旧商法(明治23・26年)

Commercial Code

参考原資料

  • Commercial Code , 司法省記録課 , 1892 [Google Books]

他言語・別版など

GENERAL PROVISIONS. ARTICLE 1. In commercial matters, so far as in this Code not provided for, the usages of trade and the provisions of the Civil Code apply. 2. The validity of laws, ordinances, or regulations, promulgated with reference to particular classes of commercial matters or traders is not affected by this Code. BOOK I. COMMERCE IN GENERAL. CHAPTER I. COMMERCIAL MATTERS AND TRADERS. 3. Commercial matters are all commercial transactions, whether entered into by traders, or other persons, and such other matters as are in this Code provided for. 4. Commercial transactions are all legal acts which are either directly or indirectly performed with the object of making a profit or earning a living by traffic in produce, merchandise, or documentary securities, by means of buying and selling, letting for hire, or any other mode of cession ; they include, in particular:— i. Transactions having for object the barter or sale of produce ; ii. Undertakings and transactions relating to manufacture, industry and handicraft ; iii. Undertakings and transactions relating to the conveyance of persons and the carriage of goods ; iv. Undertakings and transactions relating to the navigation of ships and to conveyance and carriage thereby ; v. Undertakings and transactions relating to building ; vi. Undertakings and transactions relating to banking ; vii. Undertakings and transactions relating to the issue and circulation of negotiable instruments of credit ; viii. Undertakings and transactions relating to warehousing and other modes of deposit, made or received for purposes of trade ; ix. Undertakings and transactions relating to the buying, selling, pledging and mortgaging of ships, and to the building, repairing, outfitting and equipping thereof ; x. Transactions on Exchange ; xi. Undertakings and transactions relating to insurance. 5. The following are also to be deemed commercial transactions:— i. Money changing, or money lending in return for interest or other remuneration, where it takes place in a public shop, office, or other place of business, or where it takes place in consequence of public advertisements ; ii. The publication of newspapers or other periodical prints ; iii. Every act of agency or of instruction in commercial matters ; iv. The carrying on of public business offices or of public agencies ; v. The carrying on of public enterprises for entertainment or amusement ; vi. The undertaking of any work by a contractor. 6. Transactions concluded by a trader in the course of his business, or concluded by him with some other trader or contractor, are, unless the contrary is proved, to be regarded as commercial transactions. 7. The following are not to be regarded as commercial transactions:— i. The selling of produce gathered by a person from his own land or from land leased, provided that it is not done for the purpose of carrying on a business ; ii. The selling of wares or the offering of services, in a public street or from house to house, unless emanating from some established place of business ; iii. The making of wares or the rendering of services by persons whose remuneration consists merely in wages for their labour ; iv. Agreements for the hiring of labour or services, in so far as any such agreements are not provided for in this Code. 8. Contracts having for subject-matter rights to immovables are not commercial transactions, unless they relate to purchase or resale for the purpose of speculation. 9. Traders are all persons who carry on a commercial business ; the carrying on of a commercial business is the engaging, as a profession, in commercial transactions. The occupation of farmer, grazier, keeper of silkworms, hunter, fisher, or seaweed gatherer is not to be deemed a commercial business. 10. Every person can trade who can independently bind himself by contract, whether such trading is done by means of single commercial transactions or by means of an established commercial business. A person without capacity to bind himself independently can trade through his guardian. The guardian is to be entered in the Commercial Register. 11. Minors of either sex, who have completed their eighteenth year, and who have, with the consent of their father, mother, or guardian, established independent means of livelihood, are competent to trade. Every such person, desiring to trade on his own account, is to hand in at the proper Court a statement in writing, setting forth the requisites specified in the preceding paragraph, and signed and sealed by himself, as well as by his father, mother or guardian, and is to have such statement registered. Every person depositing such statement stands, from the date of entry thereof in the register, on an equal footing with persons of full age with respect to rights and obligations in all commercial matters. 12. Every married woman is entitled to trade who has obtained the consent, express or implied, of her husband thereto. No such consent is required where a married woman is deserted by her husband, or does not receive from him the necessary means of support. A married woman who merely assists her husband in his commercial business is not to be deemed a trader. 13. A married woman competent to trade has in commercial matters all the rights and duties of an independent person. Her entire property is liable for her trade debts, without regard to the right of management, or other rights of her husband with respect to such property. Where a married woman trades with the consent of her husband, their common property is also liable, so far as community of property exists between them. 14. Where husband and wife, one of whom is engaged in trade, exclude or abolish community of property between them, they must notify the fact to the proper Court for entry in the Commercial Register. Husband and wife cannot both at the same time be members with unlimited liability of one and the same commercial partnership. 15. All commercial transactions are invalid which are prohibited by law, or which are entered into by persons who do not possess the special qualifications prescribed by law therefor. Where, however, persons charged with public functions are prohibited from carrying on a commercial business, transactions entered into by them are not invalid by reason thereof. 16. Where a transaction is commercial with regard to only one party thereto, the provisions of this Code, with the exception of such as apply solely to the persons of traders or as express the contrary, are to be applied to both parties. 17. Provisions relating to commercial businesses apply also to partnerships, companies and other juridical persons carrying on a commercial business. CHAPTER II. COMMERCIAL REGISTERS. 18. The Commercial Registers concerning firm names, guardians, minors, marriage contracts, procurations, and partnerships and companies are to be kept by the Court within whose district the parties concerned have their seat of business or domicile. Such Court makes the entries and manages all matters in connection therewith. In the event of the seat of business or domicile being transferred to some other place, the facts entered in the register prior thereto, so far as they still exist, are to be registered also at such other place. 19. Every entry is to be published forthwith by the Court, in a newspaper appearing in the place where the Court has its seat. Such newspaper must be selected in advance for the space of one calendar year. In the event of no newspaper existing at the place in question, the mode of publication is to be determined by the Minister of Justice. The registers are open to public inspection, and a certified copy of any entry may be demanded on payment of fees. Fees are to be paid for every registration and publication. Such fees are to be settled by Imperial Ordinance at fixed and uniform rates. 20. Registration must in every case be applied for in person by the parties concerned, or by an agent authorized in writing for such purpose ; the application must be made by production of a declaration in writing, signed and sealed by such parties, and the entry is to be made on the same day or on the day next following. 21. In the event of the Court refusing a registration, the parties concerned may raise immediate complaint against the order. The same applies in the case of alteration or cancellation of a previous entry. 22. Every fact registered is deemed to be of public and judicial cognizance and no one is entitled to plead ignorance thereof, unless he can prove that such ignorance was in no way due to any fault of his own. Such facts may, however, be relied on, either before or after registration, against any person who has otherwise obtained knowledge thereof. The special cases in which the creation of certain legal relations is dependent on registration will be determined in their proper place. CHAPTER III. FIRM NAMES. 23. Every trader must have a firm name and must use the same to identify himself in all his transactions in the course of business. A person carrying on with separate capital more businesses than one must have a separate firm name for each one of them. 24. As a rule the so-called yago, hitherto in use, of a person carrying on a business is to form the firm name ; he may, however, use his family name, or his names, as firm name. 25. Firm names may be entered in the Commercial Register on application. The same applies with respect to branch establishments where such exist. Entry is to be made forthwith of every alteration or discontinuance of a registered firm name. 26. By registration the exclusive right is acquired of bearing the firm name in one and the same trade in one and the same district, and no one may in such trade in such district adopt the same firm name ; nevertheless, a firm name existing already prior to this Code coming into force may be continued so long as the description of trade carried on under such firm name remains unaltered, even though such firm name is identical with another in the same district. 27. Any person inheriting a business, or acquiring a business by contract together with the firm name, may, subject to what is provided for in Article 75, continue the previous firm name. 28. A firm name can only be transferred to other persons together with the business carried on under such name. Where a business is disposed of together with the firm name, the outstanding transactions, the debts, the good-will, and the trade books, are in the absence of any agreement to the contrary, and irrespective of whether the firm name is retained or altered, to be deemed to be disposed of together with such business. Any such agreement to the contrary, unless expressly mentioned in the notice or publication of the taking over of the firm name, is of no effect as against third persons. 29. Where a person, on disposing of his business together with the firm name, engages not to carry on another business of the same kind, such engagement is binding, but only for that particular district, and for a period which may in no case exceed the ten years next thereafter. 30. Any person improperly using the registered firm name of another or acting contrary to the obligations in the second paragraph of Article 28 and in Article 29 mentioned, may be proceeded against by the party injured thereby in order to be restrained from any further violation, as well as for damages. CHAPTER IV. TRADE BOOKS. 31. Every trader is bound to keep books, in the manner usual in the branch of trade in which he is engaged, and fully setting forth the conduct of his business ; he is in particular, day by day, systematically and clearly to record all transactions effected, obligations entered into by and towards him, merchandise received and delivered, and payments made and received. He is further to enter, month by month, the amount of his household expenses and of the general expenses incurred in his business. Individual sales in retail business need not be entered, but only the total amounts of each day's cash and credit sales. 32. Every trader is, on commencing business operation and also within the first three months of each subsequent year, and partnerships with limited liability and joint-stock companies are, on commencing business operation and also at the end of each business year, bound to make out a complete inventory of the property, both movable and immovable, as well as a balance sheet showing the assets and liabilities, and to enter and sign both in a book specially kept for such purpose. In preparing the inventory and balance sheet, all merchandise, rights of claim, and other property are to be estimated at the then ruling quotation or market value. In the case of rights of claim the satisfaction of which is doubtful, a deduction corresponding to the probable loss is to be made, and rights of claim upon which nothing is recoverable are to be written off for their full amount. 33. Partnerships and companies distributing interest or dividends to their members half-yearly, or at shorter intervals, are bound to fulfil every half year the duties imposed by the preceding Article. 34. Every trader is bound to preserve his trade books for a period of ten years, and to take care that they are secured from loss or damage by fire and other accidents. 35. The trade books of a trader are his exclusive property, and no trader, except in the event of bankruptcy or liquidation, can be compelled by any authority of its own motion to deliver them up. 36. In matters, however, of succession, community of property, or partition, as well as in disputes with respect to the conduct of business, a trader is obliged, if so ordered by the Court on the application of a party interested, to produce all his trade books. 37. In the course of an action the Process Court, on the application of either party, may order production of the adversary's trade books for the purpose of such entries, as relate to the matter in dispute, being inspected in the presence of the owner, and, if necessary, of having copies taken. If the books are in some place other than that where the action is pending, such inspection or copying is to be effected either by the Process Court itself at such place, or by the Court of such place upon request of the Process Court. 38. Where any person fails to comply with an order of the Court directing the production of his trade books or of any one of them, the fact in dispute, which it is desired to prove by such books or book, is to be presumed against him, unless he can prove that the non-production was in no way due to any fault of his own, or can render a statement to that effect credible. 39. It is for the Court to decide, according to the particular circumstances of the case, the value as evidence of entries in trade books ; nevertheless such entries can, of themselves, never form conclusive proof in favour of the person who made them, excepting in the case of entries relied upon by his adversary as well, or entries which cannot be contradicted by conflicting entries in the trade books of the adversary, where the latter is a trader, or entries the incorrectness of which the adversary is unable to show to be at least probable. The first made exception is to be extended to such entries as stand in connection with the entries relied upon by the adversary as well. 40. It is for the Court, in the case of entries in the respective trade books of the contending parties contradicting each other to such an extent that it is impossible to explain them, to decide, according to the circumstances of the case whether such evidence is to be entirely rejected, or whether greater credence is to be attached to the books of one of the parties. 41. In all cases where trade books furnish only incomplete proof, it may be supplemented by other evidence ; as to this the Court decides according to the circumstances of each particular case. CHAPTER V. TRADE PROCURATORS AND ASSISTANTS. 42. Any person carrying on a commercial business may appoint one or more procurators for such business, or for any branch establishment thereof, by means of an express instruction for which, however, no particular form is required. Every grant and every revocation of a procuration is to be entered in the Commercial Register. 43. A procuration may at any time be revoked or the procurator may at any time renounce it. It also terminates of itself by expiration of time, by the contract of hiring out of services concluded with the procurator coming to an end, or by the disposal or dissolution of the business in respect of which the procuration was conferred, but a procuration is not terminated by the death of the principal. Transactions undertaken by a procurator after his instruction has terminated are valid, if he was ignorant of such termination. 44. A procuration granted to several persons collectively can only be exercised by all the grantees jointly. Such a procuration terminates for all, even where it comes to an end in the person of one of them only. 45. The grant of a procuration carries with it the authority to use the firm name of the principal and to undertake on his behalf judicially and extra-judicially all commercial transactions and legal acts connected with his business. A limitation of the powers of a procurator is of effect against such third persons only as had knowledge of the limitation. 46. A procuration may be granted for an indefinite period, until a certain date or the happening of a certain event, or for a fixed period. The rights of revocation and renunciation are not affected hereby. 47. A procurator cannot transfer the procuration granted him, either wholly or in part, to another ; he is, nevertheless, entitled to engage trade assistants. 48. A principal directly and exclusively acquires the rights and incurs the obligations arising from all transactions and acts undertaken or done by a procurator in the principal's business, whether he sanctioned the same or whether his name was disclosed therein or not. The same applies to illegal acts done by a procurator in the business of his principal, and to transactions which, although concluded in the name of the procurator, are from the circumstances and the intention of the other party to the transaction to be taken as concluded on account of the principal. 49. Any person, who in concluding a transaction either falsely represents himself to be duly instructed as procurator, or exceeds his instructions under the procuration, is personally liable, at the option of the other party to the transaction, for performance or damages ; in the case, however, in which the procurator exceeds his instructions, the liability of the principal, in so far as it exists in conformity with the second paragraph of Article 45, is not to be excluded ; but in such case the transaction can only be enforced against either the principal or the procurator. Where the other party had knowledge of the absence of instructions under the procuration, the transaction, as between the parties thereto, is of no effect. 50. A procurator may not trade either on his own account or on that of third persons ; if he violates this provision, he must, on demand of the principal, and apart from the further consequences laid down in Article 63, allow the commercial transaction so concluded to count as concluded on account of the principal, and must make good any damage sustained. 51. Any person engaged as trade assistant in a commercial business for the rendering of services to the principal may, without requiring a special instruction for the purpose, and with full effect for his principal, undertake all such transactions and do such acts as ordinarily come within the sphere of the duties entrusted to him. His principal alone acquires all the rights and incurs all the obligations consequent on such transactions and acts, whether the assistant is engaged for the whole of the business or for a department thereof, or only for certain kinds of transactions or for single transactions. A trade assistant is not competent to carry on legal proceedings, or to do any individual act before a Court , unless he has been specially instructed for such purpose. A trade assistant must in signing, in addition to writing his name, indicate his representative capacity. 52. A trade assistant is, in particular, to be deemed engaged for a particular sphere of duties, where he is employed by his principal in carrying on particular transactions in a public shop, warehouse, or other place of business, or where he is employed away from the place of business, or where he enters into transactions with third persons in the office of the business without any objection being raised by his principal, or in answer to enquiries declares himself to be empowered to enter into the same. 53. Where third persons with whom trade assistants enter into transactions as representatives of their principal, act in good faith, such transactions are valid with regard to such third persons, even though the trade assistants failed to observe the limits of the instructions conferred or the manner of conducting business enjoined on them. 54. Where it is desired to entrust trade assistants with a more extensive capacity of representing their principal than that flowing, in accordance with the usages of trade, from the engagement for a particular sphere of duties, such intention must be effected by conferring on them a special instruction, which must be duly notified to third persons. This provision must, in particular, be observed in cases where it is intended that *the signature of the assistant shall bind the principal in correspondence, or on bills of exchange, promissory notes, and other documents evidencing indebtedness. 55. Payments made or received in good faith by third persons to or from trade assistants at the place of business, must in all cases be recognized by the principal as received or made on his behalf. The same applies to merchandise, documents, and any other thing of value, accepted or delivered under like conditions. Any person bringing a receipted account, or any other acknowledgment of receipt, is to be deemed to be empowered to receive payment or the object named, unless the circumstances of the case admit of some other presumption. 56. No trade assistant can transfer his powers ; nor can he cause himself to be either entirely or partially represented in the exercise thereof by another without the consent of his principal, excepting where the usages of trade permit of his doing so. 57. The provisions contained in the second paragraph of Article 45 and in Articles 48, 49, and 50 are also to be applied to trade assistants. * 58. The legal relations between a principal and trade assistant are, in so far as they are relations of service, and saving the provisions in this Code contained, to be determined by the principles governing contracts of hiring out of services. 59. A contract of hiring out of services, where entered into for an indefinite time, may at any time be dissolved by a month's notice on either side. Where such contract has been entered into for the life of one of the parties, or for such length of time as may be deemed equivalent thereto, it is to be deemed to have been entered into for an indefinite time. 60. A contract of hiring out of services entered into for a certain time cannot be dissolved before the expiration of such time unless by mutual consent, except in cases where retirement or dismissal at some earlier period is by law permitted. During the continuance of his term of service an assistant is entitled to the receipt in full of the stipulated, or locally customary remuneration, even though his principal should fail to employ him at all, or should employ him only but little. 61. Where, during the stipulated term of service, an assistant has for two months or more by illness or otherwise been incapacitated from performing the duties incumbent on him, he may be dismissed. 62. A principal is not bound to compensate an assistant for illness contracted or injuries incurred in his employment, nor is he liable for the medical expenses consequent thereon, unless such illness or injury was brought about by the fault of the principal himself. 63. A trade assistant may be dismissed at any time :— i. If he commits an act of unfaithfulness, or abuses the confidence reposed m him ; ii. If he transacts business on his own account or on that of a third person, unless such business is of an insignificant character ; iii. If, without lawful cause, he refuses or fails to carry out the work with which he is charged, and, generally, to perform the duties incumbent on him ; iv. If he gives offence by unseemly conduct or a disorderly course of life. 64. A trade assistant may at any time retire from his employment if he fails to receive proper remuneration, if unlawful or immoral services are expected of him, or if he is treated in a manner injurious or dangerous to his safety, health, or honour. A trade tassistant may at any time before the expiration of the term stipulated retire from his employment, but subject to the due observance of the period for notice in Article 59 specified, if he intends to establish himself independently. 65. A contract of hiring out of services does not terminate on the death of the principal, but it terminates on the business for which the trade assistant was engaged ceasing to exist. Where such business is to be transferred to other persons, both parties are entitled to give such notice as is in Article 59 provided. CHAPTER VI. COMMERCIAL PARTNERSHIPS AND COMPANIES AND JOINT TRADE ASSOCIATIONS. GENERAL PROVISIONS FOR COMMERCIAL PARTNERSHIPS AND COMPANIES. 66. Commercial partnerships and companies can only be formed for the purpose of carrying on jointly a commercial business. 67. Partnerships and companies formed with the object of carrying on an illegal or prohibited business are void ab initio. Partnerships and companies carrying on business contrary to public policy or good morals may be dissolved by order of the Court on the application of the Public Procurator or of the police authorities, or by the Court of its own motion. Immediate complaint may be raised against such order. 68. Partnerships and companies for the carrying on of whose business the consent of some public authority is by law or ordinance required cannot be formed unless such consent is obtained. With regard to joint-stock companies the provisions of Section III must be observed. 69. The formation of a partnership or company is, with regard to third persons, of no effect as such, until it has been duly registered and published. 70. Every partnership and company must have a firm name and a seal of its own, and must have a definite seat of business. 71. The firm name must be engraven on the seal, and a copy of the seal must be deposited with the Commercial Register at the Court in Article 18 mentioned. The same formality is to be observed on any subsequent alteration of the seal taking place, or upon a new seal being adopted. 72. The firm name and seal are placed upon all communications addressed to public authorities, upon reports, certificates of shares, bills of exchange and promissory notes, and, generally, upon all documents by means of which the partnership or company acquires any rights or enters into any obligations. 73. Every partnership and company has its own separate property and independent rights and duties. It can, in particular, in its own name acquire rights of claim and incur liabilities, acquire property movable and immovable, and sue and be sued in Court. SECTION I. ORDINARY PARTNERSHIP (GOMEI-KWAISHA). SUBSECTION 1. FORMATION OF THE PARTNERSHIP. 74. Where two or more persons not exceeding seven combine money, or things of value, or their personal services, for the purpose of therewith undertaking a commercial business on joint account without their liability being limited to their contributions, they thereby constitute an ordinary partnership. 75. The firm name of the partnership is to contain the family names of all the partners, or of one or more of them, with the addition of the word “ Kwaisha.” Where a partnership takes over a business that is already established, it cannot continue to bear the existing firm name. 76. After the retirement of individual partners the use of the firm name borne prior thereto may be continued, but only with the consent of the partner retiring, if his name is retained in the firm name. 77. A partnership can only be formed by a contract in writing ; a copy of such contract signed by all the parties thereto is to be delivered to each partner. These provisions are also to be observed on any subsequent alteration of the partnership contract taking place. 78. The formation of every partnership is to be registered within the fourteen days next following at the place where the head office is situated, and also in every place where a branch is established. 79. The entry in the register and the publication are to contain :— i. A declaration that the partnership is to be an ordinary partnership ; ii. The object of the partniship ; iii. The firm name of the partnership and the place of its seat of business ; iv. The names and place of residence of each partner ; v. The date of formation ; vi. Where a term for the existence of the partnership has been fixed, the duration thereof ; vii. The names of the managing partners, if any. 80. Whenever any subsequent alteration takes place or is agreed upon in one or more of the particulars in the preceding Article specified, such alteration is to be registered within seven days. 81. No partnership may commence business operations until registration has taken place. Where a partnership fails to comply herewith, its operations are to be stayed by order of the Court. Immediate complaint may be raised against such order. 82. Where operations are not commenced within six months from the date of registration, the registration and publication become inoperative. SUBSECTION 2. ALTERATION OF THE PARTNERSHIP CONTRACT. 83. A partnership contract cannot be altered without the consent of all the partners: where such consent is not obtained, the existing provisions of the contract remain in force. 84. Where any provision of the partnership contract has not been carried out by the partnership, such provision cannot be relied on either against the partners or against third persons. SUBSECTION 3. RIGHTS AND DUTIES OF PARTNERS AMONG THEMSELVES. 85. The rights and duties of partners among themselves are determined by this Code and the partnership contract. 86. For transactions and matters foreign to the object of the partnership, though not actually opposed thereto, the consent of all the partners entitled to management is required. 87. All matters relating to the execution of the provisions of the partnership contract are to be decided by a majority of the partners entitled to management. 88. In the conduct of the affairs and the protection of the interests of a partnership, all partners have equal rights and duties, unless it is otherwise provided by the partnership contract. 89. The voting power of a partner is not to be measured by the relative amount of his contribution. 90. Partners not entitled to management may at all times look into the course of business, examine the books and papers of the partnership, and state their views with regard thereto. 91. Each partner entitled to management has the right to grant and revoke trade procurations. 92. Every partner owes the partnership the same application and diligence as a regular man of business would give to his own affairs, and must make good to the partnership any damage he may by the violation of these duties have occasioned it. 93. All contributions made by partners of money, or of things of value, are to be entered in the inventory of the partnership at the valuation fixed by agreement, and become partnership property. 94. Where it has become impossible for a partner to furnish the contribution due from him, he is to be deemed expelled from the partnership, unless he furnishes, with the consent of all the partners, some other contribution in lien thereof. 95. Where a partner fails to furnish the contribution due from him, the partnership may, at its option, either expel him therefrom, or require him to pay interest at the rate of seven per cent per annum, and may in either case claim damages from him. 96. No partner is bound to increase his contribution beyond the amount agreed on, or to make good any deficiency it may by loss have sustained. 97. No partner is permitted, without the consent of all the partners, to reduce his contribution or his share in the partnership property. 98. No partner can, without the consent of all the partners, introduce a third person into the partnership, or substitute any such person in his own place. The heir or other successor of a partner can succeed to his place, unless it is expressly provided to the contrary in the contract ; but he is only entitled to management with the consent of all the partners. 99. The disposal of a share in a partnership to another person is inoperative with regard to both the partnership and third persons. 100. Where a partner admits another person to participate in his share in the partnership, the relations thereby created are to be determined by the provisions relating to joint trade associations. 101. A partner is entitled to interest at the rate of seven per cent per annum on all loans made by him to the partnership, and on all disbursements made by him on its behalf ; he can claim to be indemnified for losses directly sustained by him in conducting its affairs. 102. No partner is entitled to remuneration for services rendered by him in the conduct of the affairs of the partnership, unless it is expressly so agreed in the partnership contract ; but a partner whose contribution consists of his personal services can claim suitable remuneration for services rendered to the partnership over and above what is properly due from him. 103. Where a partner fails to hand over to the partnership within a proper time monies received by him on its behalf, or applies its monies to his own use, he is bound to pay interest thereon to the partnership at the rate of seven per cent per annum and to pay damages, if any. 104. No partner can without the consent of all the partners, either on his own account or on that of third person, carry on or take part in any transactions falling within the description of trade pursued by the partnership. If he does so, the partnership can, at its option, either expel him therefrom, or take over the transactions on its own account ; and it is entitled, in either case, to claim to be indemnified for any damage it may have sustained. 105. The share of each partner in the profits and losses of a partnership is proportionate to the money value of his contribution, unless some other scale of apportionment is agreed upon in the contract. In the event of the money value of a contribution consisting of personal services not having been determined in the contract, it is to be fixed with regard to all the circumstances of the case. 106. Where a partner, notwithstanding that he is not entitled to management, performs any act of management, or commits any deceit against the partnership, or otherwise acts in flagrant violation of his essential duties towards it, the partnership can expel him therefrom and can claim damages from him. 107. The partners are bound among themselves to recognize all acts and transactions done on behalf of the partnership by any individual partner by virtue of the partnership contract or the provisions of this Code. SUBSECTION 4. RIGHTS AND DUTIES OF PARTNERS WITH REGARD TO THIRD PERSONS. 108. A partnership directly acquires the rights and incurs the obligations arising from any act done expressly or impliedly on its behalf by a partner entitled to management. 109. Every partner entitled to management can enforce judicially as well as extra-judicially the rights of the partnership, and can validly deal therewith. 110. The engagements of the partnership with respect to third persons may be enforced by them against any partner entitled to management. 111. Any limitation of the representative powers of the partners entitled to management is inoperative as regards third persons. 112. The partnership property is in the first place liable for the obligations of the partnership, and thereafter every partner is undividedly liable to the full extent of his property. 113. Persons who, without being partners, consent or allow their names to appear in the firm name of a partnership, or take part in the conduct of its affairs, or actually take upon themselves the rights and duties of partners, are jointly and severally and unlimitedly liable as though partners. 114. Trade assistants or trade procurators whose salary consists either wholly or in part of a fixed or variable share of the profits, are not to be regarded in the same light as the persons in the preceding Article mentioned. 115. A newly admitted partner is liable for all obligations incurred by the partnership prior to his admittance, unless it be otherwise stipulated by agreement. 116. No portion of the partnership property can be claimed for the payment of the debts of any individual partner by his creditors, unless some right to such portion had been created in favour of third persons prior to the contribution thereof to the partnership property. 117. The creditors of a partner can claim from the partnership such interest or dividends only as he himself may be entitled to. The share of a partner, however, in the partnership property can only be claimed on his retirement from the partnership, or upon dissolution thereof. 118. Previous to the division of the partnership property, no debt due to a partnership can be set off against a right of claim against a partner therein, and, similarly, no debt due to a partner can be set off against a right of claim against the partnership of which he is a member. 119. The reduction of the share of a partner in the partnership property can be contested by the creditors of the partnership within two years of such reduction, if it impairs the means of satisfying their claims out of the partnership property, or renders the satisfaction of such claims more difficult. SUBSECTION 5. CESSATION OF MEMBERSHIP OF PARTNERS. 120. A partner can only voluntarily retire from a partnership entered into for a fixed term with the consent of all the partners ; but no such consent is necessary where the partnership was entered into for an indefinite time or for life. Such retirement can, however, only take place after six months prior notice has been given and at the end of a business year, unless important reasons exist for speedy retirement. 121. The membership of a partner is also terminated :— i. By his expulsion ; ii. By his death, unless his heir or other successor takes his place ; iii. By his bankruptcy ; iv. By his loss of capacity, unless it is otherwise agreed upon. 122. Whenever the membership of a partner ceases, the partnership is to have such fact and the cause thereof entered in the Commercial Register within seven days. 123. When the membership of a partner ceases, the amount of his share in the partnership property at the time is to be determined by means of a balance sheet made out for the purpose, and the amount so ascertained must be paid out to him, or to his heir or other successor. Accounts of any transactions entered into, but not completed, before the membership of a partner ceases may be taken on the completion thereof. 