Disclosure
The Specific Commercial Practices Law, regulating doorstep selling, telephone sales, multi-level marketing scheme, work-in-home scheme and certain continuous contract, require for traders to deliver consumers e written documents of disclosure. A trader must hand a document that explains the details of the contract to the consumer before the consumer give his contractual declaration. This kind of requirement is asked in other consumer trade laws: Estate Agent Law, Securities Transaction Law, Commodity Futures Transaction Law, Money Lending Business Law and so on. Whilst the extension of information is varied by laws and depending on the nature and feature of goods, rights and services, the benchmark might be benchmark of average consumers.
Information duty
The Consumer Contract Law stipulates information duty. A trader, inducing a consumer to start trading, makes his effort to provide necessary information by that a consumer can recognize the details of the contract, his rights and duties in depth.For instance, the Futures Commodity Transaction Law says that a broker-dealer has to provide statutory information to the customer clearly and comprehensively in time before he gives his contractual declaration and during trade if necessary: lump sum amount of trading is extremely huge rather than amount of deposit of margin; there is possible for a customer to sustain huge amount of damages beyond deposit of margin by market fluctuation. Traders have to explain the material information that affect or is likely to affect the customer’s decision. In money lending case, the Tokyo Summery Court, on February 3rd 2005, said that a money borrower included a notion of consumer broadly speaking and therefore a money lender bore information duty to the borrower. The extension of material elements is decided in general by considering the nature of the trading, trading goods or services. And also it is necessary to take an account of the individual particularity of the customer: knowledge, information, experience and so on.
Degree of the duty
For instance, according to the Financial Products Sales Law, broker-dealer must explain a customer material terms and conditions; market risk, credit risk, deadline of execution of right and so on. The law also refers the degree of information duty; it should be executed by the way and degree efficient to make a customer recognize the material elements, taking account of his knowledge, experience and financial status. Concerning a commodity futures trading case, The Sapporo District Court on April 12th 2007 strengthened the information duty to be done substantially; the explanation of the details of the transaction including trading risk had to be given by illustrating specific case; it was not efficient only to be explained it as abstractly.The court also affirmed that a trader, if he completed his explanation duty, needed to investigate the customer’s status quo: ability, trading objectives, recognition of trading, affordability of finance and so on.However, the duty of investigation might be overlapped by the obligation in the suitability requirement.
Civil sanction against the duty
For failure of information duty, the CCL does not cause any administrative sanction against the duty, as well as civil penalty (sec. 3). However, it can be found several laws that stipulate the civil sanction.According to the Commodity Futures Transaction Law, if traders are against the information requirement, they have to pay damages caused by their omission of the duties (sec. 218(2)).
Certainly, such statutory provision is not condition for a customer to claim damage compensation in other trading. Customers can get damage based on good fait as general clause .in civil law.
