Question from a reader:
I have a question about commercial law. Can you explain the relationship between Article 504 of the Commercial Code and Article 100 of the Civil Code? Specifically, how should we understand the reason why the minority opinion regarding Article 504 of the Commercial Code is considered to have the same intent as the principle of disclosure?

Considering
the Relationship Between Article 504 of the Commercial Code and Article 100 of the Civil Code

Hello everyone! Today, I would like to discuss a somewhat challenging topic: the relationship between Article 504 of the Commercial Code and Article 100 of the Civil Code. In particular, I will delve into my perspective on why the minority opinion regarding Article 504 of the Commercial Code is considered to have the same intent as the principle of disclosure. Many of you might find the interpretation of commercial and civil law a bit difficult. However, I believe that by understanding the underlying concepts of the law, we can gain a deeper insight into it.

Article 504 of the Commercial Code and Its Background

First, let’s briefly review Article 504 of the Commercial Code. This provision requires merchants to provide sufficient information to their trading partners when entering into commercial contracts. In other words, merchants should be honest about their commercial activities and the terms of the contracts. The purpose of Article 504 of the Commercial Code is to build trust in commercial transactions. A smooth relationship with trading partners is essential for the success of commercial activities. I personally feel how important this “trust” is in the business world. Once trust is lost, it is very difficult to rebuild it.

Relationship with Article 100 of the Civil Code

Next, let’s take a look at Article 100 of the Civil Code. This provision pertains to the relationship between creditors and debtors and stipulates arrangements in cases where the debtor fails to perform their obligations. Article 100 of the Civil Code clarifies the responsibilities regarding the performance of contracts and their consequences. When considering the relationship between Article 504 of the Commercial Code and Article 100 of the Civil Code, we can see how trust and responsibility in commercial transactions are interconnected. In other words, the honest information provision required by Article 504 of the Commercial Code forms the foundation for fulfilling obligations based on Article 100 of the Civil Code. By gaining the trust of trading partners, the performance of contracts proceeds smoothly.

Minority Opinion and the Principle of Disclosure

Now, returning to the main topic, let’s explore the reasons why the minority opinion regarding Article 504 of the Commercial Code is considered to have the same intent as the principle of disclosure. The minority opinion holds that Article 504 of the Commercial Code is based on the “principle of disclosure.” This principle requires disclosing one’s identity and commercial information to trading partners in commercial activities. The importance of this concept lies in enhancing the transparency and reliability of commercial transactions. When we conduct business, understanding the position of the other party and the nature of the transactions they are engaged in is a means of mitigating risks. From the perspective of the minority opinion, the information provision required by Article 504 of the Commercial Code can be said to reflect the principle of disclosure. For example, when I start a new project with a business partner, being able to know their past commercial activities and the reputation of their trading partners allows me to proceed with confidence. Conversely, if the information is insufficient, I may feel anxious about my relationship with that partner, increasing the likelihood of the project not going well.

Considering with Specific Examples

Here, let’s provide a specific example. My friend Sato runs a small restaurant. Recently, he decided to enter into a contract with a new supplier. However, he signed the contract without adequately researching the supplier’s past clients and evaluations. As a result, the ingredients provided by the supplier did not meet the standards, significantly damaging the restaurant’s reputation. This example illustrates the importance of the information provision required by Article 504 of the Commercial Code. With reliable information, Sato could have made a better choice.

Toward a Conclusion

Examining the relationship between Article 504 of the Commercial Code and Article 100 of the Civil Code, as well as the perspectives of the minority opinion and the principle of disclosure, highlights the importance of trust and transparency in commercial activities. Merchants are required to be honest with their trading partners, and as a result, the performance of contracts proceeds smoothly. By deepening this understanding, I believe we can enhance our decision-making abilities in the business scene. The law can sometimes be complex and difficult to understand, but by connecting it to real business situations, it can become more relatable. As our understanding of the law deepens, we can expect our business activities to proceed more smoothly. I encourage all of you to think about how you can apply what you learn from commercial and civil law to your own businesses. Building trust may ultimately lead to significant success. Well then, see you in the next blog!