124. The value of the share of a partner in the partnership property is, in the absence of any agreement to the contrary, payable in money only, without regard to the nature of his original contribution. In the absence of a special agreement no compensation is due for such contributions as consist in personal services, or as otherwise terminate when the membership of the partner ceases. 125. A partner, whose membership has ceased, continues liable for a period of two years thereafter to the full extent of his property, in respect of obligations incurred by the partnership before his membership ceased. The same applies to a partner who in accordance with Article 98 has substituted a third person in his place. SUBSECTION 6. DISSOLUTION OF PARTNERSHIP. 126. A partnership is dissolved :— i. By expiration of the term for which it was formed ; ii. By the happening of events upon which dissolution was by the partnership contract provided to take place ; iii. By the consent of all the partners ; iv. By the bankruptcy of the partnership ; v. By order of the Court. 127. A partnership may be dissolved by order of the Court in cases, other than those in Article 67 mentioned, on an application made by one or more of the partners to have the partnership dissolved on grounds which render the object of the partnership unattainable or the continuance of its existence as a partnership impossible. In the latter case the Court may order in lieu of dissolution, the expulsion of individual partners, on an application to that effect by all the other partners based on sufficient grounds. Against the orders in the last two paragraphs mentioned immediate complaint may be raised. 128. In the cases mentioned in Article 126, i. and ii. the partnership may be continued by all the partners or by some of them ; in the latter case, a partner who declines to continue is to be deemed to retire. 129. Where dissolution of a partnership takes place for reasons other than bankruptcy, one or more liquidators are to be elected by a majority of all the partners, and the cause of dissolution, the date thereof, and the names and domiciles of the liquidators are to be entered within seven days in the Register. 130. It is the duty of the liquidators to close all current business ; to discharge the obligations of the partnership ; to collect outstanding claims ; and to sell the then existing partnership property. The liquidators are not permitted to continue the business of the partnership or to enter into any new transactions, except in so far as is necessary for the purpose of liquidation. They can represent the partnership in all judicial proceedings and effect any compromise or submission to arbitration on its behalf. 131. The powers of the liquidators cannot be limited by the partners, and they are only revocable by order of the Court on the application of the partners on weighty grounds. Against such order immediate complaint may be raised. 132. The liquidators, on the conclusion of their duties, are to render an account to the partners, and distribute amongst them the partnership property in accordance with the provisions of Articles 105 and 124. During the progress of the liquidation, such property as becomes available may be distributed amongst them. 133. Only so much of the partnership property is divisible amongst the partners as is not required for meeting the total obligations of the partnership. 134. The trade books and papers of a dissolved partnership are to be dealt with by the partners in conformity with the provisions of Article 34. 135. The unlimited liability of the partners for the obligations of the partnership becomes prescribed by the expiration of five years from dissolution, excepting in the case of obligations in respect to which some shorter period of prescription exists, but nothing herein affects the right of a creditor to claim any patrnership property remaining undistributed. SECTION II. LIMITED PARTNERSHIP (GOSHI-KWAISHA). 136. A limited partnership is one in which the liablity of its members is limited to the amount of their contribution in money or things of value, unless in the case of one or more of them it is otherwise determined by contract. The number of members of a limited partnership is subject to no restriction. 137. Subject to the rules in this Section contained, the provisions governing ordinary partnerships apply also to limited partnerships. 138. In the case of a limited partnership the registration and publication must, in addition to the particulars in Article 79, ii—vi. specified, contain :— i. A declaration that the partnership is to be a limited partnership ; ii. The total amount of the partnership capital ; iii. The amount of each partner's contribution ; iv. The names of the partners whose liability is unlimited, if any ; v. The names of the managing partners or directors if any, with a statement as to whether their liability is limited or unlimited. 139. The firm name of a limited partnership may not contain the family names of partners other than those who are unlimitedly liable. The firm name is in every case to conclude with the words “ Goshi-kwaisha” Where the firm name contains the family name of a partner, he is thereby rendered unlimitedly liable for obligations of the partnership. 140. With the exception of partners with unlimited liability, and directors, the partners can, on their own account as well as on that of third persons, carry on or take part in transactions falling within the same description of trade as that pursued by the partnership. 141. All the partners, unless it is otherwise provided in the contract, are equally entitled and bound to represent the partnership. 142. Where the partnership consists of more than seven partners, it appoints one or more of the partners to be directors, either at once in the partnership contract or, in the event of such case arising at a later period, by means of a resolution of the partnership, for the validity of which a majority of three-fourths of all the partners is required. Directors may at any time be dismissed from their office by a resolution of the partnership, for the validity of which a majority of three-fourths of all the partners is required. 143. The partners entitled to management or directors have the exclusive right of representing the partnership in all its affairs, judicial and extra-judicial ; they are, however, bound by the provisions of the partnership contract and the resolutions of the partnership. Where there are two or more managing partners or directors, it is to be determined in the partnership contract or by a resolution of the partnership whether its business may be conducted by each one in dividually, or only by some of their number combined, or only by all collectively. 144. Any restriction placed upon the representative powers of the partners entitled to management or directors is of no effect with regard to third persons entering into transactions with them in good faith. 145. Subject to the consent of the partners entitled to management or directors, a partner with limited liability may transfer his share in the partnership to a third person, who thereupon enters into all the rights and duties of the transferor. 146. It may be previously determined in the partnership contract or by a resolution of the partnership arrived at as in Article 142 mentioned that, all or some one or more of the partners- entitled to management or directors, shall be unlimitedly liable for the partnership obligations incurred during their conduct of business. 147. The unlimited liability mentioned in the last preceding Article of any partner entitled to management or director terminates at the expiration of one year from the date of his retirement from office. 148. The partners entitled to management or directors are to convene an ordinary general meeting at least once in every year, and to convene an extraordinary general meeting whenever they deem necessary or upon a requisition made by one fourth of all the partners. 149. Seven days at least prior to the date of a general meeting, the object of the meeting and copies of the documents to be laid before it must be communicated to each partner. 150. At the ordinary general meeting, which is to be held immediately after the close of the business year, a balance sheet and a report on the business of the preceding year and on its results are to be submitted to the partners for their examination and approval. The question of approval is decided by resolution passed by a majority of the members present. 151. To pass a resolution deciding any matter laid before an extraordinary general meeting an absolute majority of all the partners is required. Matters, however, for the decision of which in the case of an ordinary partnership the consent of all the partners is required, are decided by a majority of three-fourths of all the partners. In such case the dissenting members have the right of immediate retirement from the partnership. 152. Where the number of partners present at such general meeting is insufficient to pass a resolution by the majority required by the preceding Article, a provisional resolution may be passed. In such case the resolution passed must be communicated to all the partners and a fresh general meeting convened, with an express notification that the resolution will become effective if confirmed by a majority of those present at such subsequent general meeting. 153. No interest or dividends may be paid to partners so long as the partnership capital is diminished by losses. SECTION III. JOINT-STOCK COMPANIES (KABUSHIKI-KWAISHA). SUBSECTION 1. GENERAL PROVISIONS. 154. A joint-stock company is a company having its capital divided into shares, and for whose obligations its property is exclusively liable. 155. A joint-stock company is to be deemed to be a commercial company even if its object is not the carrying on of a commercial business. 156. No joint-stock company may have less than seven members, and none can be formed without a concession from the Government. SUBSECTION 2. PROMOTION AND FORMATION OF JOINT-STOCK COMPANIES. 157. No joint-stock company can be promoted by less than four persons. The promoters are to draw up the prospectus and provisional regulations of the company, and each promoter is to subscribe his name and affix his seal thereto. The regulations must not be contrary to the provisions in this Code contained. 158. The prospectus is to contain the following particulars:— i. A declaration that the company is to be a joint-stock company ; ii. The objects of the company ; iii. The firm name of the company, and the place of its seat of business ; iv. The total amount of capital of the company, the number of shares and the amount of each ; v. A rough estimate of the manner in which the capital of the company is to be employed ; vi. The names and domiciles of the promoters and the number of shares taken by each ; vii. Where a term for the existence of the company has been fixed, the duration thereof. 159. Application for permission to promote a company must be made by the promoters to the proper Department of State through the Governor of the district in which the company is to be established. Such application must be accompanied by the prospectus and provisional regulations. 160. When such permission has been obtained, the promoters may publish the prospectus with an invitation to subscribe for shares. Such publication is to include mention of the fact that the legally prescribed permission has been obtained, the date upon which it was given, and the statement that the provisional regulations of the company will be open to the inspection of every subscriber. 161. A person in order to subscribe for shares is to enter in the subscription list the number of shares he wishes to take, and is to sign his name and affix his seal thereto. A person may also subscribe by forwarding a signed and sealed declaration in writing. Where a person subscribes through a representative, the names of the principal, together with those of the representative, are to be mentioned and the signature and seal of such representative affixed. 162. A person by subscribing binds himself, conditionally on the company being formed, to pay the amounts payable on each share in conformity with the regulations. 163. When all the shares have been subscribed, the promoters are to convene the first general meeting. The first business to be transacted at such meeting is the definite settlement of the regulations of the company, with the assent of at least one half of all the subscribers, who represent at least one half of the total share capital. 164. At the first general meeting resolutions are to be passed for the ratification of contracts entered into and disbursements made by the promoters in promoting the company, and for fixing the value of contributions consisting in things of value for which the contributors are to receive shares. Such resolutions are passed by an absolute majority of votes of those present, who represent at least one half of the total number of subscribers and one half of the total share capital of the company. 165. The business at the first general meeting also includes the election of the directors, and of inspectors. 166. When the first general meeting has been held, the promoters are to apply through the Governor to the proper Department of State for a concession to form the company. Such application is to be accompanied by i. The prospectus and regulations ; ii. The subscription list ; iii. The document of permission to promote the company. 167. When the concession is granted, the promoters are to hand over the business to the directors. The directors are thereupon to cause the shareholders to forthwith pay to the company twenty five per cent at least upon each share. 168. When the amount mentioned in the preceding Article has been paid in, the company is to apply within fourteen days for registration. Such application is to be accompanied by the prospectus, regulations, and subscription list, and the charter of concession. The following particulars are to be registered and published :— i. A declaration that the company is to be a joint-stock company ; ii. The objects of the company ; iii. Its firm name and place of seat of business ; iv. The total amount of the share capital, as well as the number of shares and the amount of each ; v. The amount already paid upon each share: vi. The names and domiciles of the directors ; vii. Where a term for the existence of the company has been fixed, the duration thereof ; viii. The date of its charter of concession ; ix. The date of commencing business. The Court is to keep the documents handed in by the company along with the Register. 169. Where a company forms a branch establishment it is likewise to be entered in the Commercial Register of the place. 170. Where no registration has been effected within one year at the latest from the date of obtaining concession, such concession becomes inoperative. The provisions of Articles 81 and 82 apply also to joint-stock companies. 171. Until registration takes place, the promoters and directors, as well as the shareholders, are jointly and severally liable to an unlimited extent for all obligations and disbursements sanctioned at the first general meeting. 172. The promoters of a company remain jointly and severally liable to an unlimited extent for all obligations and disbursements not sanctioned at the first general meeting. SUBSECTION 3. FIRM NAME OF COMPANY AND LIST OF SHAREHOLDERS. 173. The firm name may not contain the names of any shareholder or shareholders, and it is to conclude with the words li Kabushiki-kwaisha." 174. Every company is to keep a list of shareholders in which are to be inscribed :— i. The names and domicile of each shareholder ; ii. The number of shares held by each shareholder, and the number of each share ; iii. The amount already paid up on each share ; iv. The dates of acquisition and transfer of each share. SUBSECTION 4. SHARES. 175. The amount of each share is to be a fixed and equal portion of the capital of the company. No share may be less than twenty yen in amount and, where the capital of a company amounts to one hundred thousand yen or more, no share may be less than fifty yen. 176. A certificate is to be issued in respect of each share and such certificate is to bear the sum of money for which it is issued, the date of issue, its number, the firm name and seal of the company, the names and the seals of the directors and the names of the shareholder. 177. Shares can be neither subdivided nor consolidated. 178. So long as the shares are only partly paid up the company may only issue provisional certificates ; the final certificates may not be issued until the shares are fully paid up. 179. Neither provisional nor final certificates may be issued until registration has taken place. 180. The transfer of any share, upon which less than one fourth of the amount thereof has been paid, is void. 181. The transfer of a share is invalid as against the company, unless the names of the transferee of such share have been entered on the sharecertificate, and on the list of shareholders. 182. The transferor of a share on which less than one half has been paid up continues liable to the company as a surety for the full amount unpaid thereon. 183. For the purpose of closing the list of shareholders and the accounts, a company is entitled, once in every business year, on giving public notice, to suspend the transfer of shares for a period not exceeding one month. 184. Neither the amount paid up on any share nor the interest of a shareholder in the property of a company, can be reclaimed before the dissolution thereof. SUBSECTION 5. DIRECTORS AND INSPECTORS. 185. Every company is in general meeting to elect from amongst the shareholders at least three directors to hold office for a period not exceeding three years, and who at the expiration of such period, are eligible for re-election. From amongst the directors one or more may be appointed managing directors, whose liability, however, remains the same as that of the other directors. 186. With respect to the powers of directors to represent the company, and the limitation of such powers, the provisions of Articles 143 and 144 apply. 187. The number of shares which are to be held by a shareholder, in order to render him eligible for the office of director, is to be prescribed in the regulations of the company. During the period of office of a director, the certificates of such shares are to be marked as not transferable and deposited with the company. 188. The directors are personally responsible to the company for the performance of their official duties, and for the due observance of the regulations of the company and its resolutions. 189. The liability of the directors for the obligations of the company is the same as that of other shareholders. They can, however, if it is so provided by the regulations of the company or previously determined by a resolution passed in general meeting, be held personally jointly and severally an dun-limitedly, liable in respect of all obligations which have arisen during their term of office. Such liability terminates at the expiration of one year from the date at which they ceased to hold office. 190. Every alteration in the persons of the directors is to be entered in the Commercial Register. 191. Every company is in general meeting to elect from amongst the shareholders at least three inspectors to hold office for a period not exceeding two years, and who at the expiration of such period, are eligible for re-election. 192. The duties of the inspectors are as follows :— i. To see that the conduct by the directors of the affairs of the company is in conformity with the laws and ordinances, the regulations of the company, and the resolutions passed in general meeting, and, generally, to expose all mistakes and irregularities committed by the directors in the course of such conduct ; ii. To examine the accounts, the inventory, the balance sheets, the business reports and the schemes for distribution of interest or dividends, and to report to the shareholders in general meeting thereon ; iii. To convene a general meeting whenever they consider such a measure necessary or expedient in the interests of the company. 193. The inspectors are at all times entitled to investigate the course of business, to have access to the books and papers, and to examine the treasury of the company and the present condition of all its property. 194. Whenever a difference of opinion arises amongst the inspectors, such opinions are to be submitted to a general meeting. 195. The inspectors are liable for any damage caused to the company, or the creditors thereof, by the violation of any of the duties imposed upon them by Article 192. 196. Where directors or inspectors draw salaries or other remuneration, such salaries or remuneration are to be fixed in the regulations, or by resolutions passed in general meeting. 197. Directors and inspectors may at any time be dismissed from their office by a resolution passed in general meeting, without giving rise to any claims against the company for further salary, or other remuneration or indemnity. SUBSECTION 6. GENERAL MEETINGS OF SHAREHOLDERS. 198. General meetings are convened by either the directors or the inspectors, or by any other persons, who under this Code are entitled to convene such meeting. 199. Every such meeting is to be convened in the manner prescribed in the regulations, and the purpose for which it is called and the matters to be considered thereat are to be notified at least fourteen days prior to the date of holding the same. This provision applies also to the convening of the first general meeting. 200. The ordinary general meeting is to be held at least once a year at the time prescribed in the regulations. At such meeting the accounts, the inventory, the balance sheet, the business report, and the scheme for the distribution of interest or dividends for the preceding business year are laid before the shareholders, and resolutions with respect thereto passed. The report of the inspectors upon the writings submitted by the directors is to be laid before the meeting together with the writings themselves. 201. An extraordinary general meeting may at any time be convened for the purpose of passing resolu tions on special matters. Such meeting must also be called upon a requisition of shareholders representing not less than one fifth of the total share capital, and specifying the object for which the meeting is required to be called. 202. Except where otherwise in this Code provided, a general meeting is empowered to pass resolutions only in conformity with the regulations of the company. In the absence of any regulation relating thereto, resolutions are to be passed by an absolute majority of votes of the shareholders present who represent not less than one fourth of the total share capital. 203. For passing a resolution for the purpose of altering the regulations, or for the purpose of voluntarily dissolving the company, the majority required is that prescribed by Article 164. The provisions of Article 152 apply also to joint-stook companies. 204. In general, one share entitles the holder thereof to one vote ; the regulations may, however, restrict the voting powers of members holding more shares than ten. SUBSECTION 7. ALTERATION OF THE REGULATIONS OF A COMPANY. 205. A company may alter its regulations where provision for such alteration has therein been made, or by resolution passed in general meeting, but not in a sense contrary to the provisions of law, or to the conditions of concession imposed by the Government. 206. A company may increase its capital by raising the amount of every share, or by the issue of new shares, or of bonds. A company may reduce its capital by lowering the amount of everY share, or reducing the number of shares ; but its capital may not be reduced to less than one fourth of the total amount thereof. Every bond is to bear the name of its holder ; with respect to its amount the provisions of Article 175 apply. 207. Where a company proposes to reduce its capital, it must give notice of its intention to all its creditors and require them to present within thirty days any objection they may have to such reduction. 208. Where no objection is raised within the term in the preceding Article mentioned, none is to be deemed to exist. Where objection is raised the company may only proceed with the reduction of its capital after it has removed the objection by satisfying, or giving guaranty for the claim. 209. Where a creditor has, in consequence of his ignorance of the proposed reduction of capital, failed to notify his objection thereto, and such ignorance was in no way due to any fault of his own, those shareholders of the company, who have received repayment of their portion of the amount by which the capital was reduced, remain, for a period of two years from the date of registration of such reduction, personally liable to such creditor to the extent of the amount received. 210. Any alteration made in particulars of the regulations already registered is to be registered forthwith, and no such alteration can come into force until this has been effected. In the event of alteration of the seat of business, the removal thereof is to be registered in the former place of its scat ; in the new place of its seat, every thing is to be registered that is required in the case of a newly formed company. Where the seat of business is removed to another part of the same district such removal only is to be registered. 211. Upon the registration of any alteration in the regulations of a company, such alteration must be notified to the proper Department of State through the Governor. SUBSECTION 8. PAYMENT OF CALLS. 212. The time and manner of payment of calls is to be determined in the regulations. Fourteen days notice, at the least, of each call must be given to every shareholder with an intimation of detrimental consequences attending non-payment. 213. If any shareholder fails to observe the time appinted for payment, he is liable for payment to the company of moratory interest at the rate of seven per cent per annum, and of the expenses caused by such failure. 214. Where the defaulting shareholder fails to comply with a second call from the company to pay, within a newly fixed period of not less than fourteen days, his share may be declared forfeited by the company, and becomes its property. 215. The former owner of a share which has been declared forfeited remains, in the event of such share being publicly sold by the company and the amount realized not sufficing to cover the amount of the call ineffectually made, liable for payment of the difference and of interest and expenses a§ in Article 213 mentioned. Where, on the other hand, there is a surplus, it is to be returned by the company to the former owner. A special penalty may be fixed by the company in its regulations. SUBSECTION 9. DUTIES OF A COMPANY. 216. A company may not repay to any shareholder the amount of his share, or any portion thereof. Any amount so repaid may he reclaimed by the company, or directly by its creditors. 217. A company may not acquire its own shares, or take them in pledge. Shares declared to be forfeited, or which have been assigned to or have devolved on the company in satisfaction of a debt or otherwise are, within one month, to be publicly sold, and the amount realized deposited in the treasury of the company. 218. Every company is bound once at least in the year to close its accounts, and to prepare a statement of account, inventory, balance sheet, business report, and scheme for the distribution of interest or dividends. When the above have been examined by the inspectors, and approved by the shareholders in general meeting, the inventory and balance sheet must be published, with the names of the directors and the inspectors attached. 219. No interest or dividend may be paid to the shareholders of a company, until any reduction of its capital caused by losses has been made good, and the prescribed amount appropriated to the reserve fund. Until the reserve fund amounts to one fourth of the capital of the company, the sum to be appropriated to such fund must be at least five per cent of the annual profits. 220. Interest or dividends paid in contravention of the provisions of the two preceding Articles can be reclaimed by the company, or directly by its creditors. 221. Interest or dividends are equally distributed amongst all the shareholders according to the amount paid up on their shares. 222. Every company is bound to keep at its head office as well as at each branch office a list of its shareholders, and its prospectus, regulations, charter, resolutions passed in general meeting, statements of accounts of each business year, inventories, balance sheets, business reports, schemes for the distribution of dividends or interest and a list of its mortgage creditors and creditors having a pledge of immovables, and is on demand to allow any person to inspect such documents during ordinary business hours. 223. The inspection of the documents mentioned in the preceding Article may be suspended once in every business year for a period not exceeding one month to enable the books to be verified. SUBSECTION 10. INVESTIGATION OF AFFAIRS. 224. Upon the application of shareholders representing not less than one fifth of the share capital of the company, the Court of the place where the seat of business of the company is situated may charge one or more officials with the investigation of the course of business of the company and the present condition of its property. 225. The investigating officials so appointed have the right to examine into the state of the treasury and assets and to examine the books and all the papers of the company, and to require the directors and other officers to give information. 226. The investigating officials must draw up a protocol recording their investigations and the statements made before them, and must hand in the same to the Court by which they are appointed. Copies thereof are to be delivered by the Court to the company, and also, on demand and payment of a fee, to shareholders and other persons. 227. The proper Department of State has at all times the right of its own motion to cause the investigation in Article 224 specified to be made by the Governor or some other official. SUBSECTION 11. PROCEEDINGS AGAINST DIRECTORS AND INSPECTORS. 228. A general meeting may, through the inspectors or through attorneys for the purpose specially appointed, carry on legal proceedings against the directors, or through such attorneys against the inspectors. 229. So also shareholders representing not less than one twentieth of the capital of a company may, through attorneys specially appointed by them for the purpose carry on legal proceedings against the directors or inspectors, without prejudice to the right of every individual shareholder to appear before the Court in his own name or as intervener in order to protect his rights. SUBSECTION 12. DISSOLUTION OF COMPANIES. 230. A company is dissolved :— i. In the cases provided for in the regulations ; ii. Whenever the shareholders voluntarily dissolve it ; iii. Whenever the number of shareholders is reduced to less than seven ; iv. Whenever the capital of the company is reduced to less than one fourth, ; v. By the company becoming bankrupt ; vi. By order of the Court. 231. Upon the dissolution of a company it is to cease to carry on its business, except in so far as may be required for the completion of transactions already commenced, or the fulfilment of existing obligation. Where, notwithstanding, the directors continue to carry on its business, they are personally liable in respect thereof to the full extent of their property. 232. Upon the dissolution of a company the directors are to convene a general meeting in which, excepting in the case of dissolution by order of the Court, a resolution declaring the company dissolved is to be passed. At such meeting, excepting in the case of dissolution by bankruptcy, one or more liquidators are to be appointed. 233. If no resolution is passed declaring the company dissolved or no liquidators are appointed, as in the preceding Article mentioned, the Court may, upon the application of the creditors or shareholders, or of its own motion, make an order supplying the place of such resolution and can appoint liquidators. 234. Excepting in the case of bankruptcy, the company must within seven days of the resolution being passed notify for registration the cause of dissolution and the date thereof, and the names and domiciles of the liquidators, and must communicate the same to the Court ; it must in all cases make such communication to the shareholders. The above particulars must also be notified by the company through the Governor to the proper Department of State. 235. The Court is empowered to supervise the course of dissolution and liquidation. 236. Upon registration the powers of the directors to represent the company pass to the liquidators. The directors are, nevertheless, bound at the request of the liquidators to assist them in the work of liquidation 237. After registration every disposition of property of the company, otherwise than for the purposes of liquidation, and all transfers of its shares are void, unless sanctioned by the Court for special reasons. 238. Directors, failing to convene the general meeting or to notify for entry in the register, are personally liable to the full extent of their property for any damage caused to the company or third persons by such failure. 239. The expenses of dissolution and liquidation are to be paid out of the property of the company in priority to all other claims. SUBSECTION 13. LIQUIDATION OF COMPANIES. 240. With respect to the duties of liquidators of a company, Articles 130 and 131 apply. 241. Instructions may be given to the liquidators with regard to the performance of their duties by the company in general meeting, or by the Court on the application of shareholders or creditors, and the liquidators are responsible for the due observance of such instructions and compliance with the provisions prescribed by law. 242. A company in general meeting, or, if necessary the Court, upon the application of the creditors made for good and sufficient reasons, may cause one or more representatives of the creditors, for the purpose of guarding the interests of the creditors, to superintend the work of liquidation or to be associated with the liquidators. 243. The liquidators must, within sixty days from the date of their appointment, ascertain the present condition of the property of the company from its books, and must issue on not less than three occasions a public notice calling on the debtors of the company to discharge their liabilities directly they fall due, and requiring the creditors to notify their rights of claim within a fixed period, which may in no case be less than sixty days. Such public notice is to state that rights of claim of creditors who have failed to notify the same before expiration of the prescribed period will be excluded from the liquidation ; but the liquidators are not entitled to exclude any known creditors who may have failed to notify their rights of claim within the prescribed period. 244. The liquidators are not entitled to make any payment to creditors before the expiration of such period. 245. Creditors, notifying their rights of claim after the expiration of the prescribed period, are entitled to be paid out of the assets in so far only as they remain undistributed amongst the shareholders after all the other obligations of the company have been discharged. 246. The liquidators are, for the purposes of liquidation, empowered to make calls on the shareholders in respect of such shares as are not fully paid up. 247. The liquidators may convene a general meeting whenever they deem such measure necessary or expedient. They are bound to convene a general meeting where the regulations of the company, or a resolution passed in general meeting, provide therefor, or where it is applied for by shareholders representing at least one fifth of the share capital. 248. Upon the completion of the work with which they have been charged, the liquidators are to submit their accounts to a general meeting of the company for its approval. 249. Upon obtaining the approval in the preceding Article mentioned the liquidators, after discharging the obligations of the company, are to proceed to distribute in money the remaining property equally amongst the shareholders according to the number of shares held by them. No such distribution is to take place until after the expiration of three months from the time of all the creditors being satisfied. No shareholder is bound, notwithstanding any resolution passed in general meeting to the contrary, to accept anything other than money in respect of his share. 250. When the liquidation has been completed, the liquidators are to lay before a general meeting of the company a general account and a general report of their work, and are to ask for their discharge. In the event of the general meeting failing to grant the discharge, the Court upon the application of the liquidators may make an order granting or refusing the same. Against such order immediate complaint may be raised. 251. The liquidators are accountable for their acts to the general meeting alone ; in respect of acts, however, by which the rights of individual shareholders are injured, they may be proceeded against by such shareholders for the recognition of their rights and for damages. 252. When the liquidators have been discharged, they are to cause the fact of the conclusion of the liquidation to be entered in the Commercial Register and publicly notified with a notice calling on any persons having claims against the company, arising out of the liquidation thereof, to assert the same within a period of three months, such claims when raised are to be settled by the liquidators. 253. Where, during the liquidation of a company, it becomes evident that the available property of the company is insufficient to satisfy in full the claims of all the creditors of the company, the liquidators are to cause proceedings in bankruptcy to be instituted, and are to publicly advertise the fact and advise all having business relations with the company thereof. In such case whatever has been already paid to the creditors or shareholders may be recovered from them. The liquidators are responsible to the creditors of the company for all non-recoverable payments made by them after ascertaining such relative position of assets to liabilities. 254. The names and domiciles of the persons, to whose custody the books and papers of the company have by resolution passed in general meeting been committed, are to be notified to the Court by the liquidators. Until such notice has been given the liquidators are responsible for the safe keeping of such books and papers. 