Toward Establishment of Consumer Contracts Law (tentative name)

Towards the Legislation of the Consumer Contract Law (tentative name)

-- Reported by the Consumer Policy Committee, Social Policy Council --

[Summary]

January 1999

Reported by the Consumer Policy Committee, Social Policy Council

The Social Policy Council has studied and deliberated on rectifying consumer contracts several times. On the basis of these studies and deliberations, the Council set up the Subcommittee for the Rectification of Consumer Contracts under the Consumer Policy Committee in July 1997 to study and deliberate on (1) the concrete contents of the civil rules for rectifying consumer contracts (hereinafter, referred to as "The Consumer Contract Law" as tentatively named) and (2) various measures to ensure the enforcement of the civil rules (including concrete measures to settle disputes).

In January 1998, the Consumer Policy Committee compiled and released an interim report titled "The Concrete Contents of Consumer Contracts Law (tentative name)" (hereinafter referred to as "The Interim Report").

Since then, the Committee, based on the idea of the Consumer Contract Law as shown in the Interim Report, has conducted active consideration on the impact of the law's establishment and the other matters while taking into account a wide-range of opinions that were taken from 52 organizations concerned and the arguments on some contents of the Consumer Contract Law that the Interim Report left for further deliberation. This Report is the compilation of these studies and deliberations by the Consumer Policy Committee over the past two years.

The summary of this Report follows:

1 Necessity of Civil Rules on Consumer Contract

1. Relations with Deregulation and Principle of Self-Responsibility
In parallel to deregulation, a system must be created to enable both consumers and businesses as market participants to act on their responsibility.

As goods and services have been more diversified and complicated recently, businesses have taken advantage of their repeated and continuous acts to become generally superior to consumers in terms of information and negotiating power. If both consumers and businesses are required to act on their respective responsibilities in such circumstances, the gap in information and negotiating power will have to be corrected to allow consumers to have their own free will in new circumstances enabling them to make fully reasonable decisions on their own.

So the Consumer Contract Law should be designed to provide transparent minimum civil rules for the prevention and the smooth settlement of consumer-involving disputes. The establishment of such civil rules meets deregulation that is being promoted as priority is given to the roles of the judicature.

2. Foreign Legal Systems
European countries and the United States have already established civil rules for rectifying consumer contracts, although the rules differ depending on national conditions.

As to the rectification of the contracting process in these countries, some concepts of duress, fraud, mistake and other provisions have been wider than in Japan and special laws or precedents meeting their respective legal systems have been established.

As to the rectification of contract terms, most West-European countries have legislated civil rules to deny the validity of unfair consumer contract terms. In the United States the courts have restricted the application of contract terms running counter to "unconscionablility" established in the common law.

3. The Situations of Consumer-involving Disputes
(1) Rising Number of Consultations

The number of consultations accepted by local consumer centers and the Japan Consumer Information Center increased to 564,071 in fiscal 1997 from 330,010 in fiscal 1989. Complaints accounted for 429,866 of the consultations in fiscal 1997 against 204,692 in fiscal 1989. Complaints" share of the consultations thus soared.

The number of consultations collected by the PIO-NET (Practical Living Information Online Network System) increased from 165,697 in fiscal 1989 to 400,497 in fiscal 1997 (as counted at the end of September 1998).

(2) Breakdown of Consultations (Fiscal 1997)

Consultations collected by the PIO-NET cover a wide range of industry sectors.

Consultations are evenly distributed to all age groups, indicating that consumer-involving disputes are not necessarily limited to some young or aged people.

The annual total of purchase prices of the consultations is 360 billion yen, including about 100 billion yen that consumers have already paid. The average amount of purchase prices of many consultations exceeds 10 million yen. The top 30 goods or services in purchase prices of consultations are all above 2 million yen.

(3) Potential Complaints

"A Poll on Consumer Problems" (by the Prime Minister's Office in January 1998) found that respondents who consulted the Japan Consumer Information Center or local consumer centers accounted for only 1.5% of those who were dissatisfied with goods or services. The similar percentage found in "The Survey on Trends in People's Life" (by the Japan Consumer Information Center in March 1998) was about 4.0%. Consumers who consulted consumer centers thus account for only a fraction of those who are dissatisfied with goods and services.

