Litigation & Dispute Resolution

When a business partner does not pay: unpaid receivables and late payment

Delivery and acceptance have been completed, but no payment has come in. Invoices are sent and go unanswered. The contact at the other company says the matter is being checked internally, but the position does not change once the due date has passed. Where payment from a business partner has stopped, the company checks the reason for the non-payment while considering how to proceed with reminders, negotiations and legal procedures.

What makes this difficult is that there is rarely a single reason for non-payment. There may be a breakdown in payment administration, such as an invoice that never arrived, internal processing that has stalled, an error in reconciling receipts, or the wrong bank account. There may equally be a problem with the other party's cash flow, or the other party may be disputing the claim itself. Several of these may apply at once. The first step is to compare the records of invoicing, payment and receipts and to check the explanation given by the other party. In every case, the deadlines and the supporting material need to be checked.

This guide sets out, in order, how to tell which reason applies, the deadlines to keep in mind, how to choose a procedure for pursuing the claim, and what happens between obtaining a judgment or a settlement and actually recovering the money. For some types of transaction we have more detailed guides, which are worth reading alongside this one.

Last updated: September 18, 2026

What to check first

The following are matters we ask you to share with us, so far as they are known, when you contact us. You can contact us even where only part of the material remains.

The contract and the order records on which the claim is based — the company checks which of a master agreement, an individual contract, a purchase order and order acknowledgment, or a quotation exists. Where there is no document, emails, chat messages and minutes of meetings may provide a basis, so the records that remain are checked. Whether the parties to the contract match the addressee of the invoice is also checked.

The amount claimed and the payment date — the company checks the payment date under the contract, the payment date stated on the invoice, and how matters have been handled in the course of dealings so far. Where the contractual provision and the invoice differ, it checks how that came about. Where there have been several transactions, the unpaid amount for each is set against the date the goods were received or the services provided and the payment date under the contract or legislation. Amounts whose payment date has passed are set out separately from those whose payment date has not yet arrived. Within the amount claimed, the company separates the part the other party accepts it is obliged to pay, the part it disputes, and the part on which its position is not known because there has been no response.

What the other party gives as its reason for not paying — what falls to be considered afterwards differs considerably according to whether the reason given is that cash is tight, that there is a problem with what was delivered, that no order was placed, or that the amount is to be set off against another claim. The other party's account, including anything said orally, is set out in chronological order.

The state of the delivery or work to which the claim relates, and the supporting material — the company checks the material showing how far it has performed its own obligations, such as delivery notes, acceptance certificates, documents bearing a receipt stamp, work reports and site photographs. Where the other party disputes receipt or acceptance, it checks how that came about.

The course of the reminders and the other party's responses — this matters in relation to extinctive prescription. The company sets out in chronological order what was demanded, the date on which it reached the other party, and the other party's replies. Where there has been a part payment, a request for time to pay, or a document stating that payment will be made, the content and date of each are checked.

The other party's trading and payment position, and any assets known to the company — the company checks the facts it is aware of, such as the contents of the commercial register, whether the business is continuing, and the position on payments to other suppliers. It also checks the information it has about assets, such as the banks used, the main receivables owed to the other party, and any real property owned. Where a filing for bankruptcy or civil rehabilitation has been made, or a notice has arrived from a lawyer stating that the lawyer has been engaged, those documents are checked.

Security, guarantees and similar arrangements, and any payment obligations owed to the other party — the company checks whether there are contracts or notices relating to these, and what they provide. It also checks whether it owes money to the other party, which bears on whether set-off can be considered.

Responsibility, the point of contact and authority to decide within the company — internally, the company appoints a person to bring the information together and a point of contact with the other party, and the departments concerned, such as accounts, sales and legal, share the material and the background they hold. It also settles who within the company decides and approves a grace period, an agreement to pay by installments, or a move to legal proceedings. On the basis of the material and the background gathered, we set out the basis for the claim and the other party's arguments and consider the procedure to be used next.