255. The liquidators are to notify to the Court and advertise the final result of the liquidation, namely:— i. The satisfaction of the claims of all the creditors by payment or arrangement ; ii. The distribution of the remaining assets of the company among the shareholders, and the amount thereof ; iii. The payment of the expenses of liquidation and the settlement of the claims arising out of the liquidation ; iv. The granting of the discharge by the general meeting or by order of the Court ; v. The measures taken for the safe custody of the books and papers of the company ; vi. The fact that the certificates of shares and the bonds of the company are no longer valid. The liquidators must also through the Governor notify the final results of the liquidation to the proper Department of State. SECTION IV. PENAL PROVISIONS. 256. Partners entitled to management and directors are liable to a fine of not less than 5 yen and not exceeding 50 yen in the following cases :— i. If they fail to effect in the Commercial Register any entry in this Chapter prescribed ; ii. If they commence business operations before registration. 257. Directors of joint-stock companies are liable to a fine of not less than 5 yen and not exceeding 50 yen in the following cases :— i. If they fail to keep a list of shareholders, or keep the same incorrectly ; ii. If, in the event of dissolution of the company, they fail to convene a general meeting, or fail to communicate the fact of dissolution to the shareholders. 258. Directors of joint-stock companies are liable to a fine of not less than 20 yen and not exceeding 200 yen in the following cases:— i. If they repay the amount of a share in whole or in part in contravention of the provisions of Article 216 ; ii. If, in contravention of the provisions of Article 217, they acquire for the company its own shares, take them in pledge, or fail to sell them publicly: iii. If they pay interest or dividends to shareholders in contravention of the provisions of Articles 218 and 219 ; iv. If, in the case of Article 225, they obstruct the examination of the state of the treasury and assets of the company, of its books and all its papers, or refuse to give the information required. The penalty in this Article prescribed applies also to partners entitled to management and to directors of a limited partnership, if they pay interest or dividends to partners in contravention of the provisions of Article 153. 259. The liquidators of joint-stock companies are liable to a fine of not less than 10 yen and not exceeding 100 yen in the following cases:— i. If they fail to issue the advertisement in Article 243 prescribed ; ii. If, in contravention of the provisions of Article 253, they fail to cause proceedings in bankruptcy to be instituted. 260. Liquidators of joint-stock companies are liable to a fine of not less than 20 yen and not exceeding 200 yen in the following cases :— i. If they make any payment to creditors in contravention of the provisions of Article 244 ; ii. If they distribute assets amongst the shareholders in contravention of the provisions of Article 249. 261. The fines prescribed in the preceding Articles are imposed by order of the Court. Against such order immediate complaint may be raised. Partners entitled to management, directors, or liquidators are jointly and severally liable for the payment of such fines. 262. Partners entitled to management, directors, inspectors or liquidators are in the following cases, liable to a penalty of not less than 50 yen and not exceeding 500 yen, and in cases of an aggravated character are in addition liable to be punished with major imprisonment for a period not exceeding one year:— i. If they knowingly make, orally or in writing, to the authorities or to a general meeting any false statement concerning the present condition of the property or the course of business of the partnership or company or, with dishonest intent conceal such condition or course of business ; ii. If in any notice or advertisement they make any false statement, or conceal the true facts of the case. Officers and assistants of a partnership or company, other than those aforementioned, who are concerned with them in the commission of the said offences are also liable to the said punishment. 263. Promoters making false statements concerning the subscriptions for shares are liable to a penalty of not less than 20 yen and not exceeding 200 yen. 264. The penalties prescribed in the two preceding Articles are to be inflicted by way of criminal procedure. SECTION V. JOINT TRADE ASSOCIATIONS (KIOSANSHOGIOKUMIAI). 265. Contracts relating to joint trade are not subject to the provisions of this Code respecting partnerships and companies. No partnership or company and no partnership or company property can be created by virtue of any such contract. 266. Where two or more persons engage in individual commercial transactions or undertakings on joint account, there exists a temporary association (Tozakumiai), and each participant is with regard to third persons directly and jointly and severally entitled and bound by any acts done for the purpose of carrying out the contract by one or more of the participants or by all of them combined, or by their common agent. 267. Where two or more persons are separately engaged in individual commercial transactions or undertakings, or in commercial businesses, but have agreed to participate in the profits and losses arising therefrom, there exists a profit and loss association (Kiobunkumiai) and each participant is jointly and severally entitled and bound as in the preceding Article provided ; he is, nevertheless, entitled, upon a claim arising from the acts of other participants being made against him, to plead the prior remedy of the plaintiff against such other participants. 268. Where a person participates in the commercial business of another by contributing property thereto on the understanding that he is to share, in return for such transfer of ownership, the profits and losses without his name appearing in the firm name and without taking any part in the conduct of business, there exists a dormant association (Tokumeikumiai), and he is, with regard to third persons, liable in respect of the acts of the active member to the extent only of so much of his contribution as is not paid up. No rendering of services in the capacity of trade procurator or trade assistant is to be regarded as participation in the conduct of the business. 269. In the absence of any express stipulation with regard to the share of such contributor in the profits and losses of a dormant association, such share is to be calculated according to the proportion borne by his contribution to the total capital of the business. 270. No profits are divisible until provision has been made for any reduction of the contribution resulting from losses. A dormant associate is, nevertheless, not bound to make good with profits due but not received, or with profits already received, any deficiency in his contribution incurred by subsequent losses. 271. A contract of dormant association, if no fixed duration is therein agreed upon, can be cancelled by a six months notice ; it is also terminated by the bankruptcy or decease of the active member or by the discontinuance of the business. 272. Upon cancellation of the contract the contribution of the dormant associate must be returned to him, after deducting the losses and debts falling to his share. 273. A dormant associate is entitled upon cancellation of the contract and also at the end of each business year, to claim production of an account and inspection and examination of the trade books and papers. The above provision applies also in the cases in Articles 266 and 267 mentioned. CHAPTER VII. COMMERCIAL CONTRACTS. SECTION I. THE DIFFERENT KINDS OF CONTRACTS. 274. The conclusion of commercial contracts may be either express or implied. 275. The contents of commercial contracts are determined by the actual, definite, and common intent of the parties thereto, construed according to the usages of trade and the reasonable aim of traders. 276. Express contracts may be concluded either in writing or verbally, or by signs. 277. Where the principal subject-matter of a contract exceeds fifty yen in value, the contract, unless performance thereof takes place forthwith, is to be formed in writing and delivered. The special provisions of this Code relating to the conclusion of particular contracts are not affected hereby. 278. The requirement of formation in writing is fulfilled by a formal document of contract, or by letters, telegrams, accounts, tickets, and any writing whatever, which bear the signature, or in the place thereof the names, of the person bound or his representative. 279. With regard to the contents of the contracts in Article 277 specified, evidence or counter-evidence is not admissible unless it is in writing, except in so far as there is question of the construction of the terms of the contract in conformity with Article 275, or of proof of mistake, coercion, or deceit, or of facts which are mentioned in the contract itself, but without binding intent. 280. The contracts mentioned in Article 277 are valid even where they are not formed in writing, if they are subsequently, and in the case of bilateral contracts by both the parties thereto either actually performed, or recognized in writing. 281. An implied contract exists where there is tacit consent to a contract proposal, and in all cases where a person does or abstains from doing something, to which an obligation or right of claim is by law or the usages of trade attached. 282. Consent by silence to a contract proposal can never be deemed to exist, except where the usage of trade or good faith and confidence, and in particular the special business position of the party to whom such proposal is made, or the settled business relations existing between the parties constitute as a rule a ground for presuming consent. 283. In the case of bilateral contracts consent by one party to performance by the other is to be taken as an implied promise to perform on his part also. 284. No contractual obligation can either expressly or impliedly arise without a lawful consideration. 285. Where the obligation of a contract is made contingent on the uncertain happening or nonhappening of some future event, the contract is of itself dissolved, when, in the one case the event does not take place, or when, in the other case, it has taken place. 286. A condition attached to a contract or any provision therein as to time can only be rendered inoperative by means of express waiver by the party in whose favor it was introduced. 287. Where by means of a commercial contract two or more persons jointly acquire a right of claim or contract an obligation, and there is no express agreement to the contrary, the right of claim may be enforced by creditors and the obligation against the debtors jointly and severally and unconditionally. 288. The rule laid down in the preceding Article applies also to obligations of suretyship, in particular with regard to two or more creditors as against one surety, as well as with regard to two or more sureties for the debt of one debtor, and also with regard to one surety for the debt of one of several debtors. 289. The diligence due from one person to another in commercial matters is, unless otherwise provided or agreed upon, to be taken to mean such diligence as is usual at the place of performance on the part of a prudent and industrious trader. 290. Responsibility for any act committed with wrongful intent or through gross negligence cannot be excluded by antecedent contract. 291. The risk of accident can be accepted, and the exercise of utmost diligence undertaken, by express contract, in cases where they are not already provided for by this Code. SECTION II. CONCLUSION OF CONTRACTS. 292. A contract is concluded as soon as the proposal of one party is accepted without objection by the other, and such acceptance, unless given by implied consent, has been declared in due form to such first party. 293. A proposal is to be deemed to be declined if no acceptance is declared forthwith, or within the time allowed to the party to whom the proposal is made. 294. In cases where implied acceptance of a proposal may be presumed, such proposal is to be deemed to be accepted if it is not declined by the party to whom it was made, either forthwith, or within the time allowed for his so doing. 295. In the case of parties at a distance the declaration of acceptance is deemed to have been made to the proposer forthwith, if it has been put into a course of ordinary transmission to the proposer by, at the latest, the middle of the week-day next following that of receipt of the proposal. When such day is a general holiday, such transmission may be made on the next succeeding day. 296. A conditional or modified acceptance of a proposal may be regarded by the proposer at his option either as an absolute refusal, or as a fresh proposal on the part of the person to whom the proposal was made. 297. Until such time as acceptance can, under ordinary circumstances, either forthwith or withen the time allowed be declared, the proposer is bound by his proposal to the other party ; he is entitled, however, before or at the time when such proposal reaches the other party to revoke the same by a communication to an effect contrary to that already made. 298. The declared acceptance of a proposal count be revoked without the consent of the other party ; in the case, however, of parties at a distance, a revocation is valid, if it reaches the proposer prior to or together with the intimation of acceptance. 299. In respect of mistakes and delays occasioned in the transmission of contract communications between parties, the party is liable in whose interest the transmission took place, in so far as the person undertaking the transmission is not responsible. 300. Samples, price-lists and other objects in recommendation of a contract proposal, sent together with or separately from such proposal, belong as a rule to the party to whom the proposal is made, even where it is declined ; all other goods are to be properly preserved by him until further disposition thereof by the proposer ; he may, however, repay himself any disbursements or any commission due by the sale of the same at the expiration of a reasonable time in conformity with the provisions of Article 373. 301. Commercial contracts are voidable on the ground of coercion, deceit, or mistake, but not on the ground of gross disadvantage, and, in particular, not on the ground of inadequacy of price or other consideration. SECTION III. PERFORMANCE OF CONTRACTS. 302. Performance of a contract consists in the complete doing of that which one of the parties thereto has, with the consent of the other expressly or impliedly bound himself to do. 303. In the absence of express contract or of usages of trade, the rules prevailing at the place of performance are to decide as to the substance and extent of the debtor's obligation, in particular as to the nature and quality of the object due. 304. Where proper tender is made of complete payment of that which is due to the creditor, but acceptance is declined by him, the debtor is entitled to deal with the subject-matter of performance at the expense and risk of the creditor, and is responsible to him in respect only of wrongful intent and gross negligence. 305. The creditor is not bound to accept partial or overdue performance, excepting in so far as payments on account are agreed upon or are usual. 306. The performance of a contract is overdue where it does not take place before the expiration of the stipulated or otherwise determined due date. 307. The due date may be fixed to be either at a named date or at the expiration of a certain period of time. 308. Where such period of time is calculated by days, the last of such days is to be deemed to be the due date ; if, however, it is reckoned by weeks, months, or years, the day of the last of the same corresponding to the day on which the contract was concluded is to be deemed to be the due date. 309. Where a period of time is calculated by days, the day on which the contract was concluded is not to be taken into account. 310. Half a month is to be regarded as a period of fifteen days. 311. Where the due date falls on a general holiday, the week-day next following is to be deemed to be the due date. 312. Apart from special circumstances, one day is, for the purposes of performance, to be taken to be the duration of business hours usual at the place of performance. 313. Where it is stipulated that performance is to take place during the course of a certain period of time, it may be effected or demanded on any business day within such period. 314. Where in the case of the preceding Article any doubt exists, the party in whose interest such period was fixed is entitled to choose the day for performance ; in the case of goods the person entitled to receive, and in the case of money claim the debtor, is, as a rule, to be considered as such party. 315. Where a period is extended, and no particulars are specified, the further period is to be calculated from the expiration of that originally fixed. 316. Where no time is fixed for performance, either by the contract or otherwise, the creditor is entitled to fix a due date if the debtor fails to perform within a reasonable time. 317. Where no other place of performance is specified, or is to be inferred from the nature of the transaction or the intention of the parties, performance is to take place at the place specified by the creditor or party entitled to receive, or failing such specification, at the place of residence and, in particular, at the seat of business of the creditor or party entitled to receive. 318. The obligation of transmission incumbent on the debtor is fulfilled by delivery to the forwarding agency specified by the creditor, or to such as may, if none be specified, be suitably employed. 319. Where both parties reside at one and the same place, local usage or the nature of the transaction is, in the absence of special contract, to decide whether it is incumbent on the debtor to forward the object due to the creditor, or on the latter to fetch away the same. 320. Without prejudice to the debtor's liability for his own fault or that of persons employed by him, the forwarding of the object due, unless otherwise stipulated, takes place as a rule at the risk of the creditor. 321. Measures and weights, distances, periods of time and holidays, standards of value and kinds of money in case of money payments, as well as other particulars relating to performance are determined according to the rules in force at the place of performance, unless otherwise determined by special contract or the usages of trade. 322. In the case of alternative debts, or of debts the subject-matter of which is left undetermined, the selection of the subject-matter of performance, provided it is still in existence, is, in the event of doubt, to be left to the debtor. SECTION IV. COMPENSATION, DAMAGES AND DISCOUNT. 323. Where a debtor fails to discharge his debt in due course, the creditor has the option of either cancelling the contract, or claiming compensation or damages, as the case may be. 324. Compensation consists, in the case of money debts, in the payment, besides the amount of the debt itself, of moratory interest from the due date until the date on which the debt is paid ; in the case of all other debts, in the payment of the highest money value that the object due reached after the due date, with the addition of moratory interest from the date of such assessment until the day of payment, unless the creditor prefers thereto the value of such object on the due date with moratory interest from such date. 325. The creditor may claim compensation without being bound to prove any fault on the part of the debtor or loss incurred by himself by reason of non-fulfilment, but only where, from the nature and extent of the obligation, the debtor is responsible for such non-fulfilment. 326. The money value of the object due, to be assessed in pursuance of Article 324, is the ordinary market value thereof, and in the case of things dealt in on Exchange their Exchange quotation, with the addition in each case of the expenses and disbursements incurred in consequence of the delay. 327. Where a creditor fails as in Article 304 mentioned to duly accept, he likewise is bound to compensate the debtor for all expenses and disbursements incurred by him in consequence of such failure. 328. Where a person wrongfully, by a fault committed intentionally or through neglect, causes detriment to another, he is bound to pay the latter full damages. 329. Damages comprise indemnification for the actual loss sustained as well as for loss of profit. 330. The profit consists in the gain which it can be shown would have resulted to the party damaged but for the fault of the other which caused the damage whether such gain was anticipated or usual, or not. 231. In assessing damages no regard is to be had to merely possible, probable or future loss or profit, or loss or profit dependent on the supervening of other circumstances. 332. Where the amount of compensation or damages has been previously agreed upon between the parties, the contract, as a rule, applies, and no indemnification higher or lower than that agreed upon can be obtained by means of an appeal to actual facts. 333. Every person who has to make compensation for expenses, disbursements, advances and other similar expenditure, or who has to pay damages, is on the demand of the entitled party, to pay interest in proportion to their amount from the day on which they became due. 334. The rate of moratory interest as well as that of other interest, in so far as it is not fixed by law or by contract, is seven per cent per annum. 335. Where a money debt is paid before due date the debtor may claim a discount for the time still to run, if such discount was stipulated for or is in accordance with the usages of trade. 336. Where a contract is cancelled by the creditor on the ground of non-performance, the debtor is to take back anything given in part performance in its actual condition, and is to restore to the creditor, in full, any thing that may have been received in counter performance or the value thereof. SECTION V. PENALTIES. 337. The creditor, in order to secure performance of a contract, may impose on the debtor as a penalty in the event of non-performance, the payment of a sum of money ; the enforcement of such a penal stipulation is independent of the requisites for damages. 338. A penalty does not deprive the creditor of his right to performance or indemnification ; in the case of doubt, howeevr, a penalty and damages cannot be claimed together 339. Where the damage sustained by the creditor in consequence of culpable non-performance is greater than the amount of the penalty such additional amount may be claimed over and above the penalty as damages. 340. The contract of a penalty for the purpose of concealing a transaction for the payment of differences, or any illegal gaining or wagering transaction is void. SECTION VI. AGENCY. 341. Instructions to conclude a commercial transaction are in every case to be regarded as an agency for the purpose, excepting in as far as the principal expressly reserves the right of ratifying the agent's act. Every agent is bound to exercise the utmost diligence in the execution of his instructions. 342. Commercial transactions concluded by an agent for his principal, whether in the name of the latter or not, directly entitle or bind the principal in regard to third persons. 343. Whoever concludes a transaction with another person on behalf of a third person, without the latter's instruction or subsequent ratification, is personally responsible to such person in respect of such transaction. 344. Where a person in concluding a transaction as agent exceeds his authority, he is responsible to his principal for so doing, if the third person had not, or could not have had knowledge thereof. 345. Where the party with whom an agent has concluded a commercial transaction on behalf of another was ignorant of the fact of agency and of the person of the principal, and such ignorance was due to no fault of his own, he is entitled to claim indemnification from the agent for the damage he may have sustained by reason of non-performance by the principal. 346. Agency is not determined by the death of the principal or of the agent. 347. No agency can be transferred to a third person without the principal's consent, or the circumstances from which the principal's consent may be inferred to be obtained. 348. Any person concluding a commercial transaction on behalf of another, with the latter's instructions or subsequent ratification, is entitled, even in the absence of an express agreement, on production of an account to be indemnified for the advances, disbursements, and other expenses, properly made or incurred by him in such transaction, and to demand the usual interest, commission, or fees. SECTION VIL PRESCRIPTION. 349. Rights of claim in commercial matters are prescribed at the expiration of six years from their due date, or, where no such date is fixed, from the time of their accruing, excepting where some shorter period for prescription is by law provided. 350. Prescription is interrupted by a summons for performance expressly addressed to the debtor, by any judicial or extra-judicial act done by the creditor for the purpose of enforcing or guaranteeing his right of claim against the debtor, by a written promise to pay, or by part payment by the debtor in respect of the principal claim or any accessory claim. 351. The mere forwarding of a receipted or non-receipted account is not to be deemed summons. 352. Expiration of the period for prescription operates to completely extinguish the principal claim as well as every accessory claim, and to prevent the creditor from further, either directly or indirectly, enforcing the same. SECTION VIII. ACCOUNTS CURRENT. 353. Persons between whom such settled business relations exist that mutual rights of claim and debts continually arise therefrom may discharge the same by means of a periodical mutual balancing of the account 354. Account current relatians can be created by contract, express or implied, but not by the mere giving of credit even when continued for a length of time. 355. The account is to be balanced at intervals of one year, unless a shorter period is fixed by contract. 356. At the end of every period each party is bound to close the account and to send, within the stipulated or a reasonable time, the statement thereof to the other party for confirmation, or for raising any objection he may have thereto. 357. If no objections are raised, or if, notwithstanding any objection being raised, account current relations are continued without reservation, the account is to be regarded as tacitly confirmed. 358. Individual rights of claim belonging to an account current cannot be enforced separately, unless the account current relation is determined, or the account is disputed. 359. Where an account has been confirmed, the balance due to one or other of the parties can be claimed by virtue of such account alone. 360. In the absence of any contract to the contrary, the balance shown due at the end of each period may be carried over as a fresh item into the next account. 361. In the absence of contract or usage to the contrary, all mutual rights of claim and debts arising out of commercial matters may be brought into account current. 362. Where account current relations are constituted between persons standing to each other in such settled business relations that rights of claim arise in favour of one of the parties alone, and the other party from time to time makes payment on account of such rights of claim, the rights of claim belonging to such account current are only enforceable periodically and upon the account current taken as a whole. 363. On rights of claim entered in account current suitable interest, even in the absence of any contract, is due from the time of their entry. 364. With respect to the balance shown due for any period, the last day of such period is to be deemed to be the due date. 365. Account current relations, with respect to the rights of claim and debts entered in account current, are inoperative as against third persons. 366. Apart from the right of either party to withdraw at any time, account current relations are dissolved by the death or bankruptcy of either of the parties thereto. SECTION IX. PLEDGE. 367. A pledge of movables for guaranteeing a right of claim arising out of a commercial transaction is in every case to be created by a contract in writing ; such contract is invalid unless the date and amount of the right of claim to be guaranteed, and the lawful consideration therefor as well as the date of the pledge and the objects pledged are expressly specified therein. 368. The creation of a pledge entitles the creditor to satisfy his right of claim by the sale of the objects pledged, provided that possession of the same has been transferred to him or his representative. 369. The indorsement and delivery of bills of lading, warehouse certificates and other documents, the indorsement of which transfers to the indorsee the right of disposal over the goods to which they refer, is equivalent to the transfer of the possession of the thing itself. 370. Where documents to order form the object of a pledge, they are to be endorsed to the creditor and delivered to him. Such indorsement is to contain mention of the pledge. 371. Where a debtor is in arrear with the payment of his debt, the creditor may proceed to the sale of the object pledged after he has, by producing the contract of pledge, obtained an order of the Court, without it being necessary for him to institute an action against the debtor. The creditor is forthwith to communicate to the debtor such order of the Court. 372. The sale of the object pledged can, however, take place without previous order of the Court, where the debtor in the contract in writing expressly declared his consent thereto, as well as in all cases of pledge of documents to order. 373. In the cases in the two preceding Articles mentioned, sale is to take place in public auction through a broker or auctioneer or, in the case of goods dealt in on Exchange, by means of public offer on an Exchange. Notice of the intended sale is to be given to the debtor eight days at least before the day appointed for sale. 374. Until the expiration of the term specified in the preceding Article the debtor is entitled to make payment to the creditor and to claim the return of the object pledged. 375. The surplus remaining, after deducting the amount of the claim together with interest and necessary expenses and disbursements from the price realized, is to be paid over to the debtor less all the costs of sale. 376. The creation of a pledge' does not operate to preclude the debtor from alienating the object pledged ; he is, nevertheless, out of the price realized bound to pay the pledge creditor the full amount of his claim, failing which he is liable to be punished with major imprisonment not exceeding two years. 377. A purchaser, having knowledge of the pledge right of a third person over an object he has purchesed, is to pay the price up to the full amount of his pledge claim to the pledge creditor direct ; if he fails to comply herewith he also is liable to the punishment in the preceding Article mentioned. 378. Where two or more persons have obtained a pledge right over one and the same thing, the privilege of sale is vested in the one who is in possession of the thing, where such possession was not obtained by coercion, or secretly, or on condition of the thing being returnable on demand. 379. Where, in the case of two or more pledge creditors, one is in possession of the thing itself and another of the documents vesting the right of disposal thereof, the party who first acquired such respective possession is entitled to the privilege of sale. 380. Provided that the pledge creditor acts in good faith, a valid pledge of movables may be created by the owner or by his substitute to whom he has entrusted the same for the purpose of disposal thereof or by any person who has rightfully acquired the possession of the things, provided the same, documents to bearer excepted, have not been stolen or lost. 381. An object pledged by a person to whom it does not belong can be redeemed by the owner prior to the completion of the sale thereof, on satisfaction of the claim of the pledge creditor in full. 382. The sale of an object validly pledged operates, after payment of the price, to extinguish every antecedent right thereto of ownership or pledge. 383. A pledge may be created on behalf of a debtor by a third person. 384. No pledge can be created in respect of a future debt. 385. Judicial stay of the sale of an object pledged can be obtained by a plea of payment to the creditor, if the same can, primâ facie, be made to appear probable. 386. Rights of claim based on a document to order or to bearer can be pledged without it being necessary to inform the debtor thereof. A pledged right of claim, instead of being sold, can be directly enforced by the pledge creditor ; but if it is not a money claim, he can treat the object as a pledge. SECTION X. LIEN. 387. Where in consequence of a commercial transaction a person has come into possession of property belonging to another, and has a right of claim that is due for work, expenses, advances, disbursements, or fees, or interest thereon, in respect of such property, he is entitled to retain the thing itself or its proceeds, until he has received the payment in full or guaranty for his right of claim. 388. For rights of claim due on a balance of an account current and, where the debtor has suspended payment, for all rights of claim, though not yet due, arising out of commercial transactions a creditor is entitled to exercise the right of retaining all property of the debtor of which he has rightfully obtained possession. 389. A lien is lost by loss of possession, except where the entitled party disposed of the thing for his own benefit and gave notice of his right to the new possessor. 390. A lien is lost when the right of claim in respect of which it was acquired becomes extinguished by prescription or otherwise ; but not where the ownership in the thing itself passes to another either with or without the will of the debtor. 391. A lien cannot be assigned to a third person by the creditor. 392. Where a person has notified the debtor of the exercise of a right of lien to which he is entitled, and fails within reasonable time to receive payment or guaranty, he is at liberty to sell the thing retained in conformity with the provisions in Articles 371 and 373 contained and to pay himself out of the proceeds. 393. Where a person is entitled to claim performance of a bilateral contract, he may retain what he himself has to render until the other party has on his part performed what is owing from him, unless it is otherwise agreed or the same is contrary to the usages of trade. SECTION XI. DOCUMENTS TO ORDER AND DOCUMENTS TO BEARER. 394. The right under a contract in writing to claim delivery of a fixed sum of money or of specified goods, where the contract either expressly or according to the usages of trade runs to order, is transferable by indorsement to a third person. 395. The maker or indorser of a document to order can render the same non-indorsable by a note on the document to such effect. 396. Documents to order and every indorsement thereon are to be dated and are to bear the signature and seal of the maker and of each indorser. 397. The lawful consideration of the contract in respect of which the document was made or indorsed need not be stated thereon, without prejudice, however, to the provision of Article 370. 398. A document to order may be indorsed in blank. 399. The maker of a document to order is, even without previous acceptance, bound to pay or to deliver to the indorsee the sum of money or the goods specified therein, but only upon presentation and delivery of the receipted document, and discharge of any counter-claims in respect of which he is, under Article 387 entitled to exercise a lien. 400. The maker of a document to order is entitled, but not bound, to take means to identify the person presenting the same ; he is, nevertheless, responsible, in the event of malicious intent or gross negligence, to any person injured thereby. 401. The maker of a document to order can only decline to fulfil his obligation on the ground of such pleas as anything contained in the two preceding Articles entitles him to raise, or as can be based on the document itself. 402. The question as to what rights belong to an indorsee in respect of the objects transferred to him by reason of the indorsement depends on the contents of the contract concluded between himself and the indorser. 403. Documents to order stolen, lost, or otherwise missing, whether indorsed or not, can be declared void in conformity with the provisions of the Code of Civil Procedure at the instance of the person entitled. 404. Tickets, cards, and other certificates of obligation to bearer are transferable by mere delivery. The right of claim to which the bearer thereunder becomes entitled as against the person issuing any such certificate is to be decided according to the provisions specified on the certificate itself or according to laws or ordinances or usage. CHAPTER VIII. PUBLIC AGENTS, BROKERS, COMMISSION AGENTS, FORWARDING AGENTS, AND INLAND CARRIERS. SECTION I. GENERAL PROVISIONS. 405. In so far as not specially provided for in the following Articles, the rights and obligations of public agents, brokers, commission agents, and forwarding agents are to be determined according to the principles laid down in Chapter VII, Section VI. SECTION II. PUBLIC AGENTS. 406. Public agents are traders who make a business of acting for other persons in commercial matters. Public agents may also be employed to conduct the transactions of an agency of any person carrying on commercial business. 407. A public agent may trade on his own account or exercise another calling, and may act as agent for more than one person ; he is not, however, as a rule, at liberty to act for both parties in one and the same transaction. 408. The contract of employment of a public agent may be either express or implied and may be either for single transactions or for one kind or several kinds of transactions, and either for a fixed or for an indefinite period of time ; it may be cancelled at any time by either party, without prejudice, however, to rights resulting from the contract, or to the obligations to indemnify for any damage resulting by reason of wrongful cancellation. 409. It is the duty of every public agent, even without express request, to protect the interests of his principal in every particular of the transactions with which he is charged ; he is not, however, bound to continue his services unless he has first received payment of what is already due to him. 410. The extent of a public agent's cepacity to represent his principal is dependent on the instructions given him by such principal, or on subsequent ratification ; such ratification is, in the case of permanent agents, to be regarded as equivalent to continuing instructions unless the contrary appears from the circumstances, or from some express statement of the principal. 