(4) Handling Complaints

Some complaints are settled through the application of the Civil Code or some individual laws. If alternative disputes resolution fail to settle the complaints, consumers will have to drop their demand or bring the cases to court. Constraints thus exist on counseling services at consumer centers. The legislation of the Consumer Contract Law as a special law of the Civil Code to specify and clarify the principle of good faith is expected to help settle complaints that the existing law has failed to settle.

4. Rectification of Consumer Contracts in Individual Areas
Japan has so far combined the Civil Code and various individual laws to rectify consumer contracts.

Individual laws to contribute to ensuring consumers' interests are laid down for various areas. Though one way to rectify consumer contracts is to depend on civil law provisions that make disputing parties settle their differences, the central way is to depend on administrative regulations to have administrative agencies control businesses. Individual laws have successfully regulated acts of businesses. In administrative regulations, however, administrative agencies are generally empowered to realize consumer interests and consumers are given only a few tools to realize their interests on their own. According to some people, businesses have made their own efforts to rectify consumer contracts under the present laws, including the preparation and application of model standard terms and voluntary rules, and the voluntary settlement of disputes. But some complain that they have no legal obligations to have businesses obey them.

5. Relations with Civil Code and Commercial Code
(1) Relations with the Civil Code

a. Civil Code and Its Special Laws

Special laws of the Civil Code have played the main roles in achieving various policy goals under civil rules. These laws, as constituents of the effective law concerning civil affairs, have the purpose of supplementing and modifying the Civil Code.

b. Problems Facing Civil Code

The Civil Code is based on the classic principle of civil law where the parties act as economically reasonable persons and collect necessary information on their own responsibility to make voluntary decisions. If the binding power of the contract is based on voluntary decisions building on sufficient information, an important matter should be to ensure such decisions. But the Civil Code has so far failed to fully deal with such problems. In the modern society where information is highly specialized and structurally dispersed, with negotiating power gaps stemming from social and economic gaps, however, how to ensure voluntary decisions is the problem that should be discussed seriously and resolved.

(2) Relations with Commercial Code

The Commercial Code is applied to consumer contracts in some cases. But it has no special provisions to protect consumer interests in contracts involving consumers.

(3) Necessity of Consumer ContractsLaw

The civil rules should be laid down to contribute to protecting consumer interests, since the present law gives consumers few tools to settle disputes on their own. The Consumer Contract Law is designed to lay down fair and foreseeable civil rules as a special law of the Civil Code to cover a wide range of contracts between consumers and businesses.

6. Economic and Social Effects of Legislation
In preparing the Consumer Contract Law, it is important to consider ensuring an appropriate balance between consumer and business interests and preventing confusions in the enforcement of the law so that they would not cause undue costs.

The costs and benefits accruing to both consumers and businesses should be considered and it is important to look into whether the Consumer Contract Law would boost or lower costs in the entire society and economy. The contents of the Consumer Contract Law should be designed to contribute and bring about expected benefits to both consumers and businesses, including the facilitation of handling claims and the reduction of dispute-settlement costs.

2 Civil Rules Regarding Consumer Contracts
1.Coverage
In considering the coverage of the Consumer Contract Law, the nature of business may be used to distinguish between consumers and businesses. They are the basis for laying down the rules for consumer contracts.

The "business" here, whether it is for profit or not, or whether it is for public interests or not, is believed to include not only repeated or continuous acts but also professions. Administrative entities may also be considered businesses.

Above-mentioned points should be taken into account in considering the specific scope of consumer contracts.

2.Rules for Rectification of Contracting Process
(1) Significance of Rules for Rectification of Contracting Process

To ensure that businesses appropriately provide information for consumers, to avoid businesses from exerting inappropriate pressures on consumers and to make it easier to foresee conclusions of disputes, it should be considered to legislate such rules for rectification of the contracting process as a positive law based on the accumulation of civil trial practices in Japan.