Contents

1. The response differs according to the reason for non-payment
2. Checking the payment date, prescription and delay damages
3. Considering which procedure to use for the claim
4. Recovery from assets, and dealing with insolvency and internal problems
Key legislation and official sources
Frequently asked questions

1. The response differs according to the reason for non-payment

Alongside comparing the records, the company establishes whether there is a problem with the other party's cash flow, whether the other party is disputing the claim, or whether the reason for non-payment is not clear. There are also cases where the other party accepts the claim but draws out payment. Which of these applies changes the matters to check first and the material to be prepared. Because several circumstances may overlap, both the other party's account and the objective material are checked. Even where the claim is disputed, where there are concerns about cash flow the company checks the asset position and whether a provisional measure is needed, alongside setting out the issues and the evidence.

Where dealings are continuing, the company considers the treatment of further deliveries and work together with the recovery of the outstanding amounts.

Where the problem is cash flow

Where the other party does not dispute the claim itself but is not in a position to pay, its position in relation to other creditors becomes relevant. Where the other party's assets are limited, whether security interests exist and whether other creditors have levied attachments affect the prospects of actual recovery. What matters most, therefore, is checking the asset position and the order of priority, and considering whether a provisional measure is needed.

Allowing time to pay and recovering the amount in installments is another option. It may also be considered in combination with a provisional measure. Even where time is allowed, the company considers recording the promise to pay in a document and whether security or a guarantee can be obtained. Where there is retention of title, that does not by itself allow the company to enter the other party's premises and take the goods back. Where payment by installments is agreed, the amount of the debt, the amount and date of each payment, and the treatment of the balance if payments fall behind are made clear in advance. That said, preparing an ordinary agreement does not allow compulsory execution on the basis of that document. Beyond that, one option is to have a notarial instrument drawn up, containing a statement by the debtor that it submits to immediate compulsory execution in respect of the payment of a specified amount of money. Even with a notarial instrument, compulsory execution requires the relevant conditions, such as the arrival of the payment date, to be met.

Where a filing for insolvency proceedings has been made or an order commencing them has been issued, the means available and the restrictions differ, so see also section 4, on where the other party enters insolvency proceedings. Payments received, and security obtained, may be in issue in later insolvency proceedings. The company checks the timing and content of payments and of the creation of security, and what it knew at that time about the other party's payment position.

Where the other party disputes the claim

What the other party gives as its reason for refusing to pay falls into a number of types. The material the company needs to produce differs according to the type.

The type of argument	What is actually said	What to set out on your side
Performance is incomplete	There is a defect in what was delivered. It does not match the specification. The work has not been finished.	The scope and the specification agreed in the contract. What was actually handed over. When and in what form the defect was raised. Whether an offer to repair was made.
There has been no receipt or acceptance	No acceptance has taken place, so no obligation to pay has arisen.	The acceptance procedure under the contract, and whether notice of acceptance was given. Facts bearing on whether acceptance took place or the deliverable was taken up, such as the start of use, resale, or requests for further work.
No contract was concluded	That order was not placed. No amount was agreed.	Where the manifestation of intention to place the order is recorded. The submission of a quotation and the response to it. How similar transactions have been handled in the past.
The amount is to be set off	We have a claim against you as well. We have suffered loss, so we are deducting it.	The basis on which the claim asserted by the other party is said to have arisen, and its amount. Whether the requirements for set-off, including the due dates of both claims, are met. Whether a manifestation of intention to set off has been made. Whether set-off is restricted by the contract or by legislation. Whether set-off is restricted in relation to insolvency proceedings.
The payment date has not arrived	Our understanding was that payment was due after the whole of the work was completed.	The provision on the payment date. What the invoice states, and how matters have been handled in the course of dealings so far.
Payment is to be made in exchange for your performance	We will not pay until delivery or repair is completed.	The order of performance under a bilateral contract. Whether obligations remain unperformed on your side. Whether performance was made or tendered. The extent to which the other party may withhold payment. A non-conformity with the contract does not always allow the whole of the price to be withheld.

In practice several arguments are often raised at once, and the arguments may change later. There is value in recording the reason the other party gave at the outset.