411. As a rule a public agent is only entitled to conclude contracts by virtue of express instructions. 412. A public agent who is instructed merely to conclude transactions is not thereby empowered to receive payments or returned goods, or to admit reclamations. 413. A public agent is not empowered to conclude compromises or to carry on legal proceedings, unless special instructions are conferred on him for the purpose. 414. A public agent instructed to deliver goods or to otherwise perform a contract is to be deemed to be empowered to receive payment in respect thereof, unless the contrary is expresely stated by the principal. 415. In transactions conducted or concluded by a public agent, he is not responsible to his principal for payment by third persons, unless he is himself in fault or has specially undertaken such liability. In the latter case Article 288 applies. 416. In respect of the acts of a permanent public agent, the principal is in every case to be held responsible to third persons, provided they acted in good faith, where such agent, on being questioned, expressly asserted he was thereunto empowered, or where the acts come within the usual scope of his instructions. 417. Fees or any remuneration or indemnification received by a public agent from third persons in respect of acts undertaken by him are to be placed by him to the account of the principal, failing which the latter may declare such acts as not binding on him. 418. A public agent has, as against his principal, a right of lien in accordance with Articles 387 and 388 in respect of any amount due to him for commission, advances, disbursements, expenses or interest. He is only entitled to charge his principal with such disbursements and expenses as have actually been caused him, and as in each individual case appear justified by the usages of trade or by the actual needs oi' interests of the principal. SECTION III. BROKERS. 419. Brokers are traders who by virtue of official sanction carry on, as a business, the intermediate negotiation of commercial transactions between other persons. In places where no Exchange exists the brokers have the exclusive right to fix and publish the quotations for goods and documentary securities as well as the rates of money and of exchange. Brokers, when acting as such, have public credibility for their acts. 420. Brokers can be appointed for particular branches of commercial transactions. They are prohibited from carrying on any other commercial business in addition to that of broker. By reason, however, of local circumstances, the competent authorities or the Exchange bye-laws may permit the union in one person of two or more kinds of broking and the admittance of brokers to the Exchange. 421. No person can be appointed broker unless he has completed his twenty-fifth year and has for a period of five years at least been occupied in the branch of trade in question, and unless he enjoys an irreproachable reputation. Persons who have become bankrupt can only be appointed after rehabilitation. 422. Every broker is required to give security in money before entering on his employment ; the amount of such security is to be fixed by ministerial decree for each place and each branch of trade and for the case of two or more branches of broking being carried on by one broker ; it may, however, in no case exceed twenty thousand yen. 423. The number of brokers admissible at any place, and for each branch of trade at any place, may be limited according to requirements. 424. A broker may dispose of his business to, or may be otherwise succeeded therein by a qualified person ; his successor, however, is not entitled to carry on the same until he has obtained the official sanction and given the required security. 425. Where in any one place there are at least ten brokers in all or in any particular branch of trade, they can, after having obtained the sanction of the Government thereto, form themselves into a guild, and they are to elect from their number, for the space of one year at least three directors. Every broker of the place is both entitled and bound to enter such guild. 426. Brokers or a brokers' guild are forbidden, under penalty in the case of brokers of the loss of their business privileges, and in the case of a brokers' guild, of dissolution and loss of the business privileges of its members to carry on the business of brokers on joint account ; a brokers ' guild may, however, undertake a joint security for any member in accordance with the provisions of the guild's byelaws. 427. Every brokers' guild is by vote of the majority, to establish bye-laws for the exercise of its business, for which the consent of the Chamber of Commerce and of the Exchange at the place in question, or of the one or the other only, where only one exists, and the sanction of the Government are necessary. Every member of the guild is bound to observe such bye-laws. The provision of the preceding paragraph apply also in the case of alteration of the bye-laws. The bye-laws may not, however, conflict with the laws and ordinances, nor with the usages of trade and the Exchange bye-laws at the place in question. The provisions of Article 448 apply also to resolutions of the directors of the guild. 428. The directors of a brokers' guild are entitled and bound :— i. To see to the due observance by the brokers of the laws and ordinances, as well as of the bye-laws, in all transactions coming within the scope of their business ; ii. To call the members of the guild to account for any infringement of the above and, where necessary, to apply for their punishment and expulsion ; iii. In places where no Exchange exists to fix and publish at least once every week on the basis of the memoranda to be supplied by the members, the rate of exchange and the quotations for money goods and documentary securities ; iv. To keep a continuous register of the rates and quotations thus fixed and, on demand, to deliver official certificates concerning them ; v. At the request of the Courts and authorities to give them information with regard to the condition of trade, as well as its opinion on usages of trade ; vi. To express its opinion with respect to the official sanctioning of brokers and the increase or reduction of the number of brokers ; vii. To administer all the internal concerns of the guild. 429. A broker is entitled in transactions negotiated by him to represent both parties. He is not permitted without just cause to refuse to receive instructions given to him by any person. 430. A broker is not permitted to transact any business on his own or another's account, or in his own or another's name, if he directly or indirectly has any interest therein. He is not permitted, on behalf of other persons, to accept or make any payment, or to accept or give a security or any other guaranty, or to make advances on goods. He is not permitted to act for any one in the capacity of trade procurator or trade assistant. Every transaction entered into by a broker contrary to the provisions of the three preceding paragraphs is null and void. 431. Brokers are to make all necessary statements accurately, completely, and truthfully, to the persons to whom they act as intermediaries and they are responsible therefor: in addition to this they are, in particular, in so far as concerns a transaction negotiated by them, responsible for the identity and capacity of such persons and for the genuineness of their signatures and seals. They may not negotiate transactions either for or with persons who are personally unknown to them, unless the identity of such persons is guaranteed them by some local trader of good standing. 432. Brokers are bound to preserve secrecy when required so to do by their principals. 433. In transactions negotiated by brokers in respect of goods, they are personally to convince themselves of the existence and quality of the goods and of the solvency of the purchaser, and to preserve, properly marked, the patterns and samples delivered to them, until the transaction is completely finished. 434. In transactions respecting bills of exchange, promissory notes and other documentary securities, brokers are, on accepting instructions, to require from the vendor delivery thereof to themselves, and from the purchaser payment in advance of at least twenty per cent of the price. 435. Brokers are not empowered to conclude transactions otherwise than by virtue of the express statements of the parties thereto. In the case of undisclosed principals the authority to conclude a transaction is to be deemed at the same time to carry with it authority to receive performance or counter performance as the case may be. 436. Brokers are not permitted to negotiate illegal, prohibited, or fictitious transactions. 437. Brokers are to exercise their functions as such personally ; in particular they may not make use of an assistant or agent in concluding transactions. 438. Brokers are liable to their principals in damages for the violation of duties incumbent on them, and for every other fault. 439. Claims arising out of any transaction concluded by a broker for an undisclosed principal lie directly and exclusively against the broker. 440. Every broker is bound to enter, day by day, in a special day-book, the essential substance of the transactions concluded by him, and to personally close and sign and seal each day's entries ; he is also, and at the latest in the course of the next following day, to furnish each party to every transaction with a copy of the entries relating thereto signed and sealed by himself ; such copies may run to order. Whenever a party questions the contents thereof or refuses to accept the same, the broker is forthwith to notify the fact to the other party, unless such party has remained undisclosed. 441. The day-books of deceased or retired brokers are to be deposited with the directors of the brokers' guild, or, where none such exists, with the Court. 442. Brokerage cannot be charged until the transaction has been completed except where it is otherwise fixed by any rule or is otherwise customary. The rate thereof is determined by the brokers' bye-laws or by usage. Unless otherwise agreed upon or customary, each party is as a rule to pay the moiety of the amount. The broker cannot, however, claim payment, if, owing to his fault, the contract is not duly performed. 443. The acceptance from one party of any remuneration or benefit over and above the legal brokerage entitles the other party to declare the transaction void. SECTION IV. EXCHANGE BROKERS. 444. An Exchange is a public institution where commercial transactions are effected in accordance with the provisions of the Exchange bye-laws. 445. Where sufficient trade exists, the traders of a place or of a district thereof may, with the sanction of the Government, establish an Exchange for commercial transactions in general or for particular branches of trade. 446. Every Exchange is to have a fixed place of Exchange, bye-laws and directors. All these, and every alteration of the same, are subject to the sanction of the Government. 447. In so far as no special laws or ordinances exist, the concerns and regulations of an Exchange are settled by the bye-laws of the Exchange, or where the same are not provided for therein by the directors in conformity therewith. 448. Where decisions of the directors are objected to as being unjust or prejudicial, the Department of State for Agriculture and Commerce, after hearing both sides, is to give its decision, accompanied by the grounds therefor. 449. The Government may determine that, excepting in retail trade, certain goods may in any one or more places be dealt in only on Exchange. Persons contravening render themselves liable to a fine of not less than 2 yen and not exceeding 200 yen. With respect to the fine in the preceding paragraph mentioned, the provisions of the first paragraph of Article 261 apply. 450. An Exchange may establish a depot for the goods that may be dealt in thereon and may issue warehouse certificates to order. The directors and Exchange brokers are, however, prohibited from making advances on such certificates or acquiring them by purchase. 451. Exchange brokers, after they have obtained the special sanction of the Government and have given the required security in money, are admitted by the directors and bound over upon oath to observe the Exchange bye-laws and other Exchange regulations. 452. Where a brokers' guild exists, one director at least of such guild is to be elected to the director of the Exchange. 453. To every Exchange there is to be appointed a number of brokers corresponding to the extent of business thereon. 454. The provisions of this Code with regard to brokers are binding also on Exchange brokers. 455. Brokers, Exchange brokers and Exchanges are under the supervision of the Departments of Finance, and of Agriculture and Commerce. SECTION V. COMMISSION AGENTS. 456. A commission agent is a trader who does business under contract in his own name on account of others. 457. The validity of transactions concluded by a commission agent with third persons is, with regard to such persons, not dependent on the instructions or ratification of his principal. 458. A commission agent is bound to observe the instructions given him by his principal and is responsible to him for damage caused by exceeding the same or by any other fault. 459. A commission agent is exempt from responsibility for exceeding his instructions, if he can show that such act on his part was unavoidable under the circumstances of the case and preserved his principal from further damage, unless his principal expressly or impliedly directed absolute fulfilment of what he has instructed. 460. A commission agent is not permitted to free himself from responsibility for exceeding his instructions by taking upon himself to defray the difference in price or in other items of account thereby caused to the detriment of his principal. 461. A commission agent may not retain for himself any difference in price or in other items of account arising in favour of his principal by reason of any deviation from his instructions. 462. The provisions of Article 409 are to be applied also to commission agents. In particular, a commission agent is at all times and without delay, before as well as after the execution of a transaction, to render to his principal all necessary information, and is fully to protect the interests of the owner in regard to transport, storage, insurance, purchase, sale and all other commercial operations. 463. A commission agent is bound to accept all instructions falling within the scope of his business, if he receives the requisite advances in proper time and has cover or guaranty for his claims arising out of the transaction. 464. Where a commission agent refuses to accept instructions, he is forthwith to notify such refusal to the person who gave them, failing which he is responsible for executing such instructions ; he must also make provision for the proper preservation of the goods entrusted to him. 465. In the absence of special agreement a commission agent is not bound to make advances to his principal or to third persons on his principal's account ; he is, however, entitled with the consent of his principal, or even without it in such cases as is customary according to the usages of trade, to make advances or to give credit to third persons on his principal's account. 466. A commission agent is responsible to his principal for the solvency of third persons in accordance with the provisions of Article 415, but only so far as such third persons are themselves liable. 467. A principal may at any time revoke or vary the instructions given to a commission agent, so far as they are not yet executed. A commission agent is only entitled to give notice of withdrawal from executing instructions, in cases in which he could refuse to accept the instructions in accordance with the provisions of Article 463 ; he remains liable to his principal, however, even after communication by him of a legally justified withdrawal for malicious intent or negligence. 468. A commission agency is terminated by the bankruptcy of one of the parties ; in the event of death or other incapacity to execute the instructions, it is not terminated, unless one of the parties declares that he terminates it on the ground of such fact. 469. A commission agent is entitled, in addition to business he does as such, to transact business of a similar or different nature on his own account. Where such a trader does not habitually carry on the business of commission agent, the provisions of Article 463 do not apply. 470. Unless the principal has expressly declared the contrary, a commission agent may execute the instructions on his own account as purchaser, vendor or otherwise as the case may be ; in such event, however, his rights and obligations with regard to his principal are in no way affected. 471. In the cases in the preceding Article mentioned the instructions are to be deemed executed as soon as the commission agent has dispatched notice to his principal of his acceptance on his own account. 472. As soon as instructions have been executed, the commission agent is to notify his principal of the fact and is to pay to him or place to his account the proceeds of the transaction after deducting the amount due to himself. 473. Where the instructions to a commission agent do not run otherwise, goods purchased or in other manner received on account of the principal are to be placed by him at the disposal of such principal, and are to be properly preserved by him until they are, disposed of. He is only bound to provide for the transmission of the goods by virtue of express instructions ; without prejudice, however, to his right of lien. 474. Transactions concluded by a commission agent which the principal is not bound to recognize remain, notwithstanding they are not recognized, but without prejudice to the provision in Article 381 contained, valid on the commission agent's account, and the latter is bound to indemnify the principal for all damage sustained. 475. Rights of claim and obligations arising out of commission agency transactions are, as a rule, direct rights of claim and obligations of the commission agent ; the former are, however, on assignment thereof to the principal, or in the case of the insolvency of the agent, directly enforceable against third persons by the principal. 476. A commission agent is entitled to claim from his principal, in addition to repayment of any advances made to him :— i. Reimbursement of all expenses and disbursements actually paid by himself, in so far as they were necessary or expedient, and in conformity with the usages of trade ; ii. His commission, which is to be calculated according to the agreed upon or locally customary scale ; iii. Del credere commission, where the commission agent has taken upon himself such security. For the above rights of claim a commission agent is entitled to a lien in accordance with the provisions of Articles 387 and 388. 477. Where instructions to a commission agent have remained unexecuted without fault attributable to him, commission can only be claimed where locally customary and, at the most, up to one half of the ordinary commission. 478. A commission agent is entitled to place his own trade mark or firm name on goods dealt in by him on commission. He may not, however, alter or remove the trade mark or sign of manufacture of other merchants or manufacturers existing on such goods without their consent, or place without any distinguishing sign his own trade mark or firm name on his commission goods originating from other merchants or manufacturers. 479. Unless the contrary is expressly agreed upon, a commission agent who has to execute instructions after a particular pattern or model may only cause them to be executed by the rightful owner or author of such pattern or model, failing which his principal is entitled to cancel the contract without regard as to whether the goods do or do not correspond to the pattern or model. 480. The principles governing business on commission are to be applied to the publication on commission of books and other scientific or artistic works mechanically reproducedSECTION VI. FORWARDING AGENTS. 481. A forwarding agent is a trader whose business consists in the transmission according to contract of goods and other articles in his own name on account of others. A forwarding agent is not debarred from transacting, in addition, other business either on his own account or on account of others. 482. The responsibility of a forwarding agent is the same as that of a commission agent, as well as that of a carrier, whether a fixed charge for carriage has been stipulated or not, and irrespective of whether the transmission he undertook is performed by means of transport belonging to himself, or hired, or under the control of others. 483. Where not otherwise stipulated, and in all cases of through transport, a forwarding agent is responsible, as carrier, for all intermediary forwarding agents, and for all public agents, carriers, and other persons by means of whose successive services the transmission he undertook is carried out. 484. The forwarding agent is to make out a way-bill which must state :— i. The date, and the names and domicile of the forwarding agent ; ii. The names and domicile of the carrier or of each of the carriers ; iii. The kind of goods sent and their weight ; iv. The number, nature, and marking of the packages, if any ; v. The place and time of the promised delivery ; vi. The cost of carriage. The way-bill may further state:— i. The value of the goods sent ; ii. The names of the addressee ; iii. The amount of indemnity payable in the event of delayed delivery. 485. A way-bill runs to order, unless the contrary is expressly mentioned. It may be made out to bearer. 486. The consignor may demand delivery of one or more duplicates of the way-bill. 487. Every forwarding agent is to enter day by day in a special book all forwarding contracts concluded by him, and is daily to close and sign and seal the same. Every way-bill must conform with the corresponding entries in the book. 488. Any thing in the way-bill mentioned which conflicts with the forwarding contract entered into or with existing laws and ordinances is without effect. 489. The forwarding agent may claim :— i. Return of advances made by him on the goods, as well as the cost of carriage that has been paid by him ; ii. Indemnification of the expenses and disbursements necessarily or advantageously paid by him in respect of the goods ; iii. The locally customary or agreed on forwarding commission ; where, however, there is a settled cost for carriage, only if they have been expressly stipulated for. For such rights of claim the forwarding agent has a right of lien over the goods in accordance with Articles 387 and 388. 490. The rights of claim of the forwarding agent cannot, unless otherwise stipulated, be enforced either by him or those subsequent to him in the transmission, or by any person who has entirely or partially performed the transport stipulated for, until delivery of the goods at their destination. 491. For claims or pleas founded on the responsibility imposed on the forwarding agent, he himself, as well as the other persons in the preceding Article mentioned are liable jointly and severally and unconditionally. 492. The provisions in this Section contained apply also to persons who undertake, as a business the conveyance of passengers, the transmission of newspapers, telegrams, printed matter and other things, the insertion by way of agency of advertisements, as well as other services of transmission, but not to freight brokers, public agents, reference or intelligence bureaus and similar institutions. SECTION VII. INLAND CARRIERS. 493. An inland carrier is a person who undertakes, as a business, the transport of goods and other objects by land or inland navigation. He is liable from the moment of accepting the same for transport for the loss thereof and every damage thereto, as well as for delay in the delivery thereof, in so far as such events were not occasioned by the fault of the sender himself, by the nature of the goods or objects, or by irresistible force. 494. The delivery of goods is to be deemed delayed, when not made within the time agreed upon, or, in the absence of any express agreement as to time, within the time usually required for effecting the transport. Such time is in every case to be calculated from the date of the way-bill, or failing mention of such, from the date of acceptance of the goods for transport. 495. The amount of indemnity recoverable for delayed delivery of goods, where no other sum is agreed upon, or where it does not appear disproportionate to the amount of damage, is equal to one third of the cost of carriage. 496. Where goods in the condition in which they are have become unsaleable or useless, or have lost at least three-fourths of their value, by reason of delay, partial loss or damage, compensation amounting to their full value may be claimed on their abandonment to the carrier. 497. In the case of loss of or damage to a portion or to pieces of a consignment, the amount of compensation is to be the amount by which the total consignment is thereby diminished in value, if the undamaged portion or pieces cannot be used or sold in their then condition. The provision of the preceding Article applies, however, where the value of the undamaged portion or pieces does not exceed one fourth of the value of the total consignment. 498. The amount of indemnity is to be calculated in conformity with the provisions of Article 324, taking in the case of commercial goods their commercial value, and in the case of other goods their ordinary value, at the place of delivery, unless a greater value is stated in the way-bill. 499. Disputes arising between the parties as to value or the extent of damage are to be decided by the opinion of experts, who are to be appointed by the parties themselves, or, where they cannot agree, by the Court on their application. 500. In respect of gold or silver in specie, precious metals, precious stones, objects in gold or silver, documentary securities, documents, and other valuables, indemnification according to their actual value can only be claimed where at the time of entrusting the same for transport a declaration was made of their nature and value, and they were thereupon subjected to an increased charge for carriage in accordance with a properly published special tariff. 501. In the case of other goods the carrier may stipulate, by means of a fixed tariff properly published beforehand, that compensation as in Article. 498 provided will only be made up to a certain amount per package or weight. 502. The amount of the indemnity in the preceding Articles determined can only be increased or diminished by means of an express contract based on good and sufficient grounds. 503. Gross negligence or malicious intent renders the carrier in all cases liable for full damages in conformity with the provisions of Articles 328 and 329. 504. A carrier is responsible for persons in his service and other persons employed by him in effecting the transport he has undertaken. 505. Where the transport undertaken by a carrier is effected by other carriers subsequent to him, they may be held jointly and severally liable for the full amount. 506. Every carrier is to be deemed with regard to the goods entrusted to him for transport the public agent of the sender or of the person entitled to receive, and is responsible to him for omission of the diligence necessary for the preservation and proper conveyance of such goods. 507. The provisions of Articles 483-491 apply correspondingly also to carriers. 508. Prior to and during transport the sender or the person entitled to receive as the case may be may stop or alter the carrying out of the stipulated transport ; without prejudice, however, to the right of recourse belonging to the carrier. 509. Both parties to the contract are entitled to the same right as that in the preceding Article mentioned in cases where the commencement or continuance of the stipulated transport is hindered, or rendered impossible or dangerous by irresistible force or accident ; in such case, however, the carrier is only entitled to payment of the cost of carriage in proportion to the transport already effected, and to be indemnified for any expenses and disbursements he may have incurred. 510. Where the failure to perform the stipulated transport or where any interruption therein is due to the fault of the carrier, or is occasioned by him. and he omits to supply another fit and proper carrier, the sender or the person entitled to receive, as the case may be, has the option of cancelling the contract or of claiming indemnification. 511. Prior to or during the carrying out of the stipulated transport the sender is entitled to make any disposition with regard to the goods other than that mentioned in the way-bill, so long as the carrier has not delivered the goods or the way-bill to the person originally designated as entitled to receive. 512. A carrier is not entitled, without lawful cause, to decline to accept the instructions for transport given to him or to make his acceptance thereof dependent on onerous conditions, excepting where the transport he is required to effect is accompanied with special risk or does not fall within the usual scope of his business ; in particular, he may not, save under exceptional circumstances, allege insufficient means of transport or insufficient transport arrangements. 513. On arrival of the carrier at the place of destination the right of claim arising on the contract of carriage is enforceable against the carrier, according to the contents of the way-bill, by the person entitled to receive named therein or otherwise indicated, either in his own name or in that of some third person. 514. Where the person named in the way-bill or otherwise indicated as the person entitled to receive refuses either to accept the goods or to fulfil the conditions imposed by the sender, or where he fails to satisfy the cost of carriage and other lawful rights of claim of the carrier, or where he is not to be discovered, the carrier may deposit the goods in a public warehouse or, by virtue of an order of the Court, in the hands of a third person, and may sell them in conformity with the provisions of Article 392 to the extent of the full amount of his right of claim. 515. By acceptance of the goods and payment of the carrier without reservation by the person entitled to receive, every claim against the carrier becomes extinguished. 516. All rights of action and all pleas against a carrier in respect of loss, damage, or delay, are prescribed after the expiration of one year from the day on which delivery of the goods took place, or, in the event of total loss, should have taken place. SECTION VIII. INLAND CONVEYANCE OF PASSENGERS. 517. Every person conveying passengers by land or inland navigation in return for the habitual payment of a fare is liable to indemnify such passengers for personal injury caused them by reason of failure on his part to exercise the utmost diligence in carrying them. In case of dispute it is for the carrier to prove that he has been free from blame. 518. The indemnification consists in the reimbursement of medical expenses and of the extra cost of maintenance caused to the injured party, and in exemplary damages, which are to be fixed according to the gravity and duration of the consequences of the accident, as well as according to the earning powers of the party injured thereby. 519. Where death or permanent injury, infirmity, or incapacity of earning has resulted from the accident, the amount of exemplary damages is to be fixed after taking also into consideration the requirements of maintenance of the family of the deceased or sufferer. 520. The responsibility of a carrier of passengers for passengers' luggage is the same as that of an inland carrier, if such luggage has been delivered to him and, where when necessary, the nature and value thereof have been declared, irrespective of whether the passenger accompanies it, or whether a separate charge is payable therefor or not. 521. A carrier of passengers is only responsible for hand baggage in so far as he is chargeable with fault and in so far as it is necessary to satisfy the actual and reasonable requirements of the journey. 522. Passengers' luggage, in the absence of other instructions, is to be handed over to passengers at the termination of the journey, or if this cannot be done to be kept in safe custody for the space of three days ; after the expiration of this period the responsibility of the carrier is to be measured in conformity with the provisions of Article 304. 523. In other respects the provisions of the preceding Section apply also to the carriage of passengers and luggage. No lien can be exercised upon the wearing apparel of passengers. 524. The responsibility for passengers and luggage exists without regard to whether the fare or the charge for luggage was prepaid or not, and even where, in particular cases, no such fare or charge was payable. CHAPTER IX. SALE. SECTION I. CONTRACTS OF SALE. 525. The subject-matter of a contract of sale can only be a thing which is already in existence at the time of conclusion of the contract and over which the vendor possesses the right of disposal. 526. A thing belonging to another can be sold by a person who has obtained possession thereof in a lawful manner, provided that the purchaser acts in good faith at the time of the transfer of the right of ownership. Such thing, however, unless it be a document to bearer, must not have been either lost nor stolen. 527. A contract for the sale of a thing, which is already in existence at the time of conclusion of such contract, but delivery of which is by natural causes not then possible, is, in the absence of any other intention of the parties, a contract upon the condition that the thing becomes capable of being delivered. 528. A contract for the sale of a thing, which at the time of such contract no longer exists, is valid, if neither of the parties had knowledge of the fact and the contract was concluded with due regard to the uncertainty of the thing being in existence. 529. A contract of sale, in which the vendor stipulates for the right of repurchase, is invalid if it was concluded for the purposes of a transaction relating to differences, or for the purposes of an illegal usurious or other unlawful transaction. 530. All contracts of sale are invalid which are from the outset concluded without the intention of performance, or which are concluded for the sale of things of which acquisition or alienation is prohibited. 531. Conclusion of the contract of sale or, where it is a conditional contract, fulfilment of the condition, or, where the thing has first to be measured or set apart, the measurement, separation, or indication thereof, passes the ownership of the thing to the purchaser, and the risk of loss thereof or damage thereto has to be borne by him. In the case of a sale of a share in a quantity of goods the joint-property of two or more persons, no previous measurement or separation is required. 532. A sale on inspection or trial is deemed to be concluded subject to the condition that the purchaser approves the thing. If the purchaser fails to express his approval within the time fixed by contract or the usages of trade, or necessary for inspection or trial, the condition is to be deemed as not fulfilled ; the condition, however, is to be deemed fulfilled, if the thing having been delivered to the purchaser for inspection or trial, he has failed, before the expiration of the time mentioned, either to express himself with regard to approval of the thing, or to return it to the vendor. 533. A sale according to trade mark, pattern, model or sample, is an unconditional contract, by which the vendor engages that thing conforms to such trade mark, pattern, model or sample, and, unless otherwise stipulated, that it emanates from the owner or author of the trade mark, pattern, model or sample. 534. Where a thing is bought unconditionally after inspection, the vendor, excepting in the case of his own deceit or of material mistake on the part of the purchaser, is only liable for deficiencies or defects in respect of which he gave a warranty, or which he knowingly failed to disclose to the purchaser. In the case of trifling deficiencies or defects, or where no fault is chargeable to the vendor, the purchaser is only entitled to claim a proportionate abatement in price. 535. The forwarding to any particular person with the goods and prices specially indicated, of patterns, models, samples, catalogues, and other business notices is to be deemed a binding offer of sale, unless the sender has reserved to himself the right to vary his proposals. 536. Immediately on conclusion of the contract, the vendor is entitled and bound to deliver the thing and to receive the price, and the purchaser to accept the thing and to pay the price, unless a certain interval of time is allowed by contract or the usages of trade for the fulfilment of the said obligations. 537. In the absence of any rule, provision of the contract or usage of trade to the contrary, the delivery of the thing takes place at the expense of the vendor, and acceptance, examination and the payment of the price, at the expense of the purchaser. 538. Until delivery, the vendor, excepting where the purchaser is in arrear in taking delivery, is liable to him for the loss of the thing or for damage thereto, if such loss or damage was brought about by his failure to exercise the utmost diligence. 539. Where delivery of the thing to the purchaser takes place before conclusion of the contract, the same liability as in the preceding Article mentioned is imposed on the purchaser towards the vendor. 540. Where at the time of conclusion of the contract the thing is in the hands of a third person, such person is bound to deliver it to the purchaser, in the same manner as he would have to deliver it to the vendor. 541. Where the price is not expressly fixed, the market price or in the case of things dealt in on Exchange the Exchange quotation current at the time and place of performance is in the absence of any other intention of the parties, the price payable. In the absence of any contract or usage of trade to the contrary, the purchaser is not bound to pay the price before delivery of the thing. 542. By reason of deficiency or defect in the thing, or delay in delivery the purchaser is entitled, at the expense of the vendor, to protest through a broker and to communicate the protest to the vendor. 543. In the absence of any other contract, the vendor is bound to supply the goods in the quality current at the time and place of performance. This provision applies also to the bottles, cases, and other vessels or packing in which they are to be delivered or again sold, as well as to the packing which serves merely for the purpose of their transport, in so far as the same is necessary for the preservation of the condition and nature of the goods. 