Chapter 1 General Provisions

(Purpose)

Article 1. 

The purpose of this Act is to protect the interests of consumers, and thereby to contribute to the stabilization and improvement of the general welfare of the people's life and to the sound development of the national economy by permitting, in consideration of the gap in quality and quantity of information and in the negotiating power between consumers and business, the avoidance of declarations of intention to offer or accept contracts made by consumers when they are mistaken or distressed by certain acts of businessess, and by nullifying, in part or in whole, clauses that exempt businessess from liability for damages or that otherwise unfairly impair the interests of consumers .

(Definitions)

Article 2.

As used in this Act, the term "consumer" means individuals (however, the same shall not apply in cases where said individual becomes a party to a contract as a business or for the purpose of business).

2 As used in this Act, the term "businesses" means juristic persons, associations and individuals who become a party to a contract as a business or for the purpose of business.

3 As used in this Act, the term "consumer contract" means contracts concluded between consumers on the one hand and businesses on the other.

(Efforts of businesses and consumers)

Article 3.

Businesses drafting clauses of a consumer contract shall strive to make the rights and duties of consumers and such other things set forth in the consumer contract clear and plain to consumers and, in order to deepen consumer understanding when consumers are solicited to enter consumer contracts, to provide necessary information on consumer rights and duties and such other things set forth in the consumer contract.

2 Consumers entering a consumer contract shall strive to actively use the information provided by businessess and to understand their rights and duties and such other things set forth in the consumer contract.

Chapter 2

(Avoidance of the Declaration of Intention to Offer or Accept a Consumer Contract)

Article 4

Consumers may avoid their declarations of intention to offer or accept a consumer contract if made when being solicited to enter into such consumer contract by a business because said consumers make any of the specified mistakes set forth below as a result of any of the following enumerated acts by such businesses.

(1) To represent that which is not true as to a material item. 

Mistake that the content of said representation is true.

(2) To provide conclusive evaluations of future prices, of amounts of money that a consumer should receive in the future and of such other uncertain items that change in the future with respect to goods, rights, services and such other things that are to be the subject of a consumer contract.

Mistake that the content of said conclusive evaluation so provided is certain..

2 Consumers may avoid their declarations of intention to offer or accept a consumer contract if made when being solicited to enter into such consumer contract by a businesses who represents to said consumers the advantages as to material items or things related to said material items but who intentionally fails to represent disadvantageous facts (limited to those facts that consumers would normally consider to be non-existent by such representation) as to material items because said consumers mistakenly believe the non-existence of such facts. Provided, however, that this shall not apply where the business attempts to make representations of such facts to said consumers if said consumers refuse such attempted representations.

3 Consumers may avoid their declarations of intention to offer or accept a consumer contract if made when being solicited to enter into such consumer contract by a business because said consumers are distressed as a result of any of the following enumerated acts by such businesses.

(1) To fail to leave a place where a consumer resides or does business in defiance of consumer's display to business of consumer's intention for said business to leave.

(2) To not allow a consumer to leave a place where the consumer is solicited to enter into the consumer contract by the business with respect to the conclusion of a consumer contract in defiance of the consumer's display to business of consumer's intention to leave. 

4 The term "material items" as used in paragraph 1 section (1) and paragraph 2 means the following items in a consumer contract that would normally impact a consumer's decision to conclude a consumer contract.

(1) Quality, use and such other contents of goods, rights, services and such other things that are to be the subject of a consumer contract

(2) Price and such other conditions of a transaction of goods, rights, services and such other things that are to be the subject of a consumer contract

5 The avoidance of a declaration of intention to offer or accept by paragraph 1 to 3 may not be set up against a third party who has acted in good faith.

(Third parties entrusted to intermediate and agents)

Article 5.

The preceding article shall apply to cases where a business entrusts a third party to intermediate a consumer contract between the business and a consumer (which shall simply be referred to as "entrustment " for purposes of this paragraph), and the third party (which includes persons entrusted by such third party (which includes persons entrusted at a secondary or higher level). These persons shall be referred to as "entrusted etc." for purposes of the following paragraph) performs an act provided in paragraphs 1 to 3 of the preceding article with respect to a consumer. In such case, "the business " in the latter part of the second paragraph of the preceding article shall be deemed to read "the business or the entrusted etc. provided in the first paragraph of the following article".

2 Agents of consumers, businessess and entrusted etc. to conclude consumer contract shall be deemed consumers, businessess and entrusted etc., respectively, in application of paragraphs 1 to 3 of the preceding article (which includes the case provided in the preceding paragraph. The same shall apply in the next article and article 7). 

(Interpretation Provision)

Article 6

The provisions from paragraphs 1 to 3 of article 4 shall not be interpreted to exclude the application of article 96 of Civil Code (Act No. 89, 1896) to a declaration of intention to offer or accept a consumer contract provided in these paragraphs.