Where the reason for non-payment is not clear

The company checks whether the invoice has arrived, whether any objection has been raised to the content of the claim, and whether a specific payment schedule has been indicated. The absence of a response does not show either that the claim is accepted or that the other party is unable to pay. Whether to wait for a response or to move to the next procedure is decided having regard to the prescription deadlines and the other party's asset position as well.

Guides on payment problems in system development and construction

For the following types of payment dispute, we have guides dealing with the issues particular to those fields. Where they apply, they are worth reading alongside this one.

Where payment for system development has stopped over whether the work can be accepted or over additional costs — see the guide on system development disputes

Where the price is not paid over defects in the work, additional work or delay in the schedule — see the guide on construction and building disputes

2. Checking the payment date, prescription and delay damages

The first step is to check the payment date under the contract or under legislation. Alongside that, the company checks the prescription deadline, which determines how long the claim can be brought, and when delay damages begin to run and at what rate. Time passing while reminders continue, so that the period for bringing the claim is missed, has to be avoided.

Transactions where legislation regulates the payment date

For some types of transaction, and some combinations of parties, legislation regulates the payment date. Under Japan's Act Against Delay in Payment of Fees, etc. to Small and Medium-sized Entrusted Business Operators in Manufacturing and Other Specified Fields, which renamed the earlier legislation on the prevention of delays in payment of subcontract proceeds and has applied since January 1, 2026, the payment date must be set within 60 days from the date on which the goods or services were accepted, whether or not an inspection is carried out, and within as short a period as possible, and there are special provisions on interest for late payment. The 60 days is an upper limit for setting the payment date, and where an earlier payment date has been set, payment must be made by that date. Japan's Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators also contains rules on payment dates. Under that legislation, a special rule on the payment date applies to certain re-entrustments where the prescribed matters have been notified. Both pieces of legislation contain rules under which the payment date is fixed by law where no payment date has been set or where a date beyond the statutory period has been set. The position is therefore not decided by the contractual provision or the completion of acceptance alone: the type of transaction, the attributes of the parties, and the date of each order are checked. For the first of these two pieces of legislation, the company checks whether the transaction is an entrustment of manufacturing or another covered type, the capital and the number of regular employees on each side, and the date of each individual entrustment.

How long a claim can be brought

A claim is extinguished by prescription where it is not exercised for five years from the time the holder became aware that it could be exercised, or for ten years from the time when it could be exercised. As a general rule, the period that expires first is the one that governs. For trade receivables and fees arising in ordinary transactions, the payment date is usually known, so five years from the payment date is the working measure. Even where time remains, the prospects of recovery differ according to the other party's means and the state of the evidence.

Formerly, the Commercial Code provided a five-year period for claims arising from commercial transactions, and there were also provisions setting shorter periods for particular types of claim, but these were consolidated by the 2017 amendments to the Civil Code. Claims based on contracts concluded before April 2020 may be governed by the earlier rules. The company checks not only the date the claim arose but also when the underlying contract was concluded and what type of claim it is.

Postponing the expiry of the prescription period, and renewing it

Two kinds of response are available: postponing the expiry of the prescription period until a certain time, and renewing the period so that the time already elapsed is disregarded and a new period begins. The following are the ones commonly used.

A demand — where a demand for payment reaches the other party before the prescription period expires, prescription does not become complete until six months have passed from that time. A second demand made during that period does not, however, produce a further postponement. The company needs to be able to show afterwards that the demand was made and that it arrived.

An agreement to hold discussions — where the parties agree in writing or by electromagnetic record to hold discussions about the claim, prescription does not become complete for the period laid down by law. When the postponement ends depends on matters such as the period of discussion agreed and whether notice has been given that the discussions will not continue. This is used where the parties wish to continue negotiating without the period running out, but an agreement to hold discussions made while the expiry is already postponed by a demand does not produce a further postponement. The same applies to a demand made while the expiry is postponed by an agreement to hold discussions.

Acknowledgment by the other party — where the other party acknowledges the existence of the debt before the prescription period expires, a new period begins to run from that time. A part payment, a request for time to pay, or a confirmation of the outstanding balance may amount to this. A document of this kind is sometimes exchanged in the course of dealings without either side intending it. As to a payment or a response after the period has expired, whether prescription can still be invoked afterwards is a separate question, and the content and the circumstances are checked.