(2) Remedies of Provisions for Ensuring that Businesses Appropriately Provide Information for Consumers and Preventing Businesses from Exerting Inappropriate Pressures on Consumers

There may be a case where a business inappropriately provides information for a consumer or a business makes a remark that puts high pressure on a consumer during the contracting process to induce the consumer to conclude a contract. Without such act of the business the consumer would not have signed the contract. If so, the consumer should be allowed to have no obligation under the contract or deny the validity of the contract. (This will be hereinafter referred to as "the contract law approach"). Specifically, it may be consistent with the principle of the manifestation of intent in the Civil Code to give the consumer the right to rescind the contract concluded under such circumstances. It may also be conceivable to give the consumer the right to dissolve the contract or cancel only the part that is still not performed, with considerations given to appropriate settlements to various disputes.

If the contract is rescinded, it will be considered that the contract has been invalid since the time when it was concluded. In other words, the parties to the contract will be required to restore the state before the contract conclusion. If a party have paid to another for the contract, the latter is required to return the payment. (If any payment for the contract has not been made yet, a requirement for the payment will disappear).

In giving the consumer the right to rescind the contract, the following will have to be further considered: (1) the case where a third part appropriately provides information for consumers or exerts inappropriate pressures on consumers, (2) possible actions against the third party, and (3) the period during which the right can be asserted.

Apart from the contract law approach, some people argue that the provisions, in consideration of the provisions' purpose of rectifying the contracting process, should provide for (specify) the consumer's right to claim damages from the business. (This will be hereinafter referred to as "the damages claim law approach").

It should be further considered whether to adopt the contract law approach or the damages claim law approach, or both, while taking note of requirements and remedies of these approaches and a balance between them.

(3) Requirements for Provisions for Ensuring that Businesses Appropriately Provide Information for Consumers

1) It is conceivable that a business, in concluding a consumer contract, fails to provide a consumer with information or make misrepresentation concerning important matters on the contract.

(a) In Concluding a Consumer Contract

The words of "in concluding (a consumer contract)" mean a period of time from a business' first contact with a consumer to conclude the contract.

(b) Important Matters on the Consumer Contract

"Important matters" on a consumer contract mean fundamental matters which are objectively expected, from the viewpoint of a socially accepted idea, to be crucial for an normal consumer's decision on whether or not to conclude the contract.

The concrete contents of "important matters" may be objectively considered for each category of consumer contracts, based on full considerations to characteristics of businesses and transactions, including types of the contracting processes, characteristics of goods or services, relevant laws, voluntary rules, etc. It should be further considered how to specify them in provisions, especially whether it is necessary or not to take account of the characteristics of businesses and transactions, as well as matters that individual laws cite as those that businesses must inform of consumers.

Specific ways for businesses to provide consumers with information may be objectively judged for each category of consumer contracts from the viewpoint of a socially accepted idea. It may be difficult to require businesses to provide consumers with information suitable for "each" consumer's power of understanding and characteristics. Basically, it may be sufficient for businesses to provide consumers with the opportunity where "normal" consumers, who are usually expected to conclude a type of contract, can ordinarily understand the contents of the information. But it should be further considered how to specify it in provisions.

(d) "Misrepresentation"

"Misrepresentation" means the provision of information that is neither true nor real, or that is not in accord with the facts. It is not the necessary condition that a business subjectively knows that the information which he or she provides is not true. It is only required that the information is not objectively true at the time when the business provide the information.

2) It can be considered that if information on important matters had been provided or if misrepresentation had been not made, a consumer should not have manifested the intention to conclude the contract (the cause-to-effect relationship between the business's act and the consumer's manifestation of an intention).

(4) Requirements for Provisions for Preventing Businesses Exerting Inappropriate Pressures on Consumers

1) It is conceivable that a business puts high pressure on a consumer or makes the remarks or takes the acts that affect peace in a consumer's private life or work.

A business' specific acts amount to remarks or acts putting high pressure on a consumer (for example, coercive remark similar to duress) or to remarks or acts affecting peace in a consumer's private life or work (for example, restricting a consumer for a long time, entering a consumer's house late at night, making a sudden contact with a consumer by surprise to restrict his or her time for consideration, or other remarks or acts to disturb peace in a consumer's private or official life). They should be judged objectively from the viewpoint of a socially accepted idea at the time when the contract is concluded. It should be further considered how to specify it in provisions.