544. The purchaser is bound immediately on receipt of the goods to examine their quantity and quality, and to notify the vendor of any deficiencies or defects. He can only claim in respect of deficiencies or defects discovered later on, or plead the same, if the vendor has given a special warranty, or was guilty of deceit or the nature of the goods precluded the immediate examination thereof, and if notice of such deficiencies or defects was given forthwith on discovery of the same. 545. Where a vendor makes part performance only, the purchaser can cancel the entire contract, unless it was the intention of the parties that part performance should be admissible. In the latter case a price proportionate to the actual performance is to be paid. Where, on the other hand, the vendor has made complete performance, but the price has been paid only in part by the purchaser, the vendor can enforce his rights in Article 323 mentioned or can claim return from the purchaser of the things sold in proportion to the amount of the price remaining unpaid, and can resell the same either on his own account or on that of the purchaser. 546. The weight of the packing is to be counted in the weight of the goods only where there is an ex press contract to that effect, or where it is so prescribed by the usages of trade. In like manner, whether an increased number or increased quantity is to be given to the purchaser by way of compensation for the weight of the packing or goods spoilt and damaged, and the extent thereof are determined by the contract or the usages of trade. 547. On receipt of a notice or protest from the purchaser with regard to deficiencies or defects in the thing, the vendor is on his part entitled to have an examination made of its actual condition or quality by a broker or other expert. 548. If the parties or their experts are unable to agree, the actual condition or quality of the thing is to be determined by an expert to be appointed by the Court. 549. Where a purchaser declines acceptance of a thing, he must forthwith place it at the disposal of the vendor and, until such disposal is or ought to have been effected, he is bound to provide for the keeping of the thing. A purchaser, unless so instructed by the vendor, is neither bound nor entitled to send back such thing to the vendor. 550. The purchaser may sell the rejected thing on account of the vendor where he has already paid the price therefor or where such thing is of a nature to spoil or lose in value. In the case of such sale by the purchaser to protect his own interests the provisions of Article 392 must be observed. 551. The purchaser is entitled to require the vendor to furnish him with an account, not later than delivery of the thing, and to make out a receipt for the payment of the price. SECTION II. CONTRACTS OF SUPPLY. 552. A contract of supply is a contract for the sale of a thing which at the time of concluding the contract either does not yet exist, or over which the vendor has no right of disposal, or which is still in transit, or of which delivery is to take place by means of a document to order or to bearer, or by means of some requisite changing by writing of names. 553. A contract of supply once concluded is binding on both parties thereto ; the right of ownership and risk in the thing, however, only pass to the purchaser upon delivery to him of the thing. 554. Things naturally extant, but not yet in man's power, are to be deemed non-existent. 555. Things, for the transmission of which until delivery to the purchaser the vendor is responsible, are to be treated as equivalent to things in transit. Where things in transit are sold by means of a document to order or to bearer, or by some other indirect method, the vendor bears, until delivery, the risk of their total loss or total damage ; in respect of partial loss, or partial damage, the purchaser is entitled to claim a proportionate reduction in the price. 556. In the case of a contract of supply by means of a document to order or to bearer or the like, it can be determined by contract or the usages of trade that delivery of the thing to the purchaser may only take place on payment of the price to the third person bound by such means of sale as aforesaid to deliver the thing. Where a pledge right exists over the subject-matter of the contract of supply, the provisions of Article 377 are also to be observed. 557. Where no delivery of the thing deliverable under a document to order or to bearer or the like is made to the purchaser, he may enforce against the vendor his rights arising from the contract of supply, excepting where, in accordance with the intention of the parties or the nature of the transaction, the vendor is to be free from liability. 558. The principles governing contracts of sale are to be applied also to contracts of supply, in addition to the provisions in this Section contained. SECTION III. AUCTIONS. 559. A person carrying on, as a business, the holding of public auctions for others may not decline, without lawful reason, instructions given to him for such purpose. 560. Auctions on an Exchange can only be held by Exchange brokers. 561. Any person is entitled to bid at a public auction, so long as no reasonable suspicion exists as to his solvency or good faith. 562. No auctioneer may bid on his own account, and a vendor is only permitted to bid where he has expressly reserved the right to do so, and where his object is not to thereby fraudulently force up the price. 563. In the absence of any express reservation, things brought to auction are at the time fixed for sale, to be adjudicated to the highest bidder. 564. The contract of sale is concluded in respect of each article or number so soon as the adjudication is given to the last bidder. 565. Where two or more person make the highest bid at the same time and they are not willing to take the thing in common, the adjudication is given to the one who on a further bidding amongst themselves makes the highest bid. 566. Where the last bid is invalid or is not accepted by the auctioneer, the adjudication is given to the person who made the bid immediately preceding. 567. Every bidder is bound by the conditions of sale publicly made known by the auctioneer prior to commencement of the auction, in so far as such conditions are not contrary to law. Conditions of sale drawn up in print or in writing cannot be altered or cancelled by a verbal statement of the auctioneer. 568. An auctioneer may in addition represent purchasers in bidding, and in concluding and carrying out the contract of sale. He is not, however, at liberty to make advances to the vendor upon things entrusted to him for sale by auction before they are sold. 569. The expenses of sale by auction are, unless otherwise stipulated, to be borne by the vendor. 570. The auctioneer has a right of claim against the vendor for the stipulated or customary commission, and for indemnification of the expenses and disbursements incurred by him in the sale, in so far as these are not covered by his commission. For such right of claim, and for any advances lawfully made by him to the vendor, the auctioneer is entitled to a lien upon the things entrusted to him for sale or upon the price obtained therefor. 571. The auctioneer is responsible to the vendor for every damage he occasions the latter by his negligence or unskillfulness or with malicious intent. SECTION IV. STOPPAGE IN TRANSIT. 572. Where, after the conclusion of a contract of sale, the purchaser suspends payment, or the fact of his having already done so prior to such conclusion becomes known to the vendor, and the latter does not otherwise receive payment in full or guaranty, he may take back the thing sold, which is in transit to the purchaser or to his order, in so far as it has not yet come into the possession of the purchaser or of his representative, or has not been validly resold or pledged by him. 573. The re-sale of the goods to a subsequent purchaser is only valid, if, on such sale being effected, he was acting in good faith, and if it was effected in return for a reasonable and actual price ; if such price has not been paid, the original vendor may require it to be paid to himself up to the amount of his right of claim. 574. The right of stoppage in transit is not precluded by the fact that the vendor has given credit for the price, or that he is in receipt of part payment thereof, or that account current relations exist between him and the purchaser ; such right is, however, precluded by the drawing by the vendor of bills of exchange or by his receipt of bills, notes or other instruments of credit from the purchaser in respect of the full price, provided such instruments bear, apart from the signature of the purchaser or of his representative, the signature of a third person as bound thereon. 575. Reasonable suspicion of impending suspension of payment by the purchaser or of the possibility thereof on account of embarassed business circumstances, is equivalent to actual suspension of payment. 576. The taking possession by the purchaser or his representative is to be deemed effected, when the goods have been brought into his warehouse, or have been deposited in a like place in his name irrespective of whether the cost of carriage, custom dues, or other expenses attaching to the goods, have been previously paid by him or not. 577. The right of stoppage in transit can only be exercised on payment or reimbursement of the expenses, disbursements, or other claims attaching to the goods in respect of transport or occasioned thereby, in particular of cost of carriage, commission, forwarding commission, custom dues, insurance, and average. 578. The right of stoppage in transit can also be exercised by the principal against a commission agent charged with the sale of goods or his representative, even where he is already in the possession of the goods or has sold them to a third person ; such right can be similarly exercised by a commission agent, charged with the purchase of goods, against the principal. 579. The right of stoppage in transit can likewise be exercised:— i. With respect to bills of exchange, promissory notes and other instruments of credit, transmitted by one person to another, without his being the debtor of the latter, in account current, or for the purpose of keeping, or for collecting, for security, or for the purpose of therewith making for him some payment, provided the same without having been realized are still in the hands of the addressee ; ii. With respect to sums of money already dispatched by one person to another for the same purpose, but which have not yet reached the addressee, or which have already reached the addressee but have not been placed by the latter to his own account or otherwise disposed of by him. CHAPTER X. CREDIT. SECTION I. LOAN FOR CONSUMPTION. 580. A loan for consumption may be made either by the creditor direct or by another person on his account, and either to the debtor direct or to another person on his account. 581. Every advance or payment, and every taking over of a definite obligation on account of the debtor, whether in consequence of direct contract or of some other contractual relation existing between the parties, stands on the same footing as a loan for consumption. 582. The debtor is bound in every case to repay the subject-matter of the loan in equal kind and quantity, in so far as such repayment can take place or is intended by the parties to take place. 583. For a loan for consumption in goods or documentary securities, the debtor, unless otherwise agreed upon, and in all cases where he received a specific object, must return the money value thereof at the time and place of receipt. 584. An instrument of credit running in the name of the debtor or issued on his account, cannot, where the debtor is bound to repay the amount named thereon, be negotiated or otherwise transferred by himself or on his account excepting for its full face value, in the contrary event such instrument of credit loses its validity. The allowance of a discount is not, however, hereby excluded. 585. Where a loan for consumption is made on an indorsable or otherwise negotiable instrument of credit, the persons who are to be regarded as creditor and debtor are those who are indicated as such on the instrument. 586. The debtor is bound, even without an express contract, to repay a loan for consumption received by him, unless the contrary was intended by the parties or is to be presumed from the nature of the transaction in question. 587. The debtor can in no case be deprived by contract of the right at any time to repay a loan for consumption after previous stipulated or reasonable notice ; the creditor, however, unless otherwise stipulated, is only bound to accept the principal and subsidiary amount of the debt in full in one payment, and without the deduction of a discount. 588. Where a loan for consumption is given for a time uncertain, the debtor may at any time make repayment thereof after previous reasonable notice ; the creditor, however, can only demand repayment after previous reasonable notice and in the absence of violation of good faith. 589. In the cases in Article 585 specified the obligation of repayment can only be agreed upon for a certain time. 590. Repayment of the principal of a loan may, irrespective of any contract to the contrary, be claimed before the stipulated time if the debtor remains in arrear with the interest due pursuant to the contract for longer than one interest term, or if he suspends payment or falls into embarrassed circumstances. 591. In the cases in Article 581 mentioned the creditor's right of claim is enforceable only in conformity with the contractual relations existing between himself and the debtor. 592. In so far as is not contrary to express contract or to the preceding Article, interest, to such amount as is by the nature of the transaction determinable and customary, may be claimed for every loan for consumption, and for all capital paid out or employed for another. 593. Interest can only be claimed upon interest which has become due after this has been added to the principal, either by balancing of an account, or by some other settlement of account, or by special contract. 594. A simple receipt acknowledging repayment of the principal in full is at the same time to be regarded as a receipt with respect to the interest due on such principal. 595. Interest paid voluntarily cannot be reclaimed. 596. In lieu of direct repayment, the creditor may require the debtor, up to the amount of the principal and subsidiary debt, to make payment to other persons, to accept or pay bills, notes, or orders, or to take over other obligations of debt on the creditor's account. The debtor may on his side require the creditor to settle the account by crediting payments made in conformity with Article 581. SECTION II. PROMISE OF CREDIT. 597. A promise to give credit, so long as it has not been revoked, is binding, whether it be given as a subsidiary term of another contract or as an independent promise. 598. A promise of credit to a fixed amount cannot be revoked, if it was given to a creditor, either expressly or according to circumstances, for the purpose of payment of a debt or for the purpose of security. 599. An independent promise of credit, after it has once been accepted for a fixed amount, is revocable only if the person who is in receipt of credit fails to fulfil the obligations undertaken by him in return, or suspends payment, or falls into embarrassed business circumstances, and the giver of credit is not possessed of sufficient cover or guaranty. 600. A promise of credit may be given for a fixed or an unlimited amount, for a time certain or uncertain, conditionally or unconditionally, specially or to order. 601. A mutual promise of credit is binding on both parties according to the principles of bilateral contracts ; it is revocable, however, in the cases in Article 599 specified. 602. The acceptance in account current of a deposit or of other sums of money or of valuables is to be deemed a tacit promise of credit up to the full amount of credit then standing open. 603. In case of doubt, interest or commission for a promise of credit can only be claimed in proportion to the amount of credit actually given in pursuance of such promise. 604. Where a promise of credit is given by means of an order or letter of credit addressed to another, the party issuing the same is responsible to the promisee for performance, and such performance takes place on account of the issuer ; acceptance, however, of such order or letter of credit by the addressee is to be regarded as a fresh promise of credit. 605. Where a promise of credit is given in pursuance of the instructions of another person, such person is to be regarded as surety of the promisee. 606. The recommendation of a person for a grant of credit to a fixed amount, if given without reservation is to be regarded as an instruction to give credit. SECTION III. DEPOSIT. 607. Whoever takes over for keeping a thing belonging to another, is responsible for the return thereof to the depositor, exercising with respect thereto the same care as he exercises with respect to his own property. 608. A person who receives a reward for the keeping of things belonging to others, or expressly takes upon himself the responsibility therefor, or takes over such things not only for the purpose of keeping but also for the purpose of management, or makes a business of the keeping, or management, of such things, or with whom such things are deposited in the course of the business in which he is engaged, is responsible to the depositor for the exercise of the utmost care. 609. Every innkeeper, restaurant keeper, keeper of a bathing establishment, or other person who in the course of his business receives guests is liable for loss or damage to the things brought by such guests and deposited on his premises, and he cannot free himself from such liability, either by means of a notice of non-liability, or by calling upon such guests themselves to exercise care, or in so far as there was fault on the part of himself or of any person in his service, by express contract. Large sums of money and things of special value are to be declared and committed to special keeping. 610. The depositary may by contract, or without any contract where he keeps, or manages, things belonging to others as a business, claim a reward for his care, and, in every case, may claim to be indemnified for his necessary disbursements ; he may also claim to be indemnified for any damage he may by the fault of the depositor have sustained. He is entitled in respect of his right of claim to a lien on the things deposited. 611. Excepting in the case of Article 617, the return of a deposit may be at any time demanded without previous notice, irrespective of whether such deposit was made for a definite or for an indefinite period of time. 612. A thing deposited for an indefinite period may be at any time returned by the depositary, provided that he gives a reasonable or the stipulated notice. 613. Where a thing is deposited by two or more persons jointly, it may, unless otherwise stipulated, be re-demanded by and returned to any one or more of them. 614. Fruits or benefit which accrue from the thing deposited during the period of deposit belong, unless otherwise stipulated, to the depositor. 615. Where things are deposited merely according to kind and indicated by number, weight, or other measure, they can, in so far as they are not, according to their nature, to be regarded as specific objects, only be required to be returned in equal number, weight, or measure. 616. Where fungibles belonging to two or more depositors become mixed together, each depositor becomes co-owner in the mixture in proportion to the amount deposited by him, and bears, in such proportion, the risk of loss or damage to the entire mixture. 617. Where fungibles are deposited in such manner, that according to contract or the usages of trade the depositary is entitled to the use or disposal thereof, the right of ownership therein and the entire risk of loss thereof or damage thereto is transferred to the depositary, irrespective of whether he receives a reward or not, or pays interest to the depositor or not. 618. The question as to whether the depositary is entitled to the use of specific objects deposited is to be determined entirely according to the intention of the parties. 619. In the absence of any express agreement to the contrary, deposits of money or precious metals made without being sealed up or otherwise secured are always to be regarded as the property of the depositary ; similar deposits of documentary securities, however, only where they have been transferred by the depositor to the depositary at a settled rate. 620. On a deposit wherein the ownership passes to himself the depositary is only required to pay interest where such was expressly agreed upon, and can only claim a reward, if such was expressly stipulated for or is customary. 621. Deposit-receipts may be made out either to the name of the depositor, or to order, or to bearer ; they are indorsable, unless the contrary is stated thereon. 622. In the cases of Articles 617 and 61g, the depositary or depositor may, by contract or the usages of trade, be permitted the right respectively to return or require either the thing itself, or the market price thereof at the time and place of delivery or re-delivery. 623. A depositary is not bound to inquire into the depositor's right of ownership or disposal, or to inquire into the rights of the person who presents the deposit-receipt and claims the return of the deposit ; the depositary is responsible, nevertheless, for malicious intent or gross negligence. 624. The principles laid down in Article 615 and following Articles apply also to inland carriers, masters of vessels, and other persons, with regard to things entrusted to them according to number, weight, or other measure, without being secured or marked, for the purpose of transport, of having work done upon them, or for some other purpose ; they further apply to a pledge creditor to whom money or other fungibles are delivered for the purpose of pledge. CHAPTER XI. INSURANCE. SECTION I. GENERAL PROVISIONS. 625. The contract of insurance is a contract whereby the insurer, in return for the payment of a premium, binds himself to indemnify the insured for loss or damage which may arise with respect to a specified object, during a specified period, from an unknown or uncertain event. 626. The risks which may be insured against are chiefly fire, earthquake, storms, and other natural occurrences, the risks of transport by land and by water, death and personal accidents. Insurance against other risks is not, however, excluded. The provisions of this Chapter are applicable to marine insurance, in so far as they do not conflict with the provisions contained in Book II. The insurance, unless otherwise agreed upon, extends to all risks arising during the period for which premium is paid and in particular to such as succeed one another during the said period ; under no circumstances, however, is the insurer bound to indemnify beyond the amount insured. 627. Every interest in property which the insured has as owner, creditor or by virtue of some other legal title or relation, and by the injury to which in consequence of the happening of the risk the insured would be directly damnified, is insurable. No casual interest dependent on gaming, wagering, lottery, or other hazard is insurable. 628. An insurance may be effected by a person on his own account or on account of another, and with or without the instructions or previous knowledge of the insured, and without the latter being indicated. Where from the contract, the interest of no other person appears, the person effecting the insurance is, as towards the insurer, to be regarded as the insured. 629. The insurable interest is, as a rule, limited to the ordinary value of the thing insured ; where it is to exceed such value, it must be the subject of a special and express agreement. 630. The value of the thing insured is determined in the case of movables intended for use by the cost of restoring or replacing the same, and in the case of commercial goods by their market price at the time and place of the happening of the damage or loss. 631. No insurance is valid to an extent beyond that of the insurable interest in the thing insured. 632. Where the value of the thing insured is previously fixed by express contract or on the basis of a valuation by experts, such assessment can thereafter only be disputed on the ground of coercion, deceit or material excess, and the provision of the preceding Article does not apply. 633. The value of an insured right of claim is determined by the amount of the debt, together with interest and the expenses of collection. 634. The amount of indemnity payable, in the case of insurance of persons, is the sum insured, and in the case of insurance of things, is the extent to which the insured has been directly or indirectly injured by the occurrence of the risk. Indirect injury is to include special expenses and damage caused to the insured by the necessity of averting a risk that has actually presented itself, or has threatened to do so. 635. The insurer is not bound to make good loss or damage which the insured unnecessarily and voluntarily occasioned himself or permitted to be so occasioned, or which had its immediate cause in the nature or inherent defects of the thing insured or in the use for which it was destined. 636. An insurance effected against a risk which has already happened at the time of concluding the contract of insurance is invalid, excepting where neither of the parties nor either of their representatives had knowledge thereof and the insurance was effected with the express intention of including such risk. 637. Where one and the same person is insured separately and with respect to the same thing in respect of the same interest by two or more insurers, either simultaneously or at different times, each of the insurers must be notified of such double insurance and their assent must be obtained, failing which any of them may cancel the contract. 638. In the case of double insurance, the insured, unless otherwise agreed upon, may claim payment of the indemnity from each of the insurers, and any insurer who has paid can claim from the other insurers their share of the indemnity paid ; the amount thereof is to be settled among them proportionately to the amount of all the insurances, so far as any of the same is not invalid or has not terminated by expiration of time or otherwise. A resignation in favour of one insurer never operates to the prejudice of the others. 639. In case of insurance below the amount of the insurable interest, the insured is to be deemed his own insurer for the remaining amount, and is, unless otherwise agreed upon, to bear the loss in the proportion which the latter has to the former. 640. By alienation of the thing insured, or by other transfer of the insurable interest, the insurance passes as of course to the new acquirer, except in so far as the alienor retains an interest or anything in Article 654 contained is opposed thereto, or unless the insurer has expressly reserved to himself the right to give his consent to the transfer. The insurer is, however, in every case, to be forthwith apprised of the effected alienation or transfer, and must, where the insurance runs to name, write it over to the name of the new acquirer. 641. The right of claim to a sum insured may, unless otherwise stipulated, be assigned to a third person either before or after it falls due without the consent of the insurer, and the insurer is bound from the time when he acquired knowledge of such assignment to make payment to such person exclusively. The mortgaging or pledging of a thing insured, an insurance of a mortgaged or pledged object, or an insurance in favour of a third person, is to be deemed equivalent to the assignment of the right of claim to the sum insured. 642. The conclusion and performance of contracts of insurance are governed by the principles laid down in Chapter VII of this Code ; nevertheless the insurer is in every case bound, forthwith upon such conclusion, to make out a policy of insurance and to deliver the same to the insured, and is liable to him for all damage caused by failure or delay in so doing. 643. The contract is to be deemed to be concluded, when the insurer, or his representative authorized to conclude it, has without objection accepted the written insurance proposal with its accompanying written declaration. 644. A contract of insurance may be concluded by either party through a commission agent. 645. Insurance public agents established elsewhere than at the seat of business of the insurer and insurance public agents in Japan of an insurer abroad, are, with respect to the insured, and provided that they have made no declaration to the contrary to him, to be deemed to be empowered to conclude contracts, to accept declarations, to receive premiums, to pay over the sum insured, and in every other manner to represent the insurer. 646. The policy must be dated and must be signed and sealed by the insurer or his representative, and it must contain the following particulars:— i. The date of commencement and the duration of the insurance ; ii. A sufficiently clear description of the thing insured ; iii. The amount of the sum insured ; iv. The amount of the premium ; v. The risks against which the insurance is effected ; vi. The names of the person effecting the insurance and description of the insured ; vii. Facts having an essential bearing on the contents of the insurance, and the special provisions, if any, of the contract. 647. The contents of the policy may be corrected, explained, supplemented, or altered by the usages of trade, or by supplementary or other documents relating to such policy. 648. A policy of insurance may be made out to order or to bearer, but not in blank. 649. The contents of a contract of insurance can only be proved by means of the policy or writings relating thereto, unless these no longer exist, or were not made out. 650. The value of the thing insured, in so far as it is not specified in the policy, and the amount of the damage sustained may be proved by any other legally admissible evidence. If the parties themselves are unable to agree on the amount of the damage sustained, it is to be estimated by one or more experts appointed by the Court. 651. The insured is bound, on the happening of the risk, to take all possible care to avert the same, and also, after the occurrence of the risk, to forthwith notify the insurer or his agent thereof, as well as of the fact and amount of the loss or damage sustained ; the insured is liable to the insurer or his representative for any detriment caused by the violation of this obligation. 652. No insurance covers risks occasioned by reason of war or civil commotion, unless such risks have been expressly accepted. 653. The insurer is entitled to dissolve the contract, if the insured, in concluding the same, misrepresented or concealed material facts, irrespective of whether the same was done with malicious intent, or not ; but the insured is to be deemed free from blame, if he has answered every question put to him by the insurer to the best of his knowledge and in good faith ; the right of the insurer to dissolve the contract is not, however, affected by such circumstance. 654. The insurer is not bound by the contract of insurance, unless the same is continued by him, in cases where, subsequent to the conclusion of the contract, some change in the conditions takes place with respect to the thing insured which increases or alters the risk taken, or where the premium, unless delay in the payment thereof is expressly or impliedly accorded, is not paid within the stipulated or customary time, provided such payment has been demanded upon presentation of a receipt. Payment of the premium may be made, even in the cases in Articles 640 and 641 mentioned, either by the insured himself or by his successor in rights. 655. The contract is not binding on the insured so long as the risk taken does not commence to run against him ; nevertheless, no division of the premium by reason of diminution or shortened duration of the risk is permissible, unless it was paid in advance in respect of two or more periods for the payment of premium. One year is, as a rule, the period for which premium is payable. 656. Where, during the continuance of the insurance, either of the parties is declared bankrupt, the other party may, at his option, either cancel the contract or require guaranty for its performance. 657. Where, in the absence of fault on the part of the insured, the contract is invalid, or is voluntarily cancelled, all premiums already paid must, subject to the customary reduction due to the insurer, be returned to him in their entirety where the insurer ran no risk, otherwise only the premium for the current period must be returned to him subject to the like reduction, and in proportion to the diminution of the risk, in cases of double insurance, or of over-insurance, of lessening of the insurable interest, or in cases having any other causes. 658. By payment to the insured of the sum insured the insurer acquires, as of course, any existing rights of claim against third persons to which the insured is entitled in respect of the damage sustained, and in particular, in the case of insurance of a right of claim, the rights of the creditor against the debtor ; such acquisition cannot extend, however, beyond the amount paid. The insured is answerable for any act of his prejudicial to the insurer in regard to the above. 659. In the case of partnerships or companies founded for the purpose of mutual insurance of the members thereof, the rights and obligations of these latter, in particular with regard to payment of premiums or of additional premiums, payment of the debts of the partnership or company, participation in its profits, and the presentation of accounts, are to be determined according to the contract or regulations of such partnership or company, and, in so far as they are inadequate, by the provisions of this Code. SECTION II. INSURANCE AGAINST FIRE AND EARTHQUAKES. 660. Movables or immovables may be insured by a person who as lessee, usufructuary, depositary, or in other like capacity, has the possession or custody thereof either in his own interest, or in the interest of the owner or in that of both. Where doubt exists with respect hereto, the first is to be deemed the interest insured. In the case of insurance by a person in his own interest it is deemed to be effected in the first place for making good the insured's own loss, and in the second place for covering his liability towards the owner of the thing, and his creditors are excluded from all claim on the sum insured in so far as this serves to cover such liability. In the case of insurance to meet claims for damages that may become payable to the owner or another, the insurer, even where the insured is to be regarded in accordance with Article 639 as his own insurer, has alone to bear the entire loss, to the extent of the sum insured. 661. Where, in the case of insurance of immovables, the' insured is bound by law, ordinance or other public regulations or by contract to undertake the reconstruction or the repair of the destroyed or damaged object, the insurer may apply to the Court to fix a term for the fulfilment of such obligation by the insured or his successor in rights, and may supervise the execution thereof, and he is only required to pay out the sum insured in proportion as the work progresses. It may also be stipulated that the insurer shall himself effect or cause to be effected by third persons the reconstruction or repairs at his own expense to the extent of the sum insured due. 662. Movables may be insured either specifically or as a whole ; in the latter case the insurance is not affected by the occurrence, during the term of insurance, of any augmentation or diminution in the constituent parts of the whole, or by reason of such parts being entirely or partially replaced by others during such term. Unless the contrary is agreed upon the insurance, as a whole, of the movables with which a house is furnished, does not cover money, jewels, documentary securities and other documents, as well as manuscripts and other articles which have no ordinary value. 663. An insurance of movables is only valid as regards the dwelling-place or other locality named in the policy ; the insurance is not, however, voided by removing provisionally of the thing insured to some other place. 664. The provision of Article 635 only applies to objects exposed to the risk of spontaneous combustion or explosion, if the insured has neglected to take the stipulated or requisite precautionary measures. 665. Loss caused to the insured whether the fire breaks out on the premises of the insured himself or in their neighbourhood, by measures taken to extinguish such fire or taken for the purpose of saving life or property, or by theft or in some similar manner is to be deemed loss by fire. 666. The risks of lightning, of explosions of or by powder or engines, and other similar risks, as well as the risk of earthquake are, if not otherwise agreed upon, to be treated as a risk of fire, irrespective of whether a fire ensues thereon or not. SECTION III. INSURANCE OF PRODUCTS OF THE SOIL. 667. Fruits of the earth and other natural products are only insurable against extraordinary occurrences of nature which cannot be averted by human power and care, such as violent rains, floods, drought, or storms. The risks insured against are to be specified in the policy. 668. Unless a shorter period is stipulated, the insurance is valid for one year. 669. Where damage has occurred, the indemnification payable to the insured is, in proportion to the sum insured, the amount of the difference between the value of the insured products after the event and the value which they would have possessed at maturity, if no damage had occurred unless the sum insured exceeds the last named value. 670. The insurer is not liable unless the damage amounts to at least one fourth of the value which the products would have possessed in the absence of such damage. SECTION IV. INLAND TRANSIT INSURANCE. 671. Things in transit may be insured by inland carriers and by any one having an interest in their safe arrival at the place of destination. 672. The insurer, by an insurance of things in transit, takes over every risk of loss or damage to such things during the transit, including risks of fire, theft, robbery, hostile force, and others similar thereto, in so far as no particular risks are expressly excepted. Unless otherwise stipulated, the duration of transit is to be taken to be from the moment of commencing delivery of the things to the carrier up to the moment of completing the delivery thereof to the person entitled to receive. 