A judicial claim and similar steps — where the company files an action, applies for a court demand for payment, applies for civil mediation, or participates in the other party's insolvency proceedings, prescription does not become complete until that ground comes to an end. Where the right is determined by a final and binding judgment or by something having the same effect, a new period begins to run from the time the procedure ends. Where the procedure ends by withdrawal or dismissal without the right being determined, the expiry is, as a general rule, postponed only for six months from the time it ends. A right determined by a final and binding judgment or by a settlement in court becomes subject to a ten-year period as a general rule, even where the original prescription period was shorter than ten years. This special rule does not apply, however, to a claim whose payment date has not yet arrived at the time of determination.

A demand is a means of creating time; it does not resolve the matter by itself. Where the company relies on the postponement produced by a demand, it needs not only to decide how to proceed within the six months but also to take a step that prevents the prescription period from expiring, such as filing an action. Even where the period has run, the claim is not extinguished as a matter of course until the other party invokes prescription.

Claiming for the period of delay

Where the other party is responsible for the delay in payment, delay damages may be claimed. When they begin to run is decided by checking whether a payment date was provided for, whether a demand has arrived, and how far the company has performed or tendered performance. Where delay damages are claimed on a monetary obligation, there is no need to prove that loss was suffered, and the other party cannot escape paying them on the ground of force majeure. As to the rate, the company checks the provision on delay damages, any agreement on interest, and any special rules under legislation. Where the statutory interest rate applies, the rate in force at the first point at which the other party became responsible for the delay is the one used, and a later revision of the statutory rate does not change the rate applicable to that obligation each time.

3. Considering which procedure to use for the claim

There are several kinds of procedure for pursuing a claim, each with its own conditions of use and its own course. The choice is made having regard to the likelihood that the other party will contest the claim, the amount, the material available, and the other party's means. How matters actually proceed, and the prospects of recovery, differ from case to case.

Negotiation and a demand

A resolution may be possible at the negotiation stage. Sending a letter in a lawyer's name serves both to set out the content of the claim and the basis for it and to operate as a demand, postponing the expiry of the prescription period for a set time. On the other hand, sending a letter does not mean the other party will pay, and without a decision about what will follow it the company may find itself with nowhere to go.

Whether a provisional attachment is needed, and its order relative to contacting the other party

Where there are concerns about the other party's means, the company may consider attaching its assets provisionally, before filing an action, against the risk that disposal of those assets will make later recovery difficult. Provisional attachment is a Japanese court procedure by which a debtor's assets are frozen before judgment so that later enforcement remains possible, and it is carried out on a decision of the court. The application requires, in addition to the existence of the claim, circumstances showing a risk that compulsory execution will become impossible or face considerable difficulty. A claim whose payment date has not yet arrived may also be covered, but the requirements, including the necessity for preservation, must likewise be met. The court often requires security to be provided, and the amount and the method depend on the case and on the court's decision.

Provisional attachment is a procedure for preserving future compulsory execution in respect of claims for the payment of money; it does not finally determine that the claim exists. Nor does it settle recovery or priority over other creditors. To recover from the assets provisionally attached through compulsory execution, a title of obligation, such as a judgment, a settlement in court or a court demand for payment with a declaration of provisional execution, must as a general rule be obtained separately. A title of obligation is the document on the basis of which a court enforcement procedure may be carried out. The company therefore sets out the relationship between the claim identified in the application as the right to be preserved and the right that will be claimed in the subsequent action.

Where there are concerns that assets may be disposed of, the order between contacting the other party and applying for a provisional measure is also considered. In making the application, the company checks the basis for the claim, including any arguments the other party has already raised and any material inconsistent with the claim. Where a provisional attachment turns out to have been improper, the applicant may be liable in damages for the loss caused to the other party, according to whether there was intention or negligence. A provisional attachment also postpones the expiry of the prescription period, but it does not renew the period.