2) It can be considered that if a business had not made remarks or acts to exert inappropriate pressure on a consumer, the consumer should not have manifested the intention to conclude the contract (the cause-to-effect relationship between a business's act and a consumer's manifestation of an intention).

3. Contents of Rules to Rectify Contract Terms
(1) Basic Idea

a. Principle of Good Faith

The principle of good faith requires a business to give appropriate considerations to the interests of a disadvantaged consumer in forming contents of a contract.

b. Validity of Undue Terms

If the contract term formed by a business is considered unduly disadvantageous to a consumer from the view of good faith regarding consumer transactions, the validity of the term should be denied.

c. Provisions on Undue Terms

The Consumer Contract Law should specify the undue terms to be invalidated and the requirements for such invalidation as much as possible. It should also adopt provisions meeting the actual situation and realities of disputes in Japan, with considerations given to the laws in foreign countries.

(2) Significance of Undue Terms

Identifying and invalidating the undue terms is significant to 1) reducing a consumer's burden of proof, 2) ensuring the safety of transactions and 3) clarifying standards for settling disputes.

(3) Standards for Identifying Undue Terms

The following standards based on the classification of Japan's judicial precedents on the principle of good faith and other rules may be helpful in deciding whether a term is undue or not in consumer transactions:

1) Whether the term allows a business to unilaterally change the legal relationship without reasonable circumstances.

2) Whether the term imposes a severe requirement on a consumer.

3) Whether the term makes a consumer's legal position unstable.

4) Whether the term restricts the legal rights of a consumer without reasonable circumstances

(4) Notes on Undue Terms

a. Considerations to Transactions Order

When considering measures to invalidate undue terms, it is necessary to take care to avoid any confusion in the transactions order under the present legal system and impediments to newcomers' entry into a market.

b. Interpretation of Provisions on Undue Terms

If the Consumer Contract Law has any provisions to invalidate undue terms, it is necessary to take measures to prevent such provisions from being interpreted as exhaustive.

(5) Problems Regarding Undue Terms

a. How to Assess Terms

Based on the consideration of how the interpretation of contract term is dealt with in the trial practices, comprehensive assessment is likely to be conducted with considerations given to all other matters concerned, for example the characteristics of goods or services that is the subject of the contract, other terms in the contract, all of terms in other contracts depending on the contract in question.

b. Matters Not Subject to Undue Term Assessment

Undue term assessment under the Consumer Contract Law should not cover the balance between goods or services and their prices.

Some may argue that the undue term assessment should not cover contract terms that a consumer has proposed or has been convinced to agree to through sufficient negotiations. It is actually difficult to make any proof on the existence of any substantial negotiations. And the provisions to invalidate undue terms have the characteristics of mandatory provisions that must not be affected by the parties' intention. So it is inappropriate to lay down any provisions which exclude some terms concluded through individual negotiations from the undue term assessment.

c. Classification of Undue Terms

There may be little problem even if the Consumer Contract Law, especially the gray list adopts the principle regarding the burden of proof under the Code of Civil Procedure (for details, see later descriptions). Therefore, undue terms do not particularly need to be classified into the black and gray lists.

(6) Stating Contract Terms in Plain Language

a. Stating Contract Terms in Plain Language

Businesses, in stipulating contract terms, must take care to specify the scope of the contract, and rights and obligations emerging from the contract, and to make it plain and intelligible.

b. Interpretation Principle of Contract Terms

If a business stipulates contract terms unilaterally and doubts are raised about the meaning of the terms, the terms should be interpreted to the advantage of a consumer. Such way of the interpretation is consistent with the views in judicial precedents.

4. Surprise Terms
The Standard Business Terms Act in Germany adopts a principle that a term that is not considered unusual from the viewpoint of a socially accepted idea is never regarded as a surprise term for the reason that each consumer does not know the existence of such term.

In order to ensure the foreseeability, it is necessary that the provisions on the surprise term have general requirements (the standard of normal predictions by a consumer who is expected to be involved in a type of contract). Such requirements would correspond to the unusual characteristics of surprise terms as specified in the German Standard Business Terms Act and should be made as clearly as possible.

Provisions on surprise terms should be fully coordinated with those on other matters (provisions for ensuring that businesses appropriately provide information for consumers and provisions on undue terms).

