is only defined as a “Merchant” in the context of agency.
The legislation does not exclude agents whose agency activities are “secondary”. Parties are free to contract out of any part of the legislation.
A statutory notice period of two months is required prior to terminating an agency agreement. This notice period only applies to agency agreements that have an undefined length of term. There is no statutory requirement as to the form of the notice, however, written notice is often given as good practice.
There are no specific compensation or indemnity payments available on termination. However, the agent may be entitled to terminate the agreement and make a claim for damages if his principle has breached the agreement. In such a case, the principle is under an obligation to mitigate the damages to the agent. This remedy will only be available the agent if the breach was foreseeable by the parties at the time of contracting.
An agent may be entitled to commission (i.e. pre-termination”, “post-termination” or “back” commission) where the parties have made express provision for such commission in the agency agreement.
An agent may only assign his rights and duties under an agency agreement with the consent of his principal.
The parties may agree on a law other than Japanese law as the governing law. Under such circumstances Japanese Law would not be applicable.
agentlaw.co.uk wishes to thank New Tokyo International Attorneys at Law of Tokyo for its contribution to this page.