673. When things in transit are alienated during the transit, the insurance passes in accordance with the provisions of Article 640 from the alienor to the new acquirer. 674. Where any loss or damage not covered by the policy occurs to a thing in transit, it is on the insurer to prove such exception. 675. In the absence in the policy of any expressly specified value, the basis in determining the amount of loss is the original value of the thing in transit with the accessory expenses, or, where this cannot be ascertained, the ordinary or market value of the thing at the place and time of loading together with all imposts, expenses of insurance and loading, as well as the expenses with which the insured is charged for transport. 676. In addition to the particulars in Article 646 specified, the following must be stated in the policy:— The nature of the transport and particular means of transport ; The names of forwarding agent and of the inland carriers ; The route by which the insured thing is to be carried, with special mention of the place of departure and the place of destination and, where any place is to be stopped at, of such place ; The duration of transit, if any such has been agreed upon. By exceeding the time for transit specified in the policy or usual, or by deviating from the other conditions of the policy in the preceding paragraph mentioned, the policy, save in the case of express agreement to the contrary, does not become invalid ; rights of claim founded hereon of the insured against the inland carrier or forwarding agent pass, however, to the insurer. SECTION V. LIFE INSURANCE, INSURANCE AGAINST ACCIDENTS, AND INSURANCE OF ANNUITIES. 677. The life or health of a person may be insured for the term of his life or for some other specified period of time. 678. Any person may insure his own life or health or that of another, if in the latter case he has at the time of effecting the insurance a pecuniary interest in such other's life or health. The mutual interest in each other's life or health of husband and wife, brothers and sisters, ascendants and descendants, does not require to be proved. 679. The consent or knowledge of another person whose life or health is insured is not requisite for the validity of such insurance. 680. The sum insured, as soon as it has fallen due, must be paid to the insured, or to the person for whose benefit, according to the policy, the insurance was effected or to whom the right to claim such sum has passed. When the death of the insured causes the sum insured to fall due and no persons then exist who are entitled to the sum insured, such sum must be treated as part of the deceased's estate. 681. The life or health of a person may be insured by another in pursuance of a contractual obligation either in the interest of such person himself or for the benefit of a third person. 682. The insurance is or becomes void :— i. If the death or accident, against which it was effected, had already happened at the time of contract, excepting where such fact was unknown to the person who effected the insurance ; ii. Where the person who insured or caused to be insured his life or health violates the obligations imposed upon him by the contract, or shortens his life or injures his health by a dissolute or wanton course of life, or by otherwise wilful acts ; iii. Where the death or accident occurs in consequence of, or during the execution of, a judicial sentence for a crime or delict, or takes place as the immediate consequence of the committing of a crime or delict, or is brought about by duelling or is otherwise wilfully occasioned. 683. In all cases where the insurance is or becomes void, there must be returned to the insured the amount stipulated in the event thereof in the contract of insurance and, in the absence of any such stipulation, one half, at least, of the reserve fund already accumulated for him, excepting where he has himself occasioned the invalidity by deceit or in violation of good faith. 684. The insurer is not entitled to set up the invalidity of the contract against the insured, if he continued the contract with the latter after becoming acquainted with the circumstances causing the invalidity thereof. 685. The falling due of the sum insured may, apart from the happening of death or accident, be made by contract dependent on the attaining of a certain age, or on the expiration of a certain period of time, or the payment of an annuity may be stipulated for in the place of payment of an insured sum. 686. The insurance of an annuity is a contract by which the insurer binds himself, in return for a specified sum, to pay to the insured or, upon his death, to others participating in such insurance, a fixed annuity for life, or until the expiration of a certain time. 687. The right of receiving the annuity may, in conformity with the provisions of Article 641, be assigned by the insured to another person to the same extent and under the same conditions as it belongs to the insured. 688. In all cases of life insurance, insurance against accidents, and insurance of annuities, the insured or his successor in rights is entitled, upon giving previous due notice, either to cancel the contract and receive the amount due to him in pursuance of the contract of insurance or of Article 683, or to convert the contract into a deposit of capital bearing interest and subject to a previous notice of withdrawal. Failure to make payment of premiums may be regarded by the insurer as notice of cancellation of the contract. SECTION VI. PUBLICITY OF INSURANCE. 689. No insurance partnership or company may carry on its business until it has obtained the sanction of the Government. 690. Every insurance partnership or company is bound, by means of annual accumulations, to form a reserve fund out of the premiums paid to it and from other receipts, and such reserve fund is at all times to amount to at least twice the average amount of the insured sums annually payable. This reserve fund must be safely invested and the documents of title issued in respect thereof deposited with the Court, and the revenue flowing therefrom accrues to the partnership or company. 691. Every insurance partnership or company is bound, once at least in every year, to prepare and publish a statement of its annual revenue and expenditure and a balance sheet of its assets and liabilities, and to forward a copy thereof to every member and to every person insured. 692. The Court is empowered, upon the application of any person insured, to at any time investigate, by the aid of One or more experts, the state of the insurance business, the condition of affairs, and the proportion of assets to liabilities of an insurance partnership or company, as well as the principles upon which it carries on the business of insurance, and to acquaint the persons insured with the result of such investigation and to publish the same. The expenses of such investigation and publication are to be borne by the partnership or company, if, in the opinion of the Court, there existed sufficient grounds for making the application. A similar investigation may be instituted by the administrative authorities of their own motion. 693. A partnership or company carrying on in addition to one branch of insurance business other branches thereof must conduct each branch of insurance business separately, and must accumulate and employ the receipts of each branch exclusively for the purposes thereof. The above provision also applies in the case of the bankruptcy of an insurance partnership or company. The assets remaining over in case of bankruptcy are to be distributed in accordance with Article 1045. The preceding paragraph correspondingly applies to a partnership or company which in addition to insurance transacts other business. 694. Where an insurance partnership or company violates the provisions of Articles 690-693, or where, without the consent of all the persons insured, it amalgamates with another partnership or company carrying on the same or another kind of business, or where it alters or actually violates the principles of insurance business adopted by it and made known to the insured, every person insured is at any time entitled, without giving previous notice, to cancel his insurance and to require the partnership or company to return all premiums paid by him for the current term of payment together with in terest at the legal rate from the respective days of payment. 695. Where an insurance partnership or company is in such a condition of affairs that it is apparently unable to fulfil its future obligations, any person insured may apply to have it adjudged bankrupt, even if it has not yet stopped payment. 696. An insurance partnership or company concluding contracts of insurance by means of public agents in places other than at the seat of its head office is with regard to such contracts, and irrespective of the authority conferred on such agents, subject to the jurisdiction of the Court within whose district the agent in question has his place of business, and is bound to appoint for itself a judicial representative to appear for it in such Court, failing which the agent in question is to be regarded as such representative. 697. Every agency of a foreign insurance partnership or company established in this country in accordance with Article 645 for the purpose of independently concluding contracts of insurance, is to be regarded as a branch establishment of such in surance partnership or company, to which the general provisions with regard to branch establishments, as well as the provisions of this Section, both apply. 698. The provisions in this Section contained are to be applied also to individuals and to associations carrying on the business of insurance. CHAPTER XII. BILLS OF EXCHANGE, PROMISSORY NOTES AND CHEQUES. GENERAL PROVISIONS. 699. Bills of exchange and promissory notes are instruments of credit running to order or to bearer and which provide for the unconditional payment of a certain sum of money and import as of course lawful consideration. 700. Every person who has capacity to trade may bind himself by a bill or note. 701. The presence on a bill or note of the signature of a person incapable of so incurring liability does not affect the validity of the remaining signatures thereon. 702. A bill or note in which an essential requisite has been fictitiously inserted is not to be deemed a bill or note with regard to persons aware of such fact. 703. A person who places his signature on a bill or note on behalf of another without his special instructions, or without expressly indicating that he is acting in a representative character is personally liable therefor. 704. The payee of a bill or note may directly demand the drawer or maker to furnish him with numbered parts of the same of a like tenor ; so also may any subsequent holder through the intermediary of the previous holders. Every holder of a bill or note is entitled to himself make such copies thereof as he requires. 705. Subject to such exceptions as are admitted by law or by the usages of trade, a bill or note is of itself binding according to the tenor of its contents. 706. A bill or note which does not possess the essentials required by law, or of which the contents are illegal though possessing such essentials or are in themselves contradictory, unless such contradiction can be lawfully removed, is void. 707. The validity of the contents of a bill or note which complies with legal requirements is not affected by additions on such bill or note which are immaterial to such contents ; and no liability appertaining to bills or notes as such can arise on such additions. 708. A forged or fraudulently altered bill or note is valid as such, but such forgery or fraudulent alteration, whilst itself creating no liability, does not affect liabilities once validly created. The plea of forgery or fraudulent alteration may be set up against the forger or the person so fraudulently altering, and against any person who with knowledge thereof acquired the bill or note. 709. Liabilities appertaining to a bill or note are to be determined, so far as the contracting thereof is concerned, by the law of the place named on the bill or note, and, where no such place is named, by the law of the domicile of the debtor, and, so far as their fulfilment is concerned, by the law of the place where fulfilment is to take place. Acts to be done for the purpose of exercising or preserving rights arising on a bill or note must be performed in accordance with the law of the place where they have to be done, unless some other place is named on the instrument. 710. The possessor of a bill, note, or cheque, who has acquired it by lawful means and without gross negligence, cannot be required to deliver up such bill, note, or cheque, or the proceeds thereof, except in cases where the demand so to do is based on such facts as would constitute a plea to a claim on his part for. delivery up of the instrument to him. 711. The provisions of Article 403 are to be applied to bills, notes, and cheques stolen, lost or otherwise missing. 712. Claims arising on a bill or note against the acceptor or maker respectively are prescribed after a period of three years, calculated as beginning to run from the day of maturity ; the rights' of recourse of the holder and of the indorsers respectively against the drawer and prior indorsers are prescribed after a period of three years running from the day of protest or notification of the claim. Prescription is interrupted by the institution of an action as well as by any other judicial proceeding ; it is terminated by judgment, or by an express acknowledgment of the debt in writing and its conversion into a new debt. 713. Where a bill or note is payable at sight, or at a fixed period after sight, prescription begins to run from the expiration of the period provided for presentment, if no presentment has taken place at an earlier date. 714. Where a person has lost his rights of claim under a bill or note in consequence of prescription, or in consequence of the omission of acts provided for by law, he can, nevertheless, and even in the case of Article 711, enforce such rights against the drawee, drawer, maker, or indorser to the extent to which they have benefited by any provision that they have not disbursed or that has been again reimbursed to them. 715. All persons whose signatures appear on a bill or note are by virtue thereof jointly and severally liable ; such liability of each debtor is, however, quite independent of that of the others. Actions on bills or notes may be brought against all or individual debtors on the instrument. SECTION I. BILLS OF EXCHANGE. SUBSECTION 1. DRAWING. 716. A bill of exchange must distinctly and accurately contain:— i. The date when, and the place where, it is drawn ; ii. The sum payable expressed in words ; iii. The names of the drawee ; iv. The names of the person to whom or to whose order payment is to be made, or else a statement that it is payable to bearer, and also the time of maturity and the place of payment ; v. A statement that payment is to be made against the bill ; vi. The signature and seal of the drawer. 717. The drawer may draw the bill payable to his own order or, if payment is to be made at a place other than that where the bill is drawn, he may draw it upon himself. 718. A bill may be drawn to bearer when the sum payable by it amounts to twenty five yen or more. 719. The maturity of a bill can only be fixed to be either on a certain day, or at a certain period after date, or at sight, or at a certain period after sight. 720. Where no time of maturity is expressed on a bill, the bill falls due at sight. 721. The place of residence of the drawee or some other place (Domicile Bill) may be specified as the place of payment ; in the latter case the drawee must make payment in such place, unless some other person is named in the bill to do so (Domicile Drawee). SUBSECTION 2. INDORSEMENT. 722. The payee and every subsequent holder 'of a bill may transfer it to another person by indorsement, unless the contrary is expressly stated on the bill. 723. Each indorsement on the bill must contain the date and place, the signature and seal of the indorser and the names of the indorsee ; a bill may, however, be indorsed in blank. 724. The ante-dating of an indorsement is prohibited as is punishable as forgery or fraudulent alteration. 725. A bill drawn to bearer, or indorsed in blank, is transferable by mere delivery. 726. A bill may be indorsed even after maturity, or for purposes of agency or guaranty. 727. The indorsement of a bill, which, owing to circumstances, cannot be within due time presented for payment and protested, stands on the same footing as the indorsement of an overdue bill. 728. The indorsement of an overdue bill merely transfers the rights and obligations of the indorser to the indorsee ; the latter, however, acquires an independent right of recourse, subject to no formalities, against persons who have indorsed the bill after maturity. 729. An indorsement for purposes of agency or for guaranty, where such object is not indicated on the bill, counts, with regard to third persons, as a regular indorsement. 730. An indorsement for purposes of agency, where such object is indicated on the bill, entitles the indorsee to the exercise of the rights and duties of the indorser, in particular, to the right of making a further regular indorsement, unless a prohibition to make a further regular indorsement is stated on the bill. 731. A indorsement for a guaranty (Bill Pledge, Bill Deposit) is a regular indorsement, even where such object is not stated on the bill, with the exception that every party liable on the bill may raise against the indorsee the plea of payment, or other charge of the debt which was thereby intended to be guaranteed. 732. An indorsement is only effective for the indorsee, where the series of indorsees up to himself is duly connected ; a bill indorsed for purposes of agency or guaranty may be further indorsed by the indorser as well as by the indorsee. 733. Where on a bill indorsement is prohibited, indorsements are not thereby deprived of their legal effect, but such prohibition excludes the exercise of any right of recourse against the author of the prohibition. SUBSECTION 3. ACCEPTANCE. 734. The holder of a bill may, in the absence of anything therein to the contrary, present it before maturity to the drawee for acceptance, and in the event of non-acceptance, must protest the bill on the day next following. The drawer of a bill, payable elsewhere than at the place of residence of the drawee, may state therein that the same is to be presented for acceptance under pain of loss of the right of recourse. 735. A bill payable at a fixed period after sight is, unless a shorter period for presentment is specified therein, to be presented for acceptance at least within two years after date, failing which the right of recourse against the drawer and indorsers becomes extinguished. If the drawee of such bill refuses to duly accept the bill, or to date the acceptance, the bill must be protested on the day next following. In such case the day of protest is to be taken as the day of presentment. Failing protest, the day of maturity is to be calculated from the last day of the period for presentment. 736. Acceptance binds the drawee with respect to the holder to pay the amount of the bill on the day of maturity, irrespective of whether he has received provision or not ; in the absence of coercion or deceit the acceptance is irrevocable from the moment the holder has received back the bill with the acceptance thereon. 737. Acceptance is effected by the signed and sealed declaration of the drawee on the bill, or by his mere signature and seal thereon. The effect of any other method of signifying acceptance is to be determined by the provisions of Article 805. 738. In the event of acceptance not taking place on the day of presentment, or in the event of the acceptance being conditional or otherwise restricted, the holder may regard the acceptance as refused, although the acceptance in itself is binding on the acceptor. An acceptance with regard to part of the sum payable is to be deemed as refused in respect of the remainder. 739. Where the drawee has refused acceptance either in whole or in part, or where the acceptance is to be regarded in accordance with the provisions of Articles 737 and 738 as refused, the holder is forthwith to notify the drawer and the indorsers of the protest. Failure to give such notice is attended with the loss of every right of recourse against those to whom it has not been given. A holder, who has given such notice of protest, is entitled to demand from the drawer and the indorsers guaranty for the payment on the day of maturity of the sum payable by the bill together with the expenses of protest and of the return bill. Each indorser has a similar right as against parties prior to himself, irrespective of whether he has given guaranty or not. No indorser is, however, obliged to give guaranty excepting in return for delivery of the protest. The notice given by a party as well as the guaranty he has received enures for the benefit of all the parties subsequent to himself. 740. The drawer and the indorsers may, in lieu of giving guaranty, either forthwith pay the amounts in the preceding Article specified, or deposit them in a Public Deposit Office (Kiotakusho). 741. Upon subsequent acceptance of the bill, or upon payment of the amount of the bill or of the sum recoverable by recourse, or upon the loss by the holder of his rights under the bill by prescription or from neglect, the guaranty given or the deposit made must be returned after deducting the expenses incurred. 742. A person who in accordance with the provisions of Article 740 pays to the holder the amount of the bill together with expenses may demand from him indorsement and delivery of the bill together with a receipted recourse account. SUBSECTION 4. ACCEPTANCE FOR HONOUR. 743. Where a bill which the drawee has refused to accept contains a reference in case of need to some person in the same place, the bill, together with the protest, is forthwith to be presented to such referee in case of need for acceptance. 744. Although no referee in case of need is named, the drawee or any third person may accept the protested bill for the honour of the drawer or of an indorser, but the holder is not bound to allow such intervention. 745. In the event of two or more persons intervening, the one who accepts for the honour of the greatest number of persons liable on the bill is to be preferred. Where the person for whose honour acceptance is made, is not named it is deemed to be made for the honour of the drawer. 746. An acceptance by a referee in case of need, or by some other person intervening with the consent of the holder, discharges the party for whose honour it is made and all parties subsequent to him from their liability to give guaranty. 747. An acceptance for honour binds the intervener to pay the sum payable by the bill when it falls due, if it is not paid by the drawee. 748. The acceptance for honour must be declared on the bill by the intervener for honour and signed and sealed by him, and must be mentioned on the protest or on a paper attached thereto. 749. On repayment of the expenses of protest, the protest must be delivered up to the person intervening, and must be forwarded by him, at the latest on the day next succeeding the date of protest, to the party for whose honour the bill has been accepted, with a communication of the fact of acceptance for honour. If he neglects to do this he is liable for any damage occasioned by his neglect. 750. The right to guaranty is enforceable unconditionally by the party for whose honour the bill was accepted and by parties prior to him, but the holder can only enforce such right, if he was entitled in conformity with Article 744 to decline the acceptance for honour. SUBSECTION 5. SECURITY. 751. Where on a bill a third person appends his signature to that of a party already liable thereon, he thereby renders himself jointly and severally liable with such other party. 752. A person may take upon himself the liability in the preceding Article mentioned by means of a separate declaration in writing. 753. Liability by security may be limited by express contract, but such limitation is only operative between the parties to such contract. SUBSECTION 6. PAYMENT. 754. The sum payable by a bill is to be paid in the money in which it is expressed to be payable. Where a bill does not specify any currency, it is presumed that it is intended to be payable in the money current amongst the traders at the place of payment. 755. Excepting in the case of Article 778, payment is to be received at the drawee's on the day of maturity irrespectively of whether he has accepted or not. No days of grace are admissible, but days for payment customary at a place must be observed. 756. Where the day of maturity is a general holiday, the next succeeding business day is the day for payment. 757. A bill at sight falls due on the day of presentment, or at the expiration of two years from the date of the bill, if no earlier presentment has taken place or no shorter period for presentment is specified on it. Where the bill is not presented within due time, the holder loses his right of recourse against the drawer and the indorsers. 758. Where the creditor does not collect the sum payable by a bill on the day of maturity, the drawee may deposit it in a Public Deposit Office at the expense and risk of the creditor, and he is in such case only liable for gross negligence 759. The creditor is not bound to accept payment before the day of maturity. Payment before the day of maturity is made at the risk of the debtor. 760. Payment to the holder of a bill at or after maturity discharges the debtor, unless he is chargeable with gross negligence in making such payment. 761. Payment can only be obtained in return for delivery of the receipted bill. The creditor may not refuse to accept part payment ; in the event of any such payment he is to note it on the bill and deliver to the debtor a special receipt therefor. 762. Where a bill is drawn in parts, the debtor is discharged by payment of any one part ; without prejudice, however, to the rights of a third person who possesses as owner a part bearing an indorsement or the acceptance of the drawee. The provisions of Articles 710 and 711 apply also to the delivery up of parts of a bill and to where parts of a bill are missing. 763. On a part which does not bear the acceptance of the acceptor, or where in the case of two or more acceptances these are not all delivered up the acceptor is only bound to pay on receiving guaranty. Should he refuse payment, notwithstanding tender of guaranty, the holder may protest the bill. 764. Payment at or after maturity to a holder who is lawfully entitled on the bill can only be attached by an order of the Court in case where the holder has been adjudged bankrupt, or in the cases in Articles 710 and 711 mentioned. 765. With regard to opposition to payment other than that in the preceding Article mentioned or to payment to a person who is unknown to the debtor, the provisions of Article 400 apply. 766. Where, in the case by Articles 710 and 711 provided for, a person has rendered his ownership of a bill credible and has obtained an order of the Court, he may before final and conclusive judgment demand that payment of the sum payable by the bill be made to him on his giving guaranty, or that without giving such guaranty, such sum be deposited in a Public Deposit Office ; in this latter case the provisions of Article 758 apply. 767. Where on the day of maturity the drawee refuses without just cause either to pay or deposit the sum payable by the bill, the holder must protest the bill on the next succeeding business day and notify the protest to the persons against whom he intends to have recourse ; the protest may, however, be dispensed with by an express statement to such effect on the bill. SUBSECTION 7. PAYMENT FOR HONOUR. 768. A protested bill may be paid for the honour of the drawer or for the honour of an indorser by the acceptor for honour, by the drawee, or by any third person. 769. A bill bearing the acceptance of a referee in case of need, or of some other person intervening, is to be presented to the acceptor for honour for payment immediately after the bill has been protested. 770. Payment for honour or the refusal or offer thereof is in every case to be mentioned on the protest for non-payment or on a paper attached thereto. The protest for non-payment, together with the bill, is to be delivered up to the payer for honour in return for repayment of the expenses of protest. 771. The payer for honour succeeds to the rights of the holder against the acceptor, the drawer, and the indorsers ; but in order to enforce such rights, he must fulfil the same obligations as the holder. 772. Payment for honour discharges all parties subsequent to the party for whose honour payment was made. 773. Where two or more persons offer to pay a bill for honour, the drawee, and, failing him, the person whose payment will discharge the greatest number of persons liable on the bill is to be preferred. 774. By refusal to receive payment for honour the holder of the bill loses his right of recourse against the party for whose honour payment was offered and the parties subsequent to him. SUBSECTION 8. RECOURSE. 775. In the event of the drawee failing to pay the bill on the day of maturity, the holder has a right of recourse against the drawer and the indorsers for the payment of the sum payable by the bill with interest and for repayment of all expenses caused him by the non-payment. 776. The holder is to present the bill for payment on the day of maturity, and where no payment ensues, he is, on the business day next following the day of maturity, to protest for non-payment. The same applies in the case of part-payment in the second paragraph of Article 761 specified. 777. Protest for non-payment is to be made even where protest for non-acceptance has already been made, or where the debtor is dead, or adjudged bankrupt, or his whereabout is unknown. 778. Neither presentment on the day of maturity nor protest are necessary to preserve the rights on a bill against the acceptor. Nevertheless, a bill payable elsewhere than at the domicile of the drawee is to be presented for payment to the other person named therein, and, where no such person is named, then to the drawee at the place where the bill is expressed to be payable, and where payment of the bill is not made, it is to be protested at such place. 779. Protest for non-payment may be made and recourse pursued before maturity by the holder, if the acceptor is adjudged bankrupt, or his solvency has otherwise become doubtful, and sufficient guaranty is not given for payment of the bill. 780. The holder of the bill may pursue his recourse against the drawer and indorsers individually or collectively ; every indorser against whom recourse has been instituted has the same right against parties prior to himself. 781. A person exercising his right of recourse, must, irrespective of whether the protest for non-acceptance has been notified in conformity with the provisions of Article 739, give in addition notice in writing of such recourse, and of the protest for non-payment to the prior parties against whom recourse is intended to be had, in the case of the holder, on the day after protest, and in the case of an indorser, on the day after the receipt of the notice. Such notice when given by an indorser enures for the benefit of parties to the bill subsequent to him. 782. Where recourse is had to a prior party, parties subsequent to him are not thereby discharged from their liability to recourse. 783. The dispensing with protest does not operate as a cancellation of the right of protest or of the right of recourse, but in such case notice in writing of recourse, together with transmission of a copy of the bill, suffices as against the party dispensing with the protest, for all parties subsequesent to him. 784. An action of recourse may, at any time within the period of prescription, be instituted against any party against whom a recourse claim has accrued by the person who has acquired the same. 785. The plea that the drawee has received provision does not invalidate the recourse claim, but the plea that provision was not given by a party bound to furnish it is admissible against such party. 786. A recourse claim can be brought in respect of the following:— i. The sum payable by the bill, together with interest thereon at the rate of seven per cent per annum from the day of maturity ; ii. The expenses of protest and other necessary disbursements ; iii. The expenses of the return-bill, if any. 787. Where a person has acquired a right of recourse, he may apply to the Court for provisional seizure of the movables of the recourse debtor to the amount of the sum payable by such party ; if, however, the action of recourse is not instituted within fourteen days the provisional seizure becomes void. The holder of a bill has the same right against the acceptor. 788. The recourse debtor is only bound to pay on having delivered to him the bill, the protest, and a receipted recourse account. 789. Every debtor under a bill is entitled, on payment of the amount recoverable by recourse, to demand of the holder delivery of the receipted bill and of the protest for non-payment. SUBSECTION 9. PROTEST. 790. Every protest is to be made by an officer of the Court or by a notary, or, where there are no such persons at the place, by the protesting party himself in the presence of two male witnesses, who have attained majority and who should, when possible, be traders. 791. Protest is to be made at the place of business or, where none exists, in or at the residence of the party against whom protest is made, and even notwithstanding that he is not to be found, or refuses to be present, or denies admittance. In cases of necessity protest may be made at the Court or at the office of a notary. 792. Where the place of business and residence of the party against whom protest is to be made, are unknown, and cannot on application to the local authority of the place of payment be ascertained, the protest must be made at the office of the latter. 793. Protest may not be made, even with the consent of the party against whom it is to be made at any place other than such as is appointed by law. 794. Protest may not be made on a general holiday ; but protest out of ordinary business hours is not prohibited. 795. The protest must contain :— i. A literal transcript of the bill and all that appears thereon, up to and including the final indorsement ; ii. Mention of the presence or absence of the party against whom protest is made ; iii. The demand for acceptance, payment or guaranty, and the refusal thereof, with the reasons therefor ; iv. The date and place of such demand and of such refusal ; v. In the event of acceptance for honour or payment for honour, mention thereof ; vi. The date and place, and the signatures and seals of all persons present. If the party against whom protest is made is unwilling to sign and to seal the same or is incapable of so doing, such fact is to be expressly recorded on the protest. 796. The provisions of Articles 791-794 apply also to presentment for acceptance or payment, to demands for parts, and to other acts which in conformity with the provisions of this Chapter have to be done at any specified person's. 797. In the cases mentioned in Articles 710 and 711, the transcript of the bill is to be replaced by setting forth its contents as accurately as possible, together with a clear statement of the attendant circumstances. 798. Officers of the Courts and notaries are bound to enter in full day by day in a register the protests drawn up by them, and, on demand, to issue duplicates thereof to the persons protesting. The expenses of protest must be advanced by the protesting party. SUBSECTION 10. RETURN BILLS. 799. The holder of a bill of exchange is entitled to draw a return bill upon any recourse debtor for the amount recoverable by recourse. 800. The expense of the return bill is determined by the fees for commission or brokerage, by the postage, by the stamp duty, and by the rate of exchange for a sight bill drawn at the place of payment on the place where the recourse debtor resides. Such rate of exchange must in no case, and not even in the case of the successive drawing of two or more return bills, exceed the rate of exchange for a sight bill drawn at the place of payment of the original bill on the place of issue of the same. Each of these rates of exchange must be certified by a broker. 801. The return bill is to be accompanied by the protested bill, the protest, and the recourse account, together with the two certificates of the rate of exchange. 802. A party having paid the return bill is on his side entitled to draw a return bill upon any party prior to himself. SUBSECTION 11. PROVISION. 803. The parties bound to furnish the drawee with provision are the drawer, the person for whose account the bill is drawn, and any indorser who has expressly engaged to do so. 804. Apart from money payment, any right of claim of a party liable for provision against the drawee, and every credit such party may have with the drawee may serve for provision. 805. An acceptance, even when informal, carries with it a presumption that the party liable for provision has furnished it to the acceptor, excepting where the acceptance was that of a person intervening 806. As between the parties liable for provision and the holder of the bill, the acceptance of the bill founds no presumption that provision exists 807. A drawee who has paid the bill is entitled to enforce his claim for provision in accordance with the rules of law governing bills of exchange. 808. Where a person has paid a bill in place of the drawee, he may enforce the rights of the holder against the drawee or against the recourse debtors. 809. The drawer and the indorsers remain jointly and severally liable for the acceptance and payment of the bill, even where they have furnished provision ; nevertheless, their liability may be limited or annulled by special contract between the contracting parties. 810. A drawee, who has received provision, or who, in the absence thereof, has expressly bound himself with respect to the drawer or to any other party liable to provision to accept and pay the bill, is liable to such person for any damage occasioned him by non-acceptance or non-payment, without any previous notice of a claim in respect of such damage being required to be given to the drawee. SECTION II. PROMISSORY NOTES. 811. A promissory note must distinctly and accurately contain :— i. The date when and place where it is made ; ii. The sum payable expressed in words ; iii. The names of the person to whom or to whose order, payment is to be made ; iv. The time of maturity ; v. A statement that payment is to be made against the note ; vi. The signature and seal of the maker. 812. A promissory note cannot be made to the order of the maker. 