(Limitation of the Right to Avoid)

Article 7

The right to avoid provided in paragraphs 1 to 3 of article 4 shall lapse by prescription, if not exercised within six months from the time when ratification became possible. The same shall apply if five years have lapsed from the time of the conclusion of a consumer contract.

2 Article 191 and 280-12 (and also the cases where these articles are cited in other Acts) of Commercial Code (Act No. 48, 1899) shall apply to the avoidance of the taking of shares or new-shares falling into a consumer contract provided in paragraph 1 to 3 of article 4. In such cases, "no person who has taken shares may claim nullity of his (her) subscription on grounds of mistake or noncompliance with any of the requirements of the application form for shares, nor may any person avoid his (her) subscription on the grounds of fraud or duress" in article 191 of the Act and "no person who has subscribed for new shares may claim the nullity of his (her) subscription on grounds of mistake or noncompliance with any of the requirements of the application form for shares or the preemptive right certificates for new shares, nor may any person avoid his (her) subscription on the ground of fraud or duress " in article 280-12 of the Act shall be deemed to be read as " no person may avoid his (her) subscription by application of paragraphs 1 to 3 of article 4 of Consumer Contract Act (which includes cases where article 5 of the same Act shall apply)" .

Chapter 3 Nullity of Consumer Contract Clauses

(Nullity of clauses which exempt businessess from liability for damages)

Article 8

The following enumerated clauses are void.

(1) Clauses which totally exclude a business from liability to compensate damages to a consumer arising by business's non-performance. 

(2) Clauses which partially exclude a business from liability to compensate damages to a consumer arising by business's non-performance (such non-performance shall be limited to instances where the same arises by intent or gross negligence on the part of the business, the business's representative or employee).

(3) Clauses which totally exclude a business from liability to compensate the damage to a consumer arising by a tort provided in the Civil Code committed on occasion of business's performance of a consumer contract. 

(4) Clauses which partially exclude a business from liability to compensate the damage to a consumer arising by a tort (such torts shall be limited to instances where the same arises by intent or gross negligence on the part of the business, the business's representative or employee) provided in the Civil Code committed on occasion of business's performance of a consumer contract.

(5) When a consumer contract is a contract for value, and there exists a latent defect in the material subject of a consumer contract (in case where a consumer contract is a contract for work, a defect should exist in the subject of the work. The same shall apply in the following paragraph), Clauses which totally excludes a business from liability to compensate the damage to a consumer caused by such defect

2 The clause provided in the fifth section of the preceding paragraph shall not apply in cases enumerated in the following sections.

(1) In case where the consumer contract provides that the business is responsible to deliver substitute goods without defects or repair the subject if any defect exists in the material subject of the consumer contract

(2) In case where a contract between the consumer and another business entrusted by the business or a contract between the business and another business for the benefit of the consumer, which is concluded before or simultaneously with the consumer contract, provides that the other business is responsible to compensate the whole or a part of the damage caused by the defect, deliver a substitute goods without defects or repair the subject if any defect exist in the material subject of the consumer contract

(Nullity of Clauses which Stipulate the Amount of the Damages Paid by Consumer,and such other clauses)

Article 9

The following enumerated clauses are void to the extent provided.

(1)As to clause which stipulates the amount of damages in case of a rescission or fixes the penalty, when the total amount of liquidated damages in addition to the penalty exceeds the average amount of damages by the rescission of a contract of the same kind to the business in accordance with the reason ,the time of the rescission and such other things, then the part of the clause which exceeds the average amount above-mentioned is void.

(2) As to clauses in a consumer contract which stipulate the amount of damages or fix the penalty in case of total or partial default (if the number of payments is more than one, every failure of payment is a default in this section) of a consumer who is over due, when the total amount of liquidated damages in addition to the penalty exceeds the amount calculated by deducting the amount of money actually paid by the appointed deadline from the amount of money which should have been paid and multiplying by 14.6% a year in accordance with the number of days from the appointed deadline to the day on which the money is actually paid, then the part of the clause which exceeds the amount calculated above-mentioned is void.

(Nullity of Clauses that Impair the Interests of Consumers One-sidedly)

Article 10

Clauses which restrict the rights of consumer or expand the duties of consumers beyond restrictions and expansions that would otherwise apply by application of the provisions of the Civil Code, Commercial Code and such other acts not concerned with public order and which, at the same time, impair the interests of consumers one-sidedly against the fundamental principle provided in the second paragraph of article 1 of Civil Code, are void.

Chapter 4 Miscellaneous Provisions

(Application of Other Acts)

Article 11

As to the avoidance of a declaration of intention to offer or accept a consumer contract and the validity of a clause of a consumer contract, the provisions of the Civil Code and Commercial Code shall apply in addition to this Act.

2 As to the avoidance of a declaration of intention to offer or accept a consumer contract and the validity of a clause of a consumer contract, if acts other than the Civil Code and Commercial Code provide special rules, they shall apply.

(Exclusions)

Article 12

This Act shall not apply to labor contracts.

Appendix

This Act shall be enforced from April 1^st, in 2001, and apply to consumer contracts concluded thereafter.