5. Burden of Proof
(1) Significance of Burden of Proof

The burden of proof is the disadvantage that is imposed on one of the parties, which is brought by the reason that the existence of a certain fact is not sure in a suit. Under the Code of Civil Procedure, a party who claims the legal effects including emergence, alteration and extinction of rights bears the burden of proof in principle.

How to distribute the burden of proof generally depends on the provisions on requirements in each law and a logical order in application of laws, under which each party to a dispute, in principle, bears the burden of proof regarding major fact that conforms to the provision providing for legal effect advantageous to the party.

(2) Functions in Trial Practices

In trial practices, the burden of proof is used to enable a trial to go on. However, there are not so many cases where the burden of proof alone determines winners or losers in lawsuits.

In practice, the need for proof emerges irrespective of the burden of proof. A party may have not only to rebut the evidence presented by the other party that bears the burden of proof, but also to actively prove the facts to his advantage.

(3) Burden of Proof in Consumer Contract Law

As for the Consumer Contract Law, therefore, a party bears the burden of proof on major facts that conform to the provisions providing for legal effect advantageous to him or her in accordance with the general principle of the burden of proof.

Regarding vague concepts including "unduly," "extremely" and "excessively," the principle under the Code of Civil Procedure does not impose any excessive burden on a party that bears the burden of proof.

6. Relationship between Consumer Contract Law and Existing Laws

(1) Relationship with Civil Code

The Consumer Contract Law may be ranked as a special law of the Civil Code.

(2) Relationship with the Commercial Code and Individual Laws' Civil Provisions

If the civil provisions of individual laws conflict with provisions of the Consumer Contract Law, they may generally be given priority in application. But the relationship in application between the Consumer Contract Law and the laws related to consumer contracts including civil provisions of the Commercial Code, individual laws and other laws related to consumer contracts should be considered on a provision-by-provision basis.

3 Measures to Ensure Enforcement of Civil Rules Concerning Consumer Contracts

In order to ensure the enforcement of civil rules concerning consumer contracts, it is necessary to develop consumer education and information provision systems to lay the groundwork for leading consumers to make their own decisions and take their responsibilities, irrespective of whether new civil rules are to be legislated.

And it is important that various systems for settling disputes will be developed to meet various disputes, since 1) disputes over consumer transactions include from small claims to serious claims, and 2) repeated transactions based on the inducing practices and the contract terms can cause numerous and spreading claims.

1. Problems Involved in Consumer Education and Information Provision Concerning Consumer Contracts

It is necessary that consumers can know the rules on their own responsibility to make their own decisions and to take actions to settle disputes and sue for remedy. Therefore it is important that the consumer education system should be enhanced to get consumers aware of rights and obligations regarding various consumer contracts from the viewpoint of legislating the civil rules and ensuring their enforcement,. In other words, a framework should be built in the consumer education system to allow consumers to gradually and systematically acquire basic knowledge about civil rules and other systems concerning consumer transactions, as well as the abilities to make their decisions and settle disputes over contracts.

(1) Consumer Education

It is necessary that an education system should be established where full considerations are given to details, timing, opportunities and so on in order to enable consumers to effectively acquire knowledge and abilities which are necessary for each grade, each region and each age group. The education system should ensure close cooperation among regional communities, schools and families.

Applicability and practicability are indispensable to consumer education. Therefore, it is effective to consider consumer education covering all subjects in school education horizontally and to introduce consumer education activities (ex. pupils' visit to the Japan Consumer Information Center or local consumer centers, invitation of outside experts as lecturers for school classes, etc.) into school education.

In order to improve the effect of education for people who are little interested in consumer problems, experts should be encouraged to actively attend consumer and business meetings for "lecture-delivery" services. Such lectures should be expanded with considerations given to their time schedules and venues to allow as many consumers as possible to participate in educational events.

It is necessary to ensure and train experts who can give systematic, practical, easy-to-understand and appropriate teaching about various social rules, and to promote assistance to teachers that are interested in consumer problems (for example, training courses and lectures for teachers, and development and provision of theoretical and practical education materials and methods).

(2) Information Provision

In order for consumers to appropriately judge and act on their responsibility in concluding contracts, the facilitation of access to the necessary information must be ensured.