Choosing a procedure

Procedure	Where it fits	If the other party contests the claim	What to prepare
Negotiation	Where the other party does not dispute the claim itself and it is enough to adjust the timing or method of payment.	If negotiations do not continue, another procedure falls to be considered.	The records of the contract and of performance, a breakdown of the claim, and the exchanges to date.
Civil mediation	Where the parties cannot resolve matters between themselves, but there is room to consider a flexible agreement on the method of payment, the amount or other terms. Civil mediation is a Japanese court procedure in which a panel at the court assists the parties in reaching an agreement.	If no agreement is reached, the procedure as a general rule comes to an end. In certain cases the court may issue a decision in lieu of mediation, which loses its effect if an objection is made within the prescribed period. Where agreement is reached, the record of the mediation provides a basis for compulsory execution.	The same material as for negotiation, together with a statement of the terms the company could accept.
A court demand for payment	Where the other party is not expected to contest the claim and a documentary procedure is sufficient. The application is made, as a general rule, to a court clerk of the summary court having general venue over the other party. It presupposes that service can be effected within Japan otherwise than by public notice.	Even where the company considers the other party's objection to be without merit, a valid objection means that an action is deemed to have been filed with the summary court or the district court according to the amount claimed.	Material identifying the content of the claim. Confirmation of the other party's address.
Litigation	Where the merits of the claim are themselves disputed, or where a resolution by judgment is required.	The parties exchange arguments and evidence on the issues, and the matter ends in a judgment or a settlement.	Material supporting the contract, the performance and the claim. A response to the other party's arguments.

These may also be combined. Which to choose depends on how the other party is expected to respond and on what the company treats as its priority. On provisional attachment, see the preceding subsection.

As to a court demand for payment, making the application does not put the company in a position to carry out compulsory execution. Where the other party does not file an objection within two weeks from the day it was served with the demand, the company may apply for a declaration of provisional execution, and the demand loses its effect if that application is not made within 30 days from the time it becomes available. Even after those two weeks, a valid objection made before a declaration of provisional execution is attached means that an action is deemed to have been filed. After a declaration of provisional execution has been attached, the other party may still file an objection within the unextendable period of two weeks from the day it was served with the demand, and a valid objection moves the matter into litigation.

Where the claim is for the payment of money of 600,000 yen or less, a small claim action may be available. A small claim action is a Japanese court procedure in the summary courts, in which the case is as a general rule concluded on a single hearing date. There is a limit on how often it may be used, and the matter may move into ordinary litigation.

Arbitration clauses and jurisdiction clauses affecting the choice of procedure

A contract may contain an agreement that disputes are to be resolved by arbitration, or a clause giving a particular court exclusive jurisdiction. Where such a clause exists, the basis on which a procedure is chosen changes, so the relevant clause of the contract is checked. In transactions with parties abroad, the governing law clause is checked at the same time.

4. Recovery from assets, and dealing with insolvency and internal problems

Even where the obligation to pay is determined by a final and binding judgment or by a settlement in court, no money comes in if the other party does not pay voluntarily. Where a declaration of provisional execution has been attached, compulsory execution may be available without waiting for the judgment to become final. This section sets out how to establish which of the other party's assets to recover from. A move into insolvency proceedings, and the response where there is a problem inside the company, are checked whether or not a judgment or settlement has been obtained.

Court procedures for obtaining information about assets, and their requirements

Where the other party's assets are not known, there are court procedures for requiring the other party itself to make a statement about its property, the property disclosure procedure, and for obtaining information from third parties. Where these procedures are used on the basis of an authenticated copy of a title of obligation with an execution clause, it must be possible to commence compulsory execution on that title. Beyond that, the applicant must make a prima facie showing either that full satisfaction was not obtained in a distribution or similar procedure in compulsory execution that ended within the prescribed period, or that full satisfaction would not be obtained by compulsory execution against the assets known to the applicant. It is not always necessary to have carried out compulsory execution beforehand. In addition to these, the requirements applicable to the type of information sought are checked.

