Japan Business Law Examination common mistakes
Japan Business Law Examination · Understand the traps and how to avoid them.
Applying the Civil Code rule that a contract of mandate (委任) can be terminated at any time by either party to an employment contract, concluding the employer may dismiss freely.
Candidates memorize Article 651 of the Civil Code in the obligations block and then reuse it verbatim in the labor block, missing that the Labor Contract Act (Articles 16 and 17) restricts dismissal and that the Labor Standards Act requires objective, reasonable grounds and social appropriateness. The two statutes are studied in separate domains, so the overlap is never rehearsed.
What to do instead
For every labor question, first ask which statute governs: mandatory Labor Standards Act rules, the Labor Contract Act's abuse-of-right doctrine, or default Civil Code rules only where no labor statute applies. Practice writing two-sentence comparisons of Civil Code Article 651 versus Labor Contract Act Article 16 so the hierarchy becomes automatic.
Treating a company director's duty of care as satisfied whenever the board approved the transaction, without testing whether the director gathered adequate information or followed a reasonable process.
The Companies Act states the duty of care and loyalty in general terms (Article 330 incorporating Civil Code Article 644, and Article 355), so candidates memorize the article numbers and stop there, missing the business judgment rule developed in case law and the specific conflict-of-interest approval rules under Articles 356 and 365.
What to do instead
Build a checklist for director-liability questions: was there a conflict of interest, was board approval obtained under Articles 356 and 365, was information sufficient, was the decision irrational or self-dealing, and what is the standard for a shareholder derivative suit under Article 847? Apply the checklist in that order before writing the conclusion.
Concluding that a trademark is protected simply because it was registered, without first assessing distinctiveness and the possibility of invalidation under the Trademark Act.
The registration certificate is the most visible artifact in trademark problems, so candidates jump to infringement under Article 25 and skip the threshold questions of distinctiveness (Article 3), prior identical or similar marks (Article 4), and whether the mark is a common descriptive term. The exam deliberately seeds marks that are descriptive or generic.
What to do instead
For any trademark fact pattern, run the sequence: is the mark distinctive or has it acquired secondary meaning, is there a prior right, is the registration vulnerable to invalidation or opposition, and only then assess infringement and the likelihood-of-confusion test. Write the sequence out before reading the answer choices.
Answering Antimonopoly Act questions by labeling conduct as unreasonable restraint of trade or unfair trade practice based on the label in the facts, without identifying the relevant market and the competitive harm.
The statute's categories (Articles 2(6), 2(9), 3, 19) sound like boxes to sort conduct into, so candidates sort by keyword. But the analysis turns on market definition, market share, and effect on competition, and the Japan Fair Trade Commission's guidelines supply thresholds that keyword sorting ignores.
What to do instead
For every competition question, state the relevant market in one sentence, name the theory of harm (price fixing, bid rigging, exclusion, resale price maintenance), cite the specific prohibition, and then test the effect on competition. Practice with the JFTC guideline categories rather than the statutory labels alone.
Confusing the burden and standard of proof in civil procedure, asserting that the plaintiff must prove every element beyond reasonable doubt or that the defendant must disprove the claim.
Candidates carry over criminal-law intuitions from general legal study and never map the civil standard. The Code of Civil Procedure allocates the burden by the party asserting the favorable fact, and the standard is proof to a high degree of probability, not certainty.
What to do instead
Write a one-page map: who asserts the fact, who bears the burden, what the standard is, and which presumptions or burden-shifting rules apply. Rehearse with a sales-contract dispute where the seller sues for price and the buyer raises non-conformity, so the shifting burden is concrete.
Treating a product liability claim as requiring proof of the manufacturer's negligence, and therefore dismissing the claim when no negligent act can be shown.
The Product Liability Act imposes strict liability for defects, but candidates default to tort negligence under Civil Code Article 709 because that is the framework they practiced first. The statute's three-part defect test and its definition of manufacturer are under-memorized.
What to do instead
Memorize the Product Liability Act structure: defect (design, manufacturing, or warning/instruction), damage, causation, and the manufacturer's defenses. Then contrast it explicitly with Civil Code Article 709 negligence in a two-column table so the strict-liability trigger is never lost.
Answering copyright questions by asking whether the work was registered, rather than whether it is a protected work of authorship and whether the use falls within a limitation.
Registration feels like the gatekeeper for all intellectual property, so candidates import the patent and trademark mindset into copyright. Japanese copyright arises on creation, and the analysis turns on originality, the idea-expression distinction, and the quotation and private-use limitations.
What to do instead
For copyright, run: is it a work under Article 2, is there originality, was there copying or substantial similarity, and does a limitation such as Article 30-4 or Article 32 apply? Treat registration as evidentiary only and say so explicitly in your answer.
In insolvency questions, applying the commencement of rehabilitation or bankruptcy proceedings as an automatic stay that voids all pre-petition contracts, including ongoing supply agreements.
The stay is the headline rule, so candidates over-extend it to every contract. The Civil Rehabilitation Act and Bankruptcy Act distinguish the automatic stay on debt collection from the treatment of bilateral contracts, executory contracts, and termination clauses, which have their own rules.
What to do instead
Separate the question into three parts: does the stay bar collection, can the counterparty terminate, and can the trustee or receiver assume or reject the contract? Learn the specific provisions on executory contracts and the limits on anti-assignment and termination clauses before answering.
Assuming that a valid arbitration agreement ousts the courts entirely, and answering that a party may never seek court relief once arbitration is agreed.
Candidates conflate arbitration's jurisdictional effect with a total bar on litigation. The Arbitration Act allows court-ordered interim measures and set-aside or enforcement proceedings, and the scope of the agreement determines which disputes are covered.
What to do instead
Map arbitration into three phases: before (interim relief and referral to arbitration under Article 14), during (tribunal jurisdiction and competence), and after (setting aside and enforcement). For each phase, state which court power survives.
Applying the general sales-contract rules of the Civil Code to a consumer transaction without checking the Consumer Contract Act's mandatory cooling-off, cancellation, and unfair-term rules.
The Civil Code was amended to integrate the sales rules, and candidates over-rely on the new default regime, forgetting that the Consumer Contract Act overrides it for consumer contracts and that certain clauses are void regardless of agreement.
What to do instead
Before answering any consumer question, ask whether the buyer is a consumer and the seller a business. If so, apply the Consumer Contract Act first (cooling-off, misrepresentation-based cancellation, void unfair clauses), then fill gaps with the Civil Code. Keep a short list of the void-clause categories at hand.