In order to ensure timely provision of wide-ranging information to meet various needs of consumers as consumer problems grow more diversified and complicated, wider use of electronic media, expansion of networks linking experts and other measures should be promoted.

In order to allow prompt and effective provision of information in the diversifying and complicated society, the systems that collect consumer contract information and make such information available on Internet homepages should be developed. Consumers then may be given access to such homepages to get any information they want.

2. System for Settling Disputes over Consumer Transactions
In order to smoothly settle disputes over consumer transactions, the development of the dispute-settlement system for them is important, irrespective of the legislation of new civil rules.

Disputes over consumer transactions include a wide variety from serious disputes over great injuries to minor disputes over small injuries. In developing the dispute-settlement system, therefore, the following should be considered: (1) settlement of small claims, (2) swifter settlement of disputes, (3) prevention of and remedy for spreading claims, (4) establishment of criteria for alternative dispute resolution, and (5) the easily accessible court system.

(1) Settlement of Small Claims

Consumer disputes include many small claims. It is not appropriate that it takes massive costs or time to settle small claims.

Most of the small claims are settled through bilateral negotiations between consumers and businesses. If such negotiations fail to settle disputes, parties concerned may finally resort to litigation.

If the claim is small, however, usual litigation procedures that require massive costs for employing lawyers and examining evidence may frequently be inappropriate. Appropriate measures should be taken for smooth and effective settlement of small claims.

The new litigation procedures for small claim were established in the amendment of the Code of Civil Procedure, which took effect on January 1, 1998. The special rules for summary court procedures are designed to easily and swiftly settle disputes at summary courts that have jurisdiction over litigation cases involving 900,000 yen or less. It is important to use legal services provided by lawyers, judicial scriveners, judicial commissioners or other experts for these cases that the parties can litigate.

The civil mediation system exists as an alternative-dispute-resolution system in a court. The use of such system before litigation is expected to make dispute settlement easier, swifter and cheaper.

Alternative-dispute-resolution bodies include 1) sector-by-sector private bodies (ex. business associations), 2) general private bodies (ex. bar association mediation centers), 3) general administrative bodies (ex. local consumer centers and grievance committees), etc. Their appropriate management should be ensured.

It is important that the consumer-consultation bodies and the alternative-dispute-resolution bodies should have legal experts and others to settle disputes over small claims smoothly.

(2) Swifter Settlement of Disputes

The more time it takes to settle disputes, the more costs parties in the disputes have to shoulder. To realize the swifter settlement of disputes, especially small claims, appropriate measures should be taken for both the alternative-dispute-resolution system and the court system.

It is one of the measures that the contract term as prepared by businesses stipulates how to settle the disputes if they occur.

The small-claim court system and other existing systems should be utilized to settle small claims easily and swiftly.

In order to help settle disputes promptly, the contents of the Consumer Contract Law should be made as clear as possible, and judicial precedents should be classified and analyzed to specify dispute-settlement criteria.

(3) Prevention of and Remedy for Spreading Claims

Disputes over consumer contracts have the public aspect as well as they directly damage private interests of consumers who have concluded the contracts. As for the consumer contract, a business mostly concludes massive same contracts with consumers on the standard contract terms or without any documents. Usually, therefore, behind an individual claim are massive similar claims.

Appropriate measures thus should be taken to prevent potential or spreading claims and to provide remedy for consumers collectively.

Existing individual laws, local governments' ordinances and antimonopoly systems (ex. the Antimonopoly Act, the Act Against Unjustifiable Premiums and Misleading Representations) should be taken to prevent the spread of stereotyped claims.

A problem that should be tackled is how to rectify contract terms that are not regulated by administrative agencies. One of the effective solutions to this problem is the administrative guidance that is not covered by the individual laws, as well as the Social Policy Council's efforts to rectify contract terms.

In order to prevent the spread of stereotyped claims or provide remedy for consumers of such claims, it can be considered that consumer organizations would seek for injunctions against acts or contract terms damaging the interests of consumers as a whole. But it is necessary to fully consider issues such as what consumer organization identify as the organization that meets interests of consumers, while taking into account the progress in Japan's judicial system reform.