813. Where no particular place of payment is named, the note must be paid at the place where it was made. 814. The maker of a promissory note by making it binds himself to pay it on the day of maturity. Neither acceptance, presentment for payment, nor protest are necessary in order to preserve against the maker rights arising on the note. Nevertheless, the provisions of Articles 735 and 778 apply to the maker of a promissory note payable at a fixed period after sight, or on which a person other than the maker is named for payment. 815. Subject to the provisions in this Section contained, the provisions relating to bills of exchange apply to promissory notes, in so far as they are not excluded by the nature of the case. SECTION III. CHEQUES. 816. A cheque is an order in writing to a banker, with whom the drawer in consequence of a deposit or for some other reason, has a current credit, to pay on presentment a certain sum of money to the person named in the instrument, or to his order or to bearer. 817. A cheque is to be dated and signed and sealed by the drawer, and may only be drawn payable at sight ; subject to these provisions, the method of drawing expressly or impliedly agreed upon with the banker must be observed. 818. A cheque is transferable by indorsement, and, where it is indorsed in blank, or drawn payable to bearer, by delivery. 819. A cheque requires neither acceptance nor protest. Claims on a cheque are prescribed after the expiration of three years from its date. In the event of a cheque not being presented or forwarded for payment within three days of the day of its issue, the holder bears the consequences of the delay. 820. Where, on presentment, payment of a cheque is not made, the holder and every indorser has during a period of ten days from the date of the cheque a right of recourse ; the holder against all indorsers and the drawer, and each indorser against the parties prior to himself and the drawer ; as against the drawer, however, such right of recourse continues even after such period has elapsed if he had no credit open, or had exhausted the same, or had countermanded payment. In the event of litigation the drawer is bound to produce his cheque book in Court. 821. The drawer or holder of a cheque may cross it and state between the crossing lines that it is payable to a banker only. 822. On receipt of payment, the cheque must be delivered up receipted. 823. Whoever issues, indorses, or receipts a cheque without the insertion of a date or with the insertion of a false date, or receives, pays or receipts an undated cheque, or issues a cheque without having credit open to meet it or countermands payment of a cheque without just cause, shall be punished with a fine equal to ten per cent of the amount of the cheque in addition to any criminal punishment he may have incurred. The provisions of the first paragraph of Article 261 apply to such fine. BOOK II. MARITIME COMMERCE. CHAPTER I. SHIPS. 824. Japanese ships, entitled to fly the Japanese flag, are all merchant ships and other sea-going vessels belonging wholly to Japanese subjects, or to such partnerships, companies or juridical persons as have their chief seat of business in Japan and are subject to Japanese jurisdiction, provided in this latter event that in the case of an ordinary partnership all its members, in the case of a limited partnership at least one half of its members, in the case of a joint-stock company all the directors and in the case of any other juridical person all its representatives, are Japanese subjects. 825. Every Japanese ship, before she is employed in navigation, is to be measured in conformity with the laws and ordinances by a person officially qualified therefor, and, if such ship attains or exceeds fifteen tons burden, she is to be entered in the shipping register at the Court of the port of registry, after the certificate of nationality has been received from the maritime authorities. The provisions of this Book do not apply to boats and other small vessels exclusively or mainly propelled by oars. 826. The entry in the register is to contain, in addition to the date, the following particulars:— i. The name of the ship and her port of registry ; ii. The time when and the place where she was built, in so far as these are known, and the time and circumstances of her transfer to Japanese ownership, if such has taken place ; iii. Her build, measurements, tonnage, and further particulars, according to the official certificate of survey ; iv. The names and nationality of her master ; v. The names, places of residence and further particulars of her owner or owners, the proportions of their shares in the ownership, and the lawful consideration for which their ownership was acquired. 827. Registration takes place by virtue of a declaration in writing made by the owner or owners, or their representative authorised in writing, and accompanied by the necessary documents. A certificate of registry of the same tenor with the entry is made out and delivered to the owner. 828. The right to fly the national flag may not be exercised until the certificate of nationality and the certificate of registry have been delivered. If the ship has sunk, or if she loses her nationality, the entry in the shipping register is to be annulled and the certificate of registry is to be returned. 829. Whenever any changes occur in the particulars registered, such changes are to be noted in the register and on the certificate of registry. No change may be made in the registered name of a ship without the previous sanction of the maritime authorities. 830. If a ship is acquired at a place other than the intended port of registry by a Japanese subject, partnership, company or other juridical person, there may be obtained from the consul resident at or near such place, if abroad, or from the local authorities, if at home, a provisional certificate in place of the certificate of nationality and of the certificate of registry, to last until such time as the ship arrives at the said port. A copy of such certificate must be forthwith forwarded by the said consul or authorities to the maritime authorities and Court of the said port. Such provisional certificate is valid for one year only if issued by a consul, and for six months if issued by the local authorities. 831. In the event of a certificate of nationality or of registry being lost, destroyed or rendered useless, the issue may be demanded of a new or provisional certificate as the case may be. 832. If a ship flys the Japanese flag without being entitled to do so, such ship is liable to a fine not exceeding one thousand yen or, according to circumstances, particularly in the event of using an illegal certificate of nationality or registry, to confiscation. The same penalties apply also to any Japanese ship which, save to escape from an enemy, assumes a foreign nationality by flying a foreign flag. 833. If a Japanese ship flys the Japanese flag prior to the issue of the certificates of nationality and registry, or is guilty of other contraventions of the provisions in this Chapter contained, such ship is liable for each offence to a fine not exceeding 100 yen. CHAPTER II. SHIPOWNERS. SECTION I. ACQUISITION AND TRANSFER OF OWNERSHIP IN SHIPS. 834. Merchant ships and other sea-going vessels are movables, so far as no exceptions are in this Code established. 835. Contracts with regard to the building of ships and contracts with regard to the acquisition of ships either in whole or in part, by purchase or other legal act, can only be concluded by means of special documents of contract. The transfer of ownership in ships by virtue of succession, marriage, oi' other like cause, must be proved by an authentic document. 836. A valid sale of a ship can only be effected by a non-owner under an express instruction of the owner ; the master, however, in the event of unavoidable and officially established necessity, may, without any such instruction, validly sell the ship by means of auction. 837. The period for the acquisition by prescription of a ship is twenty years. The master of a ship can never acquire the same by prescription. 838. The ownership of a ship, in so far as it is not otherwise agreed upon, includes that of her entire equipment for purposes of navigation, in particular the masts, sails, and tackle, the engines, anchors, ship's instruments, boats, and stores and provisions, with the exception of everything forming the personal property of the master or crew. 839. Where a ship is alienated during the voyage, the profit or loss of such voyage, unless otherwise agreed upon, passes to the acquirer. 840. The voluntary sale of a ship effects no change in the liability of such ship, or of the price realized, for the claims of the ship's creditors, nor does it cause any alteration in the personal obligations of the vendor. In the event of a compulsory or necessary sale, the liability attaching to the ship passes of itself to the purchase-money. SECTION II. RIGHTS AND DUTIES OF SHIPOWNERS. 841. Where a ship is the property of two or. more part-owners, there must be appointed a ship's husband to represent them in all businesses relating to the voyages of the ship. 842. The owner answers with ship and freight for the acts of the master and of the members of the crew in the exercise of their employment. If the master is at the same time the owner of the ship his liability is unlimited. If he is part-owner his liability is proportionate to the extent of his share, unless owing to fault on his part he incurs undivided liability ; for any deficiency, however, his liability is unlimited. 843. The owner may appoint the master and dismiss him at will, and, in the absence of a written contract, is not bound to indemnify him. 844. Where the master is at the same time part-owner, he may, in the event of his being dismissed against his will, claim payment of the value of his share, which value is to be determined by experts. 845. All questions arising between part-owners concerning the ship are to be decided by a majority of votes, which are to be calculated according to the extent of the share held by each part-owner. Where no resolution by a majority is attained, the sale of the ship by auction can be claimed by virtue of a resolution representing one half of the votes. If a part-owner has not consented to fresh necessary expenditure, he may free himself from his obligation to contribute thereto by surrendering his share to the, other part-owners ; he is, however, entitled to receive payment of the excess in value of his share over and above the amount he should contribute. 846. A shipowner has no right of claim to the profit arising from the voyages of the ship until all expenses and losses have been deducted. 847. A part-owner of a ship may at any time freely alienate his share without the consent of the other part-owners or of the ship's husband. 848. Whenever a transfer of the ownership of a share in a ship would deprive such ship of her nationality, the remaining part-owners or any of them, are entitled to take over such share on their own account at a valuation which is, if necessary, to be judicially fixed, or to require such share to be sold by auction to a person qualified to be owner thereof. Where by reason of a change of the members or directors of a partnership or company a ship would lose her nationality, such partnership or company is entitled to require the share of the changing member or director to be sold by auction to a person qualified to be owner thereof. CHAPTER III. SHIP'S CREDITORS. 849. The ship, together with appurtenances and outstanding freight, even though in the possession of third persons, is liable in respect of the following rights of claim in the order specified :— i. Judicial costs and other charges incurred in the compulsory sale of the ship and in the distribution of the price realized, as well as the expenses of watching and maintaining the ship and appurtenances from the commencement of the compulsory sale procedure ; ii. Shipping dues, such as port dues, tonnage dues, light dues and others ; iii. Expenses of maintaining the ship and appurtenances from the time of her entrance into port, as well as pilotage and towage ; iv. General average, and expenses for rescue, salvage, and other assistance rendered during the last voyage ; v. The rights of claim of the master and members of the crew under their contracts of service for the last term thereof ; vi. The rights of claim in respect of Ioans contracted by the master during the last voyage for the requirements of the ship, and the right of recourse in respect of cargo sold by him for the same purpose during the same, as well as in respect of the price of things or services likewise supplied or rendered to him ; vii. The rights of claim in respect of the sale, building, and equipment of the ship, inclusive of workmen's wages, if the ship has not yet gone upon a voyage ; and the rights of claim for repairing, equipment, and provisioning for the last voyage, before the ship has entered thereon ; viii. The rights of claim in respect of loans for purposes of the building or equipment of the ship, or in respect of payments on account of purchase-money by the party on whose account the ship is built, so long as the seip has not been handed over to him ; ix. The rights of claim in respect of premiums of insurance effected on the ship and appurtenances for her last voyage or last term of premium payment ; x. The rights of claim in respect of nondelivery of cargo or passengers' luggage, or in respect of any damage the same may have sustained, through the fault of master or crew ; xi. The rights of claim for damages arising by reason of collision between ships or other fault of the master or crew ; xii. Such rights of claim as are entered in the shipping register, in the order of the date in which they have been entered ; xiii. All other rights of claim against the owner or vendor of the ship. The creditors that come under the same class, with exception of those coming under the class xii, are to be satisfied rateably. 850. The liability of the freight is limited to the freight of the last voyage ; for rights of claim, however, arising in respect of or during any particular voyage, the freight of that voyage is alone liable. 851. The liability of ship and freight for non-registered rights of claim is extinguished, in the event of voluntary alienation, as soon as the ship has gone on a fresh voyage from the port of registry in the name and on the account of the new owner, without any objection on the part of the creditors of the alienor, and sixty days at least have elapsed since her departure. 852. The registration of rights of claim against a ship, excepting in the case in Article 857 specified, is only permitted in the case of registered ships and by virtue of a special document of mortgage. The registration is valid for a period of three years from the date thereof and ceases to be valid at the expiration of this period unless previously renewed. 853. Registration is effected in the shipping register and must comprise :— i. The names and domicile of the creditor and of the debtor ; ii. The amount of the debt and the lawful consideration therefor ; iii. The date of the document of mortgage ; iv. The time of entry. 854. A certificate of the registration with a statement of any prior registered rights of claim is to be issued ; such certificate is transferable to other persons by indorsement. Indorsements, in order to be valid as against third persons, are to be entered in the shipping register. 855. A registered right of claim is extinguished by a written consent of the creditor or by a judgment of the Court ; in such case the certificate is to be returned to the Court and the fact of such extinction noted by it thereon. 856. Every ship's creditor, upon duly proving his right of claim, is entitled, by virtue of an order of the Court but without prejudice to legal rights of preference, to effect the sale of the ship by auction. Where, however, a right of claim is registered in respect of only a part or parts of a ship or is directed against one or more only of the part-owners, only the part or parts in question can be sold by auction, unless the amount of such part or parts exceeds one half of the whole of the ship. 857. The rights of the ship's creditors can be exercised also against a ship in course of construction. In such case registration of the ship, until it ensues, is to be replaced by the corresponding declaration made before the Court of the intended port of registry. 858. If a ship sinks or becomes unseaworthy, the rights of the ship's creditors attach to the saved or still remaining portions or the proceeds thereof, as well as to the sum insured. Ship's creditors may independently insure their rights of claim. 859. From the moment a ship is ready to sail she cannot be seized for debts nor can a member of the ship's company be stopped, excepting for debts contracted for the purposes of the impending voyage. CHAPTER IV. MASTERS AND CREW. SECTION I. MASTERS. 860. Every master or other commander of a ship is liable for fault, even though slight, in the exercise of his functions ; he is, in particular, responsible for the cargo and for the safety of his passengers and for their effects. 861. He is relieved from liability for any act towards any person under whose directions he has acted, if such person had knowledge of the circumstances of the case. The violation of his special service duties renders him liable for any disaster not brought about by irresistible force or through fortuitous events. 862. On every voyage the master is bound to see that the ship is seaworthy, properly equipped, manned, and provisioned, that the cargo is properly stowed, and that the ship is provided with the necessary ballast, and is not overladen, or overcrowded with passengers. 863. The master has the right to select and engage the members of the crew, to form the ship's company, to repair and equip the ship, and to conclude contracts of affreightment ; nevertheless, in these respects he is subject to the directions of the shipowner or of his representative. 864. On every voyage he is required to have on board the certificates of nationality and of registry, the log book, the list of crew, the custom house clearance, the papers relating to the contracts of affreightment and to the cargo and the list of passengers. 865. The log book is to be kept by the first officer under the supervision of the master and is to contain a daily record of all matters and occurrences relating to the ship, crew, passengers, and cargo, in particular:— i. The names of the places from which the ship sails, at which she touches, or which she passes ; ii. The conditions of wind, weather, and currents ; iii. The course steered and the distances run ; iv. The ascertained latitude and longitude. It is further, whenever occasion arises, to record :— i. Soundings, the temperature of the water, and the depth of water in the well ; ii. Any employment of a pilot or of towage services ; iii. Resolutions of the ship's council ; iv. Changes in the crew ; v. All disasters and extraordinary occurrences, as well as every punishable act committed on board and the disciplinary punishments inflicted. 866. The master must be personally on board from the commencement until the termination of each voyage, and must proceed on every voyage he is instructed to undertake and complete the same without delay or deviation. 867. The master is required, within twenty four hours of the ship's arrival at her port of destination, to attend before the maritime authority at such place to produce his log book for the purpose of being certified and to at the same time make his report. The report is to give :— The name of the ship and her tonnage ; A description of the cargo ; The port and time of departure ; The ship's course ; The conditions of wind, weather and currents ; Any deaths and other disasters, any changes in the condition of the ship, and all noteworthy events of the voyage. No cargo can be discharged until such report has been effected, excepting in case of urgent need. The provisions of this Article do not apply to the coasting trade. 868. Where during a voyage it becomes necessary to run into a port of distress, the master must forthwith attend before the maritime authority of the port and make a report concerning the causes and circumstances connected therewith for the purpose of having the same protocoled. Such protocol is to be forwarded, officially drawn up, to the ship's owner and, on demand, to all other persons interested at their expense. 869. In case of peril arising during the voyage the master may under no circumstances desert his ship, excepting after previous consultation with the ship's officers and other principal members of the crew ; in such event, he is bound to leave the ship last and remains responsible for the rescue so far as possible of the persons, papers and goods on board, and of the ship herself. 870. In case of shipwreck or other event necessitating desertion of the ship, the master is forthwith to go bfeore the nearest maritime authority and make his report upon the causes and circumstances of the case ; such maritime authority may examine members of the ship's crew and passengers and may make all other inquiries for the purpose of confirming or supplementing the report. 871. In cases of necessity during the voyage the master, after consulting with the officers, and in order to provide for the needs of those on board, is empowered to make use of all provisions existing in the ship on making compensation for their value, and without regard to the persons to whom such provisions may belong. 872. During the course of the voyage the master, for the purpose of repairing the ship or for other things she may absolutely require, and provided no other means are at his disposal and the shipowner or his representative is absent, is entitled, by virtue of previous consultation with the ship's officers and upon obtaining the sanction of the maritime authority, to mortgage the ship or to pledge or sell the cargo in whole or in part, in return for which the owners of the cargo are entitled to be indemnified according to the prices current at the place and time of discharge. 873. The master is bound both at the commencement and at the termination of every voyage, and, on demand, at any time, to report to the shipowner and to render him an account. 874. Neither master nor crew are permitted, without the consent of the shipowner, to receive any goods on board on their own account ; failure to comply herewith entitles the owner to claim both the freight and any profit arising on such goods. SECTION II. CREW. 875. When members of the crew are engaged or discharged, their names are to be entered in or written off from the crew list before the local maritime authority. 876. The conditions of engagement of members of the crew are determined by the contents of the crew list, by special contract, or by the usages of trade. No special reward can be claimed in respect of extraordinary services. 877. Members of the crew discharged without sufficient cause are entitled to receive, by way of indemnification in addition to the whole of the wages due, one half of the wages they have been deprived of earning by reason of such discharge, nevertheless, this sum may not exceed one month's wages. The abandonment, interruption, or shortening of the voyage, by reason of a state prohibition or other state order, is to be deemed to be sufficient cause for discharge. 878. Any member of the crew discharged during a voyage without sufficient cause is entitled to claim a return passage free of cost to the port of his departure. Such claim is deemed to be satisfied if the master has taken care that such member is provided with proper employment on another ship bound for the afore-mentioned port. 879. Where a member of the crew has been engaged for a specified voyage, he is entitled, in the event of such voyage being prolonged, to a proportionate increase in wages. 880. In the event of the ship being sunk before the voyage has been completed, the members of the crew lose their right to claim wages, excepting in so far as any part of ship or cargo is saved by their exertions. In the event, however, of the ship being captured or becoming incapable of repair, the members of the crew are entitled to any wages due and to a return passage free of cost to the port of his departure. The provisions of the second paragraph of Article 878 apply also in these cases. 881. Members of the crew are also entitled to claim wages in respect of those days on which they are employed in saving the wreck of ship or cargo. 882. Members of the crew who fall ill or are injured after they have entered upon their employment have a right to attendance and medical treatment for a period not exceeding three months, unless such illness or injury was brought about through their own fault. 883. In the event of a member of the crew dying after he has entered upon his employment, his wages up to the day of his death are payable to his heir, and if he was killed in defending his ship, the amount so payable consists of the whole of his wages for the entire voyage. The expenses of burial of a member of the crew at sea or abroad are to be borne by the owner of the ship. 884. No member of the crew, after he has once entered upon his employment, may leave the ship without the permission of the master or of his representative. Members of the crew who have deserted may be forcibly brought back to their employment with the assistance of the local authorities, and if their return cannot be effected they lose their right to claim any wages due and are deprived of their right to any things that they may have left behind. 885. The provisions in this Section contained apply also to the master, in so far as it is not otherwise provided or does not otherwise follow as of course from the nature of the case. 886. Every breach of duty on the part of a member of the crew, in particular disobedience and resistance, is to be suppressed by the master by the exercise of his disciplinary powers. CHAPTER V. CONTRACTS OF AFFREIGHTMENT. SECTION I. CHARTER-PARTY. 887. The contract for the letting of a ship or of a part thereof for one or more voyages must be formed in writing and a copy thereof in original must be kept by each party thereto. In case of necessity the lessor is entitled before the commencement of the voyage or during the voyage to tranship the goods to a ship other than that indicated in the contract, provided that he does so without detriment to the charterer and at his own expense. 888. Unless otherwise determined by contract, the place of loading, lay days, demurrage days, and demurrage are regulated by local usage. 889. In calculating lay days and demurrage days, general holidays and those days on which the loading or unloading is prevented by wind or weather or some other natural or legal impediment are to be excluded. 890. Where freight is fixed by the month or other period of time, such period, in the absence of any contract to the contrary, is to be calculated from the day on which the ship sails. 891. If, before the voyage commences, trade or intercourse with the port of destination is prohibited, the contract is cancelled without any right to indemnification on either side. Where, during the voyage, a ship is by reason of such prohibition obliged to turn back, freight must be paid for the outward voyage only, notwithstanding that the ship was chartered out and home. In both cases the cost of loading and unloading is to be borne by the charterer. 892. In the event of the port of destination being closed by blockade or other measure, the master, in the absence, or impossibility of execution, of other instructions, must in the interests of the charterer take his ship into one of the nearest ports or return to the port of departure. 893. If the commencement or the continuation of the voyage is temporarily prevented by irresistible force, the contract still remains effective without either party being entitled to indemnification ; the charterer, however, is entitled to deal with the cargo as he sees fit but at his own expense. 894. The charterer may cancel the contract before loading has commenced on payment of one half of the freight. Failure to furnish cargo during the lay days is to be regarded as cancellation of the contract, and in such event one half of the freight must be paid. 895. If. by the fault of the charterer the cargo is confiscated or seized, he remains liable for the whole amount of the freight and is bound to make good any damage occasioned to the ship thereby. 896. Unless the charterer cancels the contract, the master is entitled and bound to proceed on the voyage, even without the full cargo agreed upon. In such case, however, if his guaranty is not sufficient for the full freight, he may demand further guaranty as well as indemnification for any loss sustained through deficiency of cargo. 897. Excepting in the case of the second paragraph of Article 905, any receipts in respect of other goods conveyed or any saving in expenses effected by reason of the voyage not taking place cannot be deducted from the freight. 898. The principles governing charter-party apply also to the case of the charter of a ship for a voyage for a purpose other than that of conveyance of goods. SECTION II. BILLS OF LADING. 899. A bill of lading is a receipt of the master for the goods delivered to him for conveyance. It contains:— i. The name and nationality of the ship ; ii. The names of the master ; iii. The names of the shipper and indication of the consignee ; iv. The port of loading and the port of destination ; v. The nature, the quantity, or weight of the goods, the number, marking, and numbering of the packages, and the method of packing ; vi. The provisions as to freight ; vii. The date ; viii. The number of parts issued. As many parts of the bill of lading are to be issued as may be required ; of such parts one, which the master is to retain, must be signed and sealed by the shipper and the others by the master. The bill may be made out to a specified person, to order, or to bearer. 900. The bill of lading must be made out within twenty four hours of shipment being completed. The custom-house receipts and custom-house declarations relating to the goods shipped must be delivered to the master by the shippers within the like time. 901. The contents of a bill of lading made out as prescribed constitute conclusive evidence between the parties interested, and between them and the insurers ; nevertheless, counter evidence is not excluded. The master, unless he has expressly undertaken the liability, is not responsible for the nature and quantity and weight of goods received by him for conveyance in any packing or in closed vessels, provided the same are externally in good order when delivered to the consignee. Liability for loss or damage, in addition to ceasing under the circumstances in Article 493 specified, is terminated by fire, theft, robbery, and other accidents in the absence of fault on his part. A master cannot free himself by contract from his liability for fault. 902. Upon payment of the freight and accessory charges together with average and any disbursements, and in return for a receipt, the master is bound to deliver the goods at the port of destination to the person who is the holder of the bill of lading. If two or more holders of the bill of lading present themselves, the goods must be deposited in a public warehouse or, by virtue of an order of the Court, with a third person. SECTION III. FREIGHT. 903. The amount of freight is regulated by contract or by the rates current at the time, and must be evidenced in the former case by the charter-party or the bill of lading. Particular average and other accessory expenses can only be charged if allowed by contract, or if sanctioned by the usages of trade. 904. Where the master has expressly overstated the burden of his ship, he is bound to indemnify the charterer or shipper for any damage he may in consequence of such statement have sustained, and the freight is to be proportionately reduced, save where such statement was in conformity with the official certificate of measurement or where the difference, if it was due to mistake, does not exceed one fortieth part. 905. If, in the case of a charter-party, the charterer fails to furnish the full cargo contracted for, he is none the less liable for payment of the entire freight ; a proportionately increased freight must be paid for additional cargo. Where the cargo shipped is less than that agreed upon, the master is entitled, with the charterer's consent, to complete the lading with other goods ; in such event the freight payable therefor belongs to the charterer. 906. Prior to commencement of the voyage the charterer or shipper may withdraw goods other than those in bulk on paying half the freight and the expenses occasioned by such withdrawal. Full freight must be paid for goods withdrawn after the voyage has commenced, together with the expenses thereby occasioned. The provisions of Article 908 are, however, to be applied where the withdrawal was occasioned by fault of the master. 907. Where goods have been put on board without the consent of the master or under a false declaration, the master may land them, or may charge the maximum rate of freight in respect thereof or may even have them thrown overboard if the ship or other goods are endangered by them. 908. Where a ship is unseaworthy, or is not of the stipulated nationality or loses the same, the charterer or shipper may cancel the contract ; in such case the master loses his right to the freight and must indemnify the charterer or shipper for any damage that may have been caused him. 909. If the ship requires to be repaired in consequence of injury occasioned during the voyage, the charterer or shipper can cancel the contract on paying the full freight. In case the repairs cannot be effected within a reasonable time, the charterer or shipper, unless the master provides another ship, can cancel the contract on paying the freight so far as it has already run. 910. In the cases specified in Article 893 the expenses of detention are to be treated in accordance with the principles governing general average. 911. The expenses of delay caused by the charterer or shipper or by the master before or during the voyage or at the place of destination are to be borne by the person who caused such delay ; he must also make indemnification for any damage thereby occasioned. 912. Full freight must be paid in respect of all goods lost through fault of the charterer or shipper, or in consequence of their nature, or through accident, and for all goods sold in conformity with Article 872 or thrown overboard for the purpose of saving from a common danger ; in the last mentioned case, however, such freight is subject to average contribution. 913. No freight is payable for goods lost by shipwreck, stranding, or capture, and, unless otherwise agreed upon, any freight paid in advance must in such case be refunded. For saved or ransomed goods, freight must be paid up to the place of shipwreck, stranding or capture, unless they are forwarded to their place of destination. 914. If the freight cannot be obtained from the consignee or from the sale of the goods, the charterer or shipper remains liable therefor. 915. The master preserves a right of preference against the goods carried in respect of freight and other rights of claim for the space of fourteen days after delivery, unless they have passed into the possession of third persons, and although the owner should become bankrupt during the said period. 916. No diminution in the freight can be claimed by reason of loss of the goods, altered circumstances, or on any other ground. 917. Goods can be abandoned to the master for the freight if he is responsible for their loss in value. SECTION IV. CONVEYANCE OF PASSENGERS. 918. If the passenger is named in the contract, the right to conveyance cannot be transferred to another party without the consent of the master. 919. Passengers are bound to comply with all directions of the master relating to the discipline of the ship. 920. The maintenance of the passenger during the voyage is covered by the passage money, unless the contrary is customary or is agreed upon ; in these cases the master is bound to supply a passenger who is in want thereof with provisions at a reasonable price. 921. Where at the port of departure or during the voyage a passenger does not go on board by the time fixed, the master is not bound to wait for him and the passenger is bound to pay the full passage money. 922. Where the voyage is abandoned prior to the departure of the ship the following provisions are to be observed :— i. One half of the passage money must be paid if the passenger gives notice of abandoning the voyage ; ii. One fourth of the passage money must be paid if the voyage is prevented by death, sickness, or by other unavoidable cause or irresistible force affecting the person of the passenger ; the passenger may, however, elect to be conveyed by one of the next departing ships, where there is a regular service in the same line ; iii. If the abandonment is brought about by the fault of the master, the passenger may claim to have returned to him the passage money paid in advance and also to be indemnified ; iv. If the voyage is prevented by unavoidable cause or irresistible force affecting the ship, the contract is dissolved of itself without affording a right to claim damages on either side, and the passage money paid in advance must in the absence of other contract be returned. 923. Where the voyage is abandoned after the departure of the ship the following provisions are to be observed:— i. The passenger, if he gives notice of abandoning the voyage during its course, must pay the full passage money ; ii. The master, if he refuses to continue the voyage, or if the abandonment of the voyage by the passenger was otherwise occasioned by the master's fault, is bound to return the passage money paid in advance and also to indemnify the passenger ; iii. If the voyage is prevented by unavoidable cause or irresistible force affecting the ship or the person of the passenger, he is only bound to pay passage money to an amount proportionate to the part of the voyage performed, excepting where the master without violation of the passenger's contractual rights offers equally good means of conveyance by ship for the completion of the voyage. The heir of a passenger who has perished in a maritime disaster or died by other accident is not required to pay the passage money, but passage money which has been paid in advance cannot be reclaimed. 924. In the event of delay in the departure of the ship, and irrespective of the cause thereof, a passenger has a right to claim free lodging and, if maintenance is covered by the passage money, to also claim maintenance on board. In the case of considerable delay the passenger may, however, cancel the contract and reclaim the passage money paid in advance. A right to claim damages arises if the delay was occasioned by the fault of the master. The provisions of the preceding paragraph apply also to similar cases at places touched at during the voyage. Passage money, however, can be reclaimed only for the portion of the voyage not yet completed. 