The procedures for obtaining information from third parties include obtaining information about real property from registry offices and information about deposits and book-entry transfer bonds from financial institutions and similar bodies. For information about real property, a property disclosure hearing must as a general rule have been held within the preceding three years. That requirement does not apply to information about deposits and similar assets. For deposits and similar assets, the application identifies the financial institutions and similar bodies from which information is sought. Once the information has been obtained, an attachment is applied for separately.

There is also a procedure for obtaining information about a person's employer from municipalities, the pension body and similar organizations, but the claims for which it may be used are limited to claims relating to duties of support and claims for damages for injury to life or body, and it is not available for the recovery of ordinary trade receivables. The type of information sought is checked together with the content of the title of obligation.

Which assets to recover from

The available methods are attachment of receivables and deposits held by the other party, attachment of movables, and attachment of real property. In practice, attachment of receivables owed to the other party by its own customers, and of deposits with financial institutions, are the methods most often seen. Because an attachment also affects the other party's business, it is considered together with the decision whether to continue the trading relationship.

Even with a judgment, no recovery follows if the other party has no assets worth pursuing. The decision is made by weighing the burden the procedure involves against the prospects of recovery.

Where the other party enters insolvency proceedings

Once an order commencing bankruptcy proceedings or civil rehabilitation proceedings has been issued in respect of the other party, ordinary claims arising from transactions before the commencement can, as a general rule, no longer be collected individually; instead the claim is filed in the proceedings and a distribution or payment is received through them. Security interests, rights of segregation and set-off, and claims on the estate in bankruptcy proceedings and common benefit claims in civil rehabilitation proceedings, are each subject to their own requirements and treatment. The stage at which a filing has been made, or at which a notice has arrived from a lawyer stating that the lawyer has been engaged, is checked separately from the position after an order commencing the proceedings has been issued, and any provisional measures ordered are checked as well. There is a period for filing claims, and missing it may result in a disadvantage.

Where the company itself owes money to the other party, whether set-off is available becomes relevant. Set-off is restricted in certain situations within insolvency proceedings, and the treatment differs according to when and how the claims and obligations on each side arose. In civil rehabilitation, even where set-off is permitted, it must as a general rule be effected within the period for filing claims, so that period is checked as well.

Where there is a problem inside the company

In the course of investigating outstanding amounts, circumstances may emerge suggesting that transactions that never took place were recorded, that a member of staff was involved in misconduct, or that suspicious remittances were made to another account. In that case, the company checks the facts internally, separately from the claim against the other party. On how to proceed, see the guide on internal investigations and investigations into misconduct.

Key legislation and official sources

English translations of legislation are provided for reference. The Japanese texts are authoritative.

Where it appears	Legislation	Source type
Extinctive prescription of claims and the two periods; postponement of the expiry of the prescription period and its renewal by a demand, an agreement to hold discussions, acknowledgment and a judicial claim; the ten-year period for rights determined by a final and binding judgment; invoking prescription	Civil Code（民法）	Japanese legislation
Delay damages on monetary obligations and the statutory interest rate; the defense of simultaneous performance; set-off and its requirements; termination of a contract	Civil Code（民法）	Japanese legislation
The former five-year period for claims arising from commercial transactions	Commercial Code（商法）	Japanese legislation
Statutory payment dates in entrusted business transactions, the deeming rules where no payment date is set, and interest for late payment	Act Against Delay in Payment of Fees, etc. to Small and Medium-sized Entrusted Business Operators in Manufacturing and Other Specified Fields（製造委託等に係る中小受託事業者に対する代金の支払の遅延等の防止に関する法律）	Japanese legislation
Payment dates in transactions with specified entrusted business operators, and the special rule for certain re-entrustments	Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators（特定受託事業者に係る取引の適正化等に関する法律）	Japanese legislation
Orders for provisional attachment, the prima facie showing required, and security	Civil Provisional Remedies Act（民事保全法）	Japanese legislation
Court demands for payment, objections and declarations of provisional execution; small claim actions; jurisdiction and agreements on jurisdiction; service	Code of Civil Procedure（民事訴訟法）	Japanese legislation
Civil mediation, decisions in lieu of mediation, and the record of the mediation	Civil Conciliation Act（民事調停法）	Japanese legislation
Titles of obligation, including notarial instruments containing a statement of submission to compulsory execution; compulsory execution against claims, movables and real property; the property disclosure procedure and the procedure for obtaining information from third parties	Civil Enforcement Act（民事執行法）	Japanese legislation
Restrictions on individual collection after commencement; claims on the estate; rights of segregation; restrictions on set-off; the period for filing claims	Bankruptcy Act（破産法）	Japanese legislation
Restrictions on individual collection after commencement; common benefit claims; restrictions on set-off and the period within which set-off must be effected	Civil Rehabilitation Act（民事再生法）	Japanese legislation
Arbitration agreements	Arbitration Act（仲裁法）	Japanese legislation
Governing law in transactions with parties abroad	Act on General Rules for Application of Laws（法の適用に関する通則法）	Japanese legislation