The appointed parties system should be used to ensure relieving a group of consumers involved in disputes collectively. It is conceivable that consumer organizations take leadership in collecting consumers involved in disputes and in selecting appointed parties to suits.

(4) Establishment of Criteria for Alternative Dispute Resolution

Dispute-settlement criteria should be specified for settling individual disputes smoothly.

Flexible dispute-settlement ways meeting specific cases should be employed for alternative dispute resolution. So mediators between parties to disputes may require some ground for settling disputes. When the Consumer Contract Law is laid down, therefore, handbooks or pamphlets on it should be prepared to get it understood by the parties concerned.

Judicial precedents may be accumulated through the legislation of the Consumer Contract Law. Classification and analysis of past judicial precedents is necessary for establishing dispute-settlement criteria.

Since decisions by alternative-dispute-resolution bodies are expected to provide dispute-settlement criteria, grievance committees of local governments and the Special Committee for Handling Consumer Complaints at the Japan Consumer Information Center should be used actively and such dispute-settlement bodies should publish the cases of settlements.

Various business associations, which have established voluntary rules, are still expected to prepare or revise their voluntary regulations, standard contract terms and fair competition codes' based on the Act Against Unjustifiable Premiums and Misleading Representations.

(5) Easily Accessible Court System

The alternative-dispute-resolution system is designed for easy and swift settlement of disputes. But some constraints exist on the system since whether to use the system is up to parties to disputes. In order to ensure the effective use of the system and fair remedy for consumers suffering from disputes, the court system should be made easily accessible as the final resort for settling disputes.

The poor that cannot bear trial costs including payments to lawyers should be given aid to have a guaranteed access to court also. In this respect, we hope that a legal aid system will be enacted as early as possible.

Frequently consumers resorting to lawsuits do not possess information and evidence. In such evidence-maldistributed suits, the court system should have the tools to improve the uneven distribution of evidence. Specifically, existing systems such as the inquiry-by-party system introduced under the amendment of the Code of Civil Procedure should be appropriately used for this purpose.

Lawyers and other experts should be easily available to consumers in regard to cases requiring complicated legal knowledge and litigation know-how and to preparations for litigation. Even if it is difficult to plead the case because of reward problems, lawyers are expected to give consumers appropriate legal advice to play some roles in helping them.

In order to improve consumers' access to court, it is necessary to consider whether to open trial on holidays and nights taking into consideration the convenience of parties to disputes and others concerned. And it should be considered how to substantially increase judicial professionals to meet the increasing lawsuits.

Conclusion

1. The Basic Idea behind Consumer Contract Law
In a modern society, citizens conclude contracts frequently. Once contracts are concluded and take effect, the parties to the contracts will have certain obligations (or liabilities). While deregulation expands consumers' freedom of choice, consumers are increasingly required to comply with the principle of self-responsibility where they are responsible for the results from their voluntary decisions.

The principle of self-responsibility can work only when consumers make voluntary decisions based on sufficient information. As transactions are diversified and complicated, however, large gaps exist between consumers and businesses in information and negotiating power. In such circumstances, consumers sometimes conclude contracts as businesses do not provide important information for consumers' decisions to conclude contracts, act to put high pressure on consumers or restrain them for a long time in a bid to induce them to conclude contracts.

In the modern society, businesses unilaterally prepare and propose contract terms, and consumers frequently conclude the contracts without their full understanding of contract terms even after negotiations on their own responsibility. Sometimes, such contracts may reserve various rights of businesses and restrict consumers' rights, working to the advantage of businesses.

An analysis of consumers' consultations accepted by local consumer information centers and so on indicates a substantial number of disputes over such contracts, including those involving large damages and serious claims. It also finds that disputes are extremely diversified in terms of goods and services as well as consumer age.

In Japan, individual laws have been established to contribute to protecting consumers' interests in various areas. As for the rectification of consumer contracts, these individual laws have provided efficient and effective regulations on the basis of characteristics and actual situations of transactions in respective industries, working to regulate acts of businesses. However, individual laws contain only a few civil provisions that empower consumers to claim their rights against businesses. The individual laws generally provide that administrative agencies can take administrative measures against businesses, like revocation of business licenses or authorizations, if they violate the provisions. Whether to take administrative measures is up to relevant administrative agencies. Therefore, administrative agencies do not necessarily take administrative measures against businesses violating the provisions. As business activities are so widely diversified that they are likely to bring a variety of consumer contracts disputes, it is difficult that administrative agencies will deal with all of such disputes appropriately.

