Case
The Osaka District Court on September 29th 2006[1] was regarding a case where the illegality of excessive selling of consumer goods was discussed in question. The aggrieved party was in 77 years old woman and was under a slight dementia. Other parties were nine consumer goods sellers in including a department store and the credit companies. The traders sold the woman a lot of Japanese Kimonos, futons (Japanese bed) and gems as gross payments of JPY 23,000,000 financed by defendant creditors. The plaintiff claimed the void of transactions that were signed under the suitable capability of economic decision, because the sellers had no capability of decision of contract in virtue of victim’s dementia, and took advantage of the woman. To the creditors, the women claimed the damage compensation, withholding her performance of remaining installment repayment.
Claim
The plaintiff claim of void of sales contract was based on civil law (sec.90). The provision stipulates that if the contract is against a public order or moral, the contract is void. Te breach of public moral seems to be similar of us unconscionable contract (UCC § 2-302). It says, [1]“(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”
Ruling
The court ruled that the degree of her dementia was not so serious not to be able to conduct her economic decision. However the court decided that the trader’s sales practices were unscrupulous and exploited significantly, therefore the contract with the plaintiff were void against the ethical principle in civil law (sec. 90); the payment of the transaction were almost financed by the creditor, whilst the monthly income of the plaintiff was only JPY 400,000 and it was not sufficient to pay monthly installment to the creditors; the plaintiff woman already had meaningful quantity Kimono, thus she was not necessity to purchase those precious clothes. Her purchasing was excessive for her necessity and the payment amount was not suitable for her financial status; in conclusion, the court said that the trader’s sales practices were void against the ethical requirement in trading practices. Excessive selling is not suitable for consumer’s necessity or trading objective. The court was not referring the breach of her suitability. It is supposed that the attorney of the plaintiff did not establish the breach of the rule. But the court ruling seems to admit the offence of the suitability rule as the element of ethical requirement. It seems to comply with the wording in the court ruling.
The usefulness of the notion
What is worthy of including the suitability rule within the elements of the offense of ethical requirement? For instance, it is expected to change the burden of proof. When the plaintiff claim that the trader take advantage of him and impair his interest seriously, it is not so easy for a consumer to prove these requirements in usually. As a general duty of the principle, the trader has to exercise to investigate that a consumer equips with of the suitability in particular trading: knowledge, recognitions, capability, trading objectives and so on, experience of the trading, financial status and so on. For instance, if there can be considered excessive over objective necessity of the consumer for particular goods or services, the trader has to prove that it is not excessive in the result of his investigation to consumer’s particularity. The instrument plays a role to lessen the burden of proof in the aggrieved party.