Legal information reviewed: 2026-09-18

Frequently asked questions

While an amount remains unpaid, may we stop deliveries or work?

The fact that an amount is unpaid does not always allow performance to be stopped. Whether performance can be stopped in respect of orders already accepted, whether to accept new orders, and whether the contract can be terminated are each considered separately. The company checks whether the unpaid price and the deliveries or work it proposes to stop stand in a relationship of performance in exchange. Where the company relies on a clause in a master agreement allowing performance to be suspended, it also checks the orders covered and the conditions, such as any requirement for a demand or notice. How matters have been handled in the course of dealings so far is checked as well before a decision is made.

We have no written contract. Can we still claim?

The absence of a written contract does not in itself prevent a claim. The conclusion of the contract and its content may be shown from quotations, purchase orders, emails and chat messages, minutes of meetings, and records of delivery or work. The starting point is to check what records remain.

If we send a letter by content-certified mail, will we be paid?

Sending one does not mean payment will follow. Content-certified mail is a Japanese postal service that records what document was sent and when, and its value lies in conveying the content of the claim and its basis clearly and in creating that record. Where a notice demanding payment reaches the other party and is recognized as a demand, the expiry of the prescription period is postponed for a set time, and the letter is used so that the steps needed to prevent prescription from becoming complete can be taken during that time. Sending a letter does not in itself establish that it arrived, so proof of delivery and the delivery record are checked as well. If nothing is done after it is sent, the period of postponement will also pass.

The other party says there is a problem with quality and is not paying.

Whether that argument provides a reason to withhold payment depends on what was promised in the contract, whether the matters raised in fact exist, when and in what form they were raised, and whether an offer to repair was made. Confirming the other party's argument in writing at an early stage makes matters easier to set out if the reason given changes later.

We have heard that a business partner may become insolvent. Is there anything we can do now?

What can be done depends on the other party's position and on the material the company holds. In some situations provisional attachment falls to be considered, and in others the existence of security or guarantees is checked. Where the company owes money to the other party, whether set-off is available is also considered. The means available and the restrictions differ at the stage where a notice has arrived from a lawyer stating that the lawyer has been engaged, at the stage where a filing for insolvency proceedings has been made, and at the stage where an order commencing the proceedings has been issued. The company checks which stage has been reached and whether security or set-off is available.

If we obtain a judgment, will we actually recover the money?

Even with a judgment, if the other party does not pay voluntarily, attachment or another procedure has to be considered separately. The prospect that the claim will be upheld and the prospect of actually recovering from the other party's assets need to be checked separately. Because the actual prospects of recovery depend on whether the other party has assets and on its position in relation to other creditors, we set out the material you need in order to weigh that against the burden the procedure involves.

Contact

Inquiries about unpaid receivables and late payment

Please tell us, so far as you are able, about the content of the transaction, the amount claimed and its payment date, whether the other party has responded, and the nearest deadline you are aware of. You are welcome to contact us at a stage when the material is not yet complete.

Whether we are able to act, and the scope of our work, are confirmed individually after a conflict check.

This article is provided for general informational purposes only and does not constitute legal advice on any specific matter. Please consult us regarding your specific situation. The content is based on the laws and regulations in effect as of the date of the last update.