On the other hand, the Civil Code as the general civil law, based on the classic principle of civil law, reached its 100^th anniversary last year. Rather than revisions of the Civil Code or the Commercial Code, the legislation of the special laws have worked to adapt the classic principle to the development of the capitalism and to achieve various policy objectives in use of civil rules.

2. Conclusions
The Consumer Policy Committee, since its release of the Interim Report in January last year, has further promoted a debate on the above-mentioned basic idea behind the Consumer Contract Law, based on various opinions collected from the organizations concerned. At the same time, the Committee has energetically considered on the concrete contents of the Consumer Contract Law and measures to ensure its enforcement.

The Committee's major conclusions on the contents of the Consumer Contract Law are as follows:

1) If a business fails to provide a consumer with information or make misrepresentation concerning important matters on the contract (that the normal consumer should usually know for deciding to conclude the consumer contract from the viewpoint of a socially accepted idea), or if a business makes the remarks or takes the acts that put high pressure or other inappropriate pressures on a consumer, it is appropriate to empower consumers to take any measure to sue for remedy, including invalidation of the contracts in question.

2) If a business use a contract term that is unduly disadvantageous to consumers from the viewpoint of good faith, such undue term should be invalidated. It is conceivable to concretely specify contract terms that should be made void and requirements for them as clearly as possible. Furthermore, businesses in stipulating contract terms must take care to specify the scope of the contract and the rights and obligations emerging from the contract and to make it plain and intelligible.

The present legal systems for the rectification of consumer contracts in Europe and the United States have formed the civil rules regarding consumer contracts, although the rules differ depending on respective national legal systems and other national conditions. If Japan is to legislate a law for the rectification of consumer contracts, it should adopt appropriate legal measures meeting the realities of consumer transactions and disputes in Japan, while taking into account foreign legal systems. In this respect, it is necessary to fully consider civil trial practices that have so far been accumulated.

In order to ensure the enforcement of civil rules regarding consumer contracts, it is necessary to take measures such as the improvement of the alternative-dispute-resolute system for small claims, and swifter settlement of and prevention of spreading disputes. It is important to take full advantage of existing systems and enhance them for such purpose. There are some problems that must be considered over the medium or long term on the basis of the development in Japan's judicial system reform.

As consumer education and information provision regarding consumer transactions grows more important, they should be strongly promoted also in order to pave the way for consumers to make voluntary decisions and take responsibility for their decisions.

3. Towards the Legislation of the Consumer Contract Law
The rules to be legislated as the Civil Code's special law covering a wide range of consumer contracts should be made highly foreseeable for both consumers and businesses. Therefore, the rules should be as specific as possible. From this viewpoint, our Committee has deliberated on the basic idea for legislation since the publication of the Interim Report. It is desirable for the Consumer Contract Law to specify, as much as possible, what would be the sanctions of specific business actions and what would be the remedy in certain cases for consumers and consumer counselors engaged in settling disputes. Especially, the businesses have asked for more detailed consideration of the provisions of the Consumer Contract Law based on characteristics of each business activity and realities of transactions, disputes and so on, arguing that the Consumer Contract Law should not invite extra confusion for businesses acting in good faith. Through more consideration, it is necessary to specify what new action the businesses would be required to take.

Thus, the Consumer Contract Law is fully considered from the viewpoint of the consistency with Japan's whole legal system because it is deeply related to contract concept as the most fundamental in the Civil Code and the Commercial Code and because the Consumer Contract Law would have special provisions for a considerably wide range of matters.

The fair and foreseeable rules should be established to enable both consumers and businesses to act on their own responsibilities. From this viewpoint it is necessary to deepen the consideration of details on the basis of the achievements in this report, coordinating with quarters concerned, in order to gain national consensus on the legislation of the Consumer Contract Law.

In conclusion, we believe that the Consumer Contract Law providing for specific civil rules should be legislated as early as possible in order to cover and rectify a wide range of contracts concluded between consumers and businesses.