925. In cases under the preceding Article the passenger cannot cancel the contract if the master, without violating the passenger's contractual rights, offers equally good means of conveyance by ship for the completion of the voyage. 926. The master is bound to provide for the safety and health of passengers and to keep on board in serviceable condition all necessary aliments, medicaments and life-saving apparatus. When a disaster occurs, his first duty is to save the passengers, and he may under no circumstances leave the ship until this is effected. It is the duty of the master to give a passenger who dies on board the customary burial at the expense of the heir or, if necessary, of the ship. 927. In the absence of any contract to the contrary a passenger is not required to pay separately, beyond the passage money, for the conveyance of luggage and effects which he is entitled to bring on board. 928. Where a passenger dies on board, the master is bound to take proper care on behalf of his heir of the luggage and effects on board of the deceased. 929. The principles laid down in Sections I and III of this Chapter, and those in Book I, Chapter VIII, Section VIII with the exception of the first clause of Article 523 apply also to the conveyance of passengers treated of in this Section. CHAPTER VI. AVERAGE. 930. General average comprises all extraordinary losses and damage intentionally caused directly or indirectly to ship or cargo with the view of saving the same from common danger, and all extraordinary expenses similarly incurred ; the following, in particular, belong to general average:— i. Putting into a port of distress to escape some danger to ship and cargo, or to escape the detrimental consequences of any such danger already encountered ; ii. The throwing overboard or unloading of cargo for the lightening of a ship, and the damage to ship or cargo thereby occasioned ; iii. Voluntary stranding for the purpose of escaping sinking or capture ; iv. The cost of ransoming the ship and cargo, including the cost of ransom of any hostages ; v. Interest or premiums on sums loaned or losses on goods sold, in conformity with Article 872, to provide for general average, as well as the expenses of inquiring into and calculating general average. 931. Prior to taking any measures giving rise to general average the master is, if possible, to consult with the officers of the ship, and the result of such consultation is to be entered in the ship's log-book. 932. If the ship and cargo have been wholly or in part saved, the general average is to be contributed in common by the cargo and one half of ship and freight in proportion to their respective values at the place of destination or other place of termination of the voyage. 933. Where a case of general average is brought about by the fault of a party interested, his contribution does not relieve him from his liability therefor. 934. General average is adjusted and apportioned at the place of destination or other place of termination of the voyage by experts who, in case of dispute, are to be officially appointed. 935. The ship's munition and provisions, the wages and personal effects of the ship's company, and the luggage of passengers are exempt from contribution to general average ; loss or damage thereto is, however, to be made good by the other articles liable to contribute. 936. The calculation of losses and damage, as well as of the amounts to be contributed, is to be based on the actual value of the articles sacrificed and of the articles saved ; goods sacrificed are, however, in every case to be paid for at the value specified in the bill of lading, notwithstanding that their actual value may have been greater. For goods laden on board without bill of lading or other express declaration, and for goods laden on deck, no indemnification is to be made. This provision does not, however, apply with regard to the latter goods in the case of ships employed in the petty coasting trade. In the cases specified in the preceding paragraph the goods saved are not exempt from liability to contribute. 937. Where, after being saved, the ship or cargo is subsequently lost or damaged, or burdened with a fresh right of claim for average or saving, the proportion of their relative liability to contribution, so far as such liability is not completely extinguished, remains unchanged with respect to the previous case of average, but such liability is to be calculated according to the value remaining after deducting the loss or damage of later origin, and the right of claim for subsequent average or saving. 938. Goods sacrificed are not liable to contribution in the event of subsequent average ; the liability of the cargo for contribution in respect of the ship is extinguished if she is subsequently lost or rendered unserviceable. 939. If the goods sacrificed come again into the possession of the owner after apportionment has been effected, he is bound to return to the parties interested the amount he received, after deducting the expenses of saving and the damages occasioned by the sacrifice. 940. Particular average comprises all losses, damage, and expenses occasioned involuntarily or for ship or for cargo only. Particular average must be borne by each owner for himself. 941. All ordinary and extraordinary expenses of and damage incidental to navigation, such as pilotage, towage, expenses of freeing from ice, dues and imposts, and damage caused to the ship by overstraining the masts and sails or the engines, are to be borne by the ship alone, unless the contrary is customary. 942. In cases of damage to ship or cargo by collision between ships, by explosion, or from other causes, the party by whose fault such damage was occasioned is liable. If the disaster was accidental or due to the fault of both parties, each party is to bear the damage he has sustained. Where, however, the fault of the parties is unequal or the cause of the disaster cannot be clearly ascertained, the damage is to be divided according to the merits. 943. Persons who in case of distress bring into safety the whole or a part of ship or cargo after the ship has been left or abandoned by the ship's company, or persons who successfully assist the ship's company in rescue or salvage, have a claim for reward for saving or assistance ; the amount of such claim is to be settled with due regard to the extent of the danger, the cost, and the time expended, as well as the perilousness and difficulties of saving or rendering assistance ; such amount may, however, not exceed as a rule one third, and in no case one half of the value of the things saved. 944. A claim for average is only admissible against the insurer if the damage amounts to one per cent at least of the insured value of ship and cargo taken together in the case of general average, and of the thing damaged in the case of particular average. 945. The clause “free from average” inserted in contract of insurance exempts the insurer from liability for all average, excepting where circumstances justifying abandonment exist ; in such case the insured has the option between abandonment and enforcing his claim for average. CHAPTER VII. BOTTOMRY. 946. Bottomry is a loan concluded by the master, away from the port of registry and subject to the due observance of the provisions of Article 872, for necessary requirements of the ship or cargo, and upon the condition that the creditor in return for a premium undertakes in respect of the mortgaged objects all sea risks during the voyage. The document of sanction and the bottomry contract must expressly state the fact and object of the bottomry, the name of the ship, route of the voyage, and the things mortgaged and the value thereof. Where the money lent exceeds the value of the objects mortgaged, the creditor may reclaim the excess and, in the case of fraudulent intent on the part of the debtor, the whole sum together with interest. Anticipated profit is not to be included in calculating the value of the cargo. 947. The ship [including appurtenances], the freight, and the cargo can be mortgaged conjointly or separately ; the cargo alone, however, only for its special requirements. The mortgage of the ship extends by implication to her appurtenances and to the freight earned on the termination of the vayage. 948. Where the same things are mortgaged more than once for different requirements, the later rights of claim are in every case to be preferred to those preceding them. 949. The bottomry bond may, on demand, be issued in two or more parts, and may be made out to order ; in the latter case it is transferable by indorsement ; the indorser, however, is only liable for payment of the principal, and not for that of the premium, unless he has expressly accepted liability for the latter. 950. Repayment of the sum lent together with the premium is to be made, unless some other period has been agreed upon, within eight days after the ship has anchored, or the cargo has been landed ; in the event of no repayment thereof taking place before the expiration of such period, the creditor may enforce the rights of a pledge creditor against the objects mortgaged. The objects mortgaged are all and severally bound to the bottomry creditor. 951. Change in the voyage, transhipment of cargo, or other alterations in the risk, unless brought about by inevitable necessity, relieve the creditor from liability for sea risks. 952. Payment of the bottomry debt cannot be claimed if the mortgaged objects were totally lost by the occurrence of a sea risk during the voyage ; in the case of damage or partial loss it can only be claimed to the extent of their remaining value, after deducting average and expenses of saving. In the cases in the preceding paragraph mentioned indemnification received on account of average inures to the benefit of the bottomry creditor. CHAPTER VIII. INSURANCE. SECTION I. CONCLUSION OF THE CONTRACT OF INSURANCE. 953. Every lawful interest in property exposed to the risks of a sea voyage may be insured for the whole voyage or part thereof, either before its commencement or during its continuance, and either in time of peace or in time of war. There may, in particular, be insured conjointly or separately the ship [including appurtenances], the freight, passage monies, the goods conveyed, the profits on their sale, commission and brokerage, the bottomry claims, average and other claims of the ship's creditors, and the interest of the insurer himself. No valid insurance of the wages or remuneration of the ship's company can be effected. 954. The insurable value of a ship is her value at the time and place of commencement of the risk. 955. With respect to the ship the risk runs, unless otherwise agreed upon, from the commencement of loading cargo or ballast until discharge thereof has been completed, or could have been completed in the absence of undue delay. 956. Bottomry and average claims are only insurable up to the value of the mortgaged objects and objects liable to contribution respectively. 957. Where, subsequent to conclusion of the contract of insurance, war breaks out or risks from other measures of State arise, each party has a right to cancel the contract, unless a proportionate increase of premium was provided for. Premium already paid must be returned in the event of the contract being cancelled. SECTION IL RIGHTS AND DUTIES OF INSURER AND INSURED. 958. The insured is entitled, in the event of the voyage being abandoned before the risk has commenced, to cancel the contract on payment of an indemnity of one half per cent of the sum insured. 959. The insurer is to bear all losses and damage caused by the happening of a sea risk ; in particular, those occasioned by storm, shipwreck, stranding, floating ice or collision, by jettison, fire, explosion, theft or robbery or pillage, by necessary change of the voyage, route, or ship, by the dishonesty or fault of members of the ship's company and by other like risks, in so far as not excepted by contract. All losses and damage caused by risks of war or of other measures of State, in particular, those occasioned by capture, declaration of war, reprisals, blockade, embargo, arrest, or by other like cause, are only borne by the insurer if he has expressly undertaken them. 960. The insurer does not bear the cost of pilotage, or of towage, the dues, custom duties, and other taxes leviable on ship or cargo, damage due to age, rotting, or worms, the wear and tear of ordinary use, the responsibility of the shipowner for the acts of the master and members of the crew, the damage due to unseaworthiness, to defective equipment or undermanning, or consequent on the absence of the prescribed papers. 961. The obligation of the damage sustained is not insured being entitled to in respect thereof against insurer to make good the excluded by reason of the a claim for indemnification the master or some other person. 962. The premium must be proportionately increased in case the voyage is prolonged beyond its stipulated duration ; it is not, however, to be reduced in the event of the duration of the voyage or of the voyage itself being shortened. 963. The insurance of passage monies entitles the insured to be indemnified the extra cost of conveyance of passengers caused by maritime disaster, such as expenses incurred by prolongation of the voyage, transhipping passengers, their maintenance in a port of distress, forwarding them by another ship, loss or damage to provisions and other mishaps. 964. Where, in consideration of an increase of the ordinary freight or passage money, the risk attending the goods or passengers' luggage on board is undertaken, the principles governing insurance are to be applied. SECTION III. ABANDONMENT. 965. Abandonment is the relinquishing to the insurer of the object insured in return for the payment of the full sum insured. It may be declared:— i. When the ship has sunk, or is wrecked, or missing, or has become unserviceable ; ii. When the ship is captured, or detained by a measure of State ; iii. When the loss or damage exceeds three-fourths of the value. Abandonment can be neither partial nor conditional, and is irrevocable. 966. A ship is to be considered as missing if she has not arrived at the port of her destination, and one year or, in the case of the coasting trade, six months have elapsed since she sailed, or since news was last received of her. On the expiration of the above-mentioned periods, a ship, in the case of an insurance for a specified time, is presumed to have been lost within the term of insurance. 967. A stranded ship cannot be abandoned as unserviceable if she can be got off, repaired, and placed in a condition to continue the voyage as far as the port of her destination, and the insurer advances the money necessary for the purpose. The insured, however, in such case preserves his claim for the expenses and average occasioned by her stranding. 968. The cargo of a ship which has become unserviceable can only be abandoned if the master is unable to procure another ship for the purpose of transporting such cargo to its port of destination. In the event, however, of the master being able to do this, the insurer bears all average losses, the additional cost of freight, and all expenses of saving, transhipping and storing the cargo, and expenses otherwise occasioned. 969. The insured is bound to give notice to the insurer of the event entitling him to abandonment within three days of its coming to his knowledge, or of the expiration of the periods in Article 966 specified, and to declare himself within six months with regard thereto. If such period has not been observed the insured is only entitled to enforce the ordinary claims arising out of the contract of insurance. 970. The insurer is bound, in default of any other contract, to make payment of • the sum insured within three months of the declaration of abandonment, but not before the documents serving to justify the same have been furnished to him, and he has been notified of all other insurance, and of bottomry, or other rights of claim whether registered or not attaching to the object abandoned. Counter evidence may be adduced against the contents of the said documents. 971. A fraudulent declaration of abandonment deprives the insured of his rights arising out of the insurance, and he must himself pay the claims attaching to the object abandoned. 972. Abandonment when accepted or declared valid by judgment transfers to the insurer the rights of the insured with regard to the object abandoned. In the abandonment of the ship the full amount of freight of the goods saved, after deduction of every obligation for which the freight is liable, is comprised. 973. The insured is bound, even after declaration of abandonment, to exercise all possible care in the saving or recovery of the things insured and for the prevention of further loss, and the insurer must bear the expenses incurred for such purpose to the extent of the value of the things saved. 974. In the case of capture or of detention by a measure of State, abandonment, unless condemnation or confiscation has earlier ensued, cannot be declared until after six months have elapsed from the communication of such event to the insurer. The insured, in the case of capture, may effect ransom, if necessary, without previous communication of the event, and without the instructions of the insurer ; the insurer, however, has the option of taking over the same on his own account or not. 975. The effect on both parties of an abandonment once declared is not altered by the subsequent saving or return of the ship. CHAPTER IX. PRESCRIPTION. 976. All rights of claim of ship's creditors and rights of claim arising in respect of bottomry, average, and saving, even if in the form of personal claims against the shipowner, master, or members of the crew, are prescribed at the expiration of one year from the day on which they became enforceable. Actions in respect of abandonment are prescribed after one month from the expiration of the period within which, in accordance with Article 969, abandonment can be declared. 977. Acceptance of the goods conveyed and payment of the freight without reservation operates to extinguish every claim against the master and the insurer in respect of loss or damage ; every right of claim arising out of average or saving is in like manner extinguished on delivery of the goods being made and the freight therefor received without reservation. Reservations to be valid must be made within twenty four hours after the acceptance or the delivery of the goods. BOOK III. BANKRUPTCY. CHAPTER I. ADJUDICATION OF BANKRUPTCY. 978. Every person who in the course of trading suspends payment is adjudged bankrupt by the Court by a rule either on his own application, or on that of one or more of his creditors, or of its own motion. Against such rule immediate complaint may be raised. Such rule may be made without prior oral proceedings. 979. The person trading who suspends payment or, in the case of a commercial partnership or company, the managing partners, directors or liquidators are within five days of the suspension, inclusive of the day on which it took place, to notify such suspension with a statement of the causes therefor to the Court of the place of the seat of business or domicile in writing or for entry in a protocol. Delivery of a balance-sheet and of the trade books must accompany such notification. The balance-sheet is to contain :— i. The enumeration and valuation of the entire property including movables, immovables, and rights of claim ; ii. A statement of all the debts ; iii. A summary of profits and losses ; iv. A statement of each month's personal and household expenses. 980. The adjudication rule is to contain:— i. The date of suspension of payment ; ii. The appointment of the bankruptcy commissioner and of one or more bankruptcy administrators ; iii. An order as to the measures necessary for securing the bankruptcy estate ; iv. An order of general attachment against the debtors of the bankrupt or those in possession of things appertaining to the bankruptey estate ; v. A summons to all the creditors of the bankrupt to give notice of their claims to the bankruptcy commissioner within a period of not less than three nor more than six months ; vi. The fixing of a date for the hearing for examination of claims and of a date for the meeting of creditors. The adjudication rule is to be communicated to the Public Procurator. 981. The adjudication must be forthwith published in a local paper, as well as by posting it up on the notice-board of the Court and on the business premises of the bankrupt, and it is provisionally executory. 982. In the event of the bankrupt's property being insufficient to cover the costs of the bankruptcy proceedings, all proceedings which should follow those in the preceding Article mentioned are to be suspended, and such suspension must be published. The bankruptcy proceedings can, however, be resumed on application or by the Court of its own motion so soon as it has been shown that the bankrupt has property sufficient to cover the costs of the proceedings. Suspension of the bankruptcy proceedings has, while it lasts, the effect in Article 1049 specified. 983. The bankruptcy commissioner must direct and control the entire bankruptcy proceedings. His orders are provisionally executory ; immediate complaint may, however, be raised against the same in the Court of the bankruptcy. 984. The Public Procurator is entitled of his own motion to prosecute inquiries as to whether the bankrupt has committed punishable acts, and can for such purpose demand inspection of the books of his business and other papers. CHAPTER II. EFFECTS OF BANKRUPTCY. 985. The adjudication of bankruptcy operates- to deprive the bankrupt, during the continuance of the bankruptcy proceedings, of the possession of his property, and of his right of administration and disposition thereof. From the date of the adjudication all payments and other acts otherwise legal of the bankrupt and all payments made to him are, as of course, null and void. Actions and executions in respect of his property, whether movable or immovable, can only be instituted and proceeded with by and against the bankruptcy administrator or administrators. 986. Execution for the satisfaction of rent against movable property of the bankrupt which serves for the exercise of his business is postponed for thirty days, unless the lessor is entitled to take back the immovable leased. 987. In the absence of any right of preference, no execution in favour of individual creditors can be effected against the property of the bankrupt during the course of the bankruptcy proceedings. 988. By virtue of the adjudication, debts of the bankrupt not yet due become due. The preceding provision applies with regard to liability to recourse where the acceptor of a bill of exchange, or the drawer of a non-accepted bill, or the maker of a promissory note is adjudged bankrupt. 989. From the date of adjudication interest ceases to run against the bankruptcy estate, excepting on rights of claim guaranteed by mortgage, pledge, or other right of preference, and in so far as the proceeds of the things given for guaranty allow. 990. Every act otherwise legal of the bankrupt subsequent to suspension of payment or within ten days immediately previous thereto, by which he procures out of his property a gratuitous advantage for another is, as of course, null and void as against the estate ; such are, in particular, donations, burdensome contracts incurring obligations gratuitously or with disproportionate consideration, payment of debts not due and the irregular payment of debts due, as well as the giving of guaranties for obligations previously incurred. 991. All other payments made and all acts otherwise legal done by the debtor to the prejudice of the estate subsequent to his suspension of payment and prior to the adjudication of bankruptcy may be contested on behalf of the estate, if the other party had knowledge of the suspension. In the case, however, of payment of bills of exchange the sum paid must be reimbursed by the drawer or by the person for whose account the drawer issued the bill, if they had knowledge of the suspension at the time when the bill was drawn and, in the case of promissory notes, by the first indorser if he had such knowledge at the time of indorsement. 992. Mortgages validly acquired, and other rights which obtain validity by formal registration, may be registered after suspension of payment up to the day of the bankruptcy adjudication, provided that not more than fifteen days have elapsed between the date of acquisition and the date of registration. 993. With respect to bilateral contracts which at the time of the adjudication of bankruptcy have not been performed in whole or in part by either the bankrupt or by the other party, either party can on giving notice cancel the same without indemnification. In the case, however, of contracts of lease or hiring or of hiring out of services, the legal or customary term of notice is, in the absence of agreement, to be observed. 994. The right of one of the contracting parties to cancel the contract or to reclaim any thing on his part already given in performance, on the ground of non-performance by the other party, cannot be enforced as against the estate. 995. A creditor who is entitled to a right of set-off can enforce the same against the estate, even for rights of claim not yet due or the amount of which is not yet determined. Set-off is, however, not admissible where such rights of claim arose or were acquired subsequently to the suspension of payment unless the creditor or debtor had no knowledge thereof. 996. Any acts otherwise legal done by the debtor with intent to prejudice his creditors can be contested without regard to their date, if the other party knew of such intention. CHAPTER III. RIGHT OF SEPARATION. 997. Creditors having a mortgage, pledge right, or other right of preference over immovables or movables of the debtor are entitled, unless previously satisfied out of the assets, to demand separate satisfaction of their claims, including costs, interest, and principal, out of the proceeds of the thing serving as their guaranty. The surplus proceeds are to be handed over by the purchaser to the estate. 998. The various kinds and the ranking of rights of preference are determined by the Civil Code and by special laws. 999. Where persons entitled to preference are not fully satisfied by the proceeds of the things given for guaranty, they can enforce their rights of claim for the unsatisfied balances against the estate equally with other creditors. 1000. Where subsequently to suspending payment the debtor acquires an inheritance, the creditors of the deceased's estate and the legatees may claim separate satisfaction out of such portions of the deceased's estate as still exist as such, or out of the proceeds thereof not yet paid to the debtor. 1001. Those effects of the bankrupt which in pursuance of the Code of Civil Procedure cannot be seized in execution cannot be appropriated to the assets. As for effects in respect of which the creditors have a right of preference, the provisions of Article 997 are to be observed. CHAPTER IV. PRECAUTIONARY MEASURES. 1002. Together with the adjudication of bankruptcy the Court shall order seals to be placed upon the movable property of the bankrupt, and his immediate detention or official surveillance. The above measures may be ordered prior to the bankruptcy adjudication by the local police authority on the application of one or more of the creditors, if the debtor has absconded, or is about to abscond, or if he secretes any portion of his property. In the case of commercial partnerships or companies the persons and property of all members whose liability is joint and several and unlimited are subject to these measures. 1003. If the debtor has complied with the provisions laid down in Article 979 and there is otherwise no ground for his detention or surveillance, the same may be omitted ; the Court can, however, later on at any time, and of its own motion order the same. The debtor may not quit the place of his residence without the permission of the Court ; and the Court has power at any time to order the compulsory production of the debtor. 1004. Release of the debtor is effected by a rule of the Court, if no grounds for detaining him or keeping him under surveillance any longer exist ; he may, however, be required to provide guaranty for his forthwith presenting himself to the Court or to the administrator whensoever required. Guaranty that is forfeited goes to the assets. 1005. The seals are removed as soon as the administrator has drawn up an inventory of the debtor's property and has taken possession thereof. Seals need not be affixed to the articles specified in Article 1001, nor to things which would thereby be hindered from being forthwith converted into money or continuously used for the benefit of the estate ; an inventory of these must be at once made and possession thereof at once taken by the administrator. The debtor's trade books are to be forthwith handed over to the administrator, and their actual state is to be certified by the bankruptcy commissioner. Articles of special value may be immediately delivered to the administrator or provisionally deposited with the Court. 1006. By the order of general attachment all persons indebted to the bankrupt, or having in their possession any thing appertaining to the estate, are summoned to make payment or delivery respectively to the administrator and to him alone. Persons desiring to exercise a right of separation to any thing are required to notify the administrator thereof and, on his demand, to permit of the thing being valued. Telegrams, letters, and other things sent intended for the debtor are to be delivered to the administrator, who is empowered to open them ; they must, however, be handed over by him to the debtor, if their contents do not concern the estate. For the above purpose the bankruptcy Court issues the requisite directions to Post Offices, Telegraph Offices and other forwarding institutions. 1007. The bankruptcy commissioner may grant the bankrupt an allowance out of the estate for the maintenance of himself and his family. CHAPTER V. ADMINISTRATION AND REALIZATION OF THE BANKRUPTCY ESTATE. 1008. Each bankruptcy Court keeps for its district a list of administrators who are by virtue of office bound to act, and from whose number the bankruptcy administrators are in each individual case to be appointed. 1009. The remuneration of the administrators for their services is a first charge on the assets and the amount thereof is fixed by the Court. 1010. The Court can at any time replace one administrator by another or appoint others to act with those already appointed. 1011. Every administrator is responsible for his acts in the same degree as an agent. Where two or more administrators are appointed, they can only act together, excepting in so far as the bankruptcy commissioner confers special instructions on individual administrators for the purposes of particular acts of administration. 1012. Immediately after the adjudication of bankruptcy, the administrator must take possession of the bankruptcy estate and proceed to the administration and realization thereof. For the performance of his duties he may require the assistance of the bankrupt, and in consideration thereof the commissioner may grant the latter a remuneration. 1013. The administrator is subject to the control of the commissioner and is bound to follow his directions. If objections are raised against any act or determination of the administrator, the commissioner decides by an order with respect thereto. Immediate complaint may be raised in the bankruptcy Court against such order. 1014. The inventory is drawn up by the administrator in the presence of an officer of the Court or of a local police official and, where necessary, in the presence of the bankrupt. Entry must be made in such inventory of every thing forming part of the bankrupt's property, including therein such effects as are not available for the assets, together with an express statement of their value, which is, if necessary, to be ascertained by experts. A certified copy of the inventory and of the protocol drawn up concerning the same is to be kept at the Court for public inspection. It is open to the Public Procurator to be present if he sees fit at the drawing up of the inventory. 1015. Disputes concerning the reclamation of property not belonging to the debtor out of the assets are decided by the bankruptcy Court or, in the case of immovables, by the Court within whose jurisdiction the immovable in question is situated. 1016. The administrator is required within the period appointed by the commissioner, which may not exceed thirty days, to examine the notice and balance-sheet rendered by the bankrupt, or himself to prepare the latter in the event of its not having been rendered by the bankrupt, and to submit his report together with the balance-sheet to the commissioner. A certified copy of the report and balance-sheet is to be kept at the Court for public inspection. The report and balance-sheet must be sent to the Public Procurator. 1017. Whenever it is evident that the assets exceed the liabilities, or as long as a composition is to be anticipated, the Court, upon the application of the commissioner and after hearing the administrator, may rule that the bankrupt's business shall be carried on by the administrator. The sale of things forming portion of the bankruptcy estate, otherwise than in the ordinary course of business, must in such case only take place with the sanction of the commissioner and after previously hearing the bankrupt. 1018. Immovables must be sold with the sanction of the commissioner and by means of auction. Movables are, as a rule, to be put up to auction, they may, however, if so sanctioned by the commissioner, be sold privately. With respect to the auction proceedings, the provisions of the Code of Civil Procedure are to be observed. 1019. The administrator must collect all debts due to the bankrupt which appertain to the estate and must enforce and secure all the rights of the bankrupt as against his debtors or other persons. For the following acts of the administrator, so far as they relate to a subject-matter of the value of at least one hundred yen, the hearing of the bankrupt and the sanction of the commissioner are first necessary:— i. The carrying on of legal proceedings ; ii. The conclusion of compromises or of submission to arbitration ; iii. The redemption of pledges ; iv. The assignment of rights of claim ; v. The refusal of succession or legacies ; vi. The contracting of loans for consumption ; vii. The purchase of immovables ; viii. Renunciations ; ix. And generally charging the estate with fresh liabilities. 1020. Monies flowing to the assets, in so far as they are not required for meeting current expenses to be fixed by the commissioner, must be deposited without delay in a Public Deposit Office, and can only be drawn out by virtue of a payment order of the commissioner. 1021. The administrator is bound to notify the commissioner of every punishable act of the bankrupt which may come to his knowledge during his administration ; the commissioner thereupon communicates such notice to the Public Procurator. 1022. The commissioner can at any time examine the bankrupt, his trade assistants, servants and other persons concerning the causes and circumstances of the bankruptcy, concerning the assets and liabilities, and the balance-sheets, as well as with reference to any other matter relating to the administration and to the bankruptcy proceedings. CHAPTER VI. CREDITORS. SECTION I. NOTIFICATION AND ESTABLISHMENT OF RIGHT OF CLAIM. 1023. All creditors of the bankrupt are deemed to be summoned by the publication of the adjudication rule to notify their rights of claim to the commissioner before expiration of the period for notification. The notification is to contain a statement of the lawful consideration for each right of claim, the amount in money claimed and any rights of preference, and is to be accompanied by the documents of proof, or a copy thereof, annexed. Any creditor not resident at the place where the Court has its seat is to appoint representative there. The notifying of the right of claim and the appointment of such representative can be effected in writing or by entry in a protocol ; in the former case the writings must be handed in in duplicate. Known creditors are in addition to be summoned by a writing issuing from the Court to notify their rights of claim ; they are, however, precluded from claiming damages in the event of such summons not reaching them. 1024. The rights of claim notified are to be registered as they arrive under successive numbers in two schedules, of which one contains the rights of claim having the right of preference and the other the ordinary rights of chaim. These schedules are to be kept at the Court for public inspection. The administrator receives for his own use copies of the notifications of the rights of claim and of the schedules. 1025. The hearing for examination of the claims is to be held by the commissioner in presence of the administrator and, if possible, of the bankrupt, and a protocol of the proceedings is to be kept. The creditors can take part thereat in person or by their agent. The commissioner can order the creditors to produce their business books or extracts therefrom. The result of the examination must be noted down in the schedules and endorsed on the documents of claim produced, and must be made known to each creditor or to his agent. The hearing for examination is to be held, as a rule, ten to fifteen days after the period for notifying rights of claim has expired. The rights of claim notified after the expiration of the period for notification can be examined at the hearing for examination ; in the event, however, of objection thereto, or for the rights of claim notified after the conclusion of such hearing, a new hearing for examination is to be held at the expense of the creditors concerned. 1026. Establishment of the rights of claim takes place by admission or by the judgment of the Court. A right of claim is taken to be admitted if it is neither disputed at the hearing for examination by the administrator, nor by any creditor whose right of claim is established or who is entered on the balance-sheet. The admitting or disputing the rights of claim of the administrator rests with the commissioner in stead of with the administrator. 1027. Such disputed rights of claim as are not withdrawn by the creditors concerned are decided by the bankruptcy Court in public hearing, upon the proposition of the commissioner and, as far as possible, in one judgment. The proceedings take place and judgment is pronounced even if the parties should fail to appear, and such judgment is not open to attack by way of protest. 1028. Judgment must be rendered, if possible, before the meeting of creditors takes place. If this cannot be done, or in the event of the judgment being appealed from, the Court decides by rule whether and for what amount the creditor whose right of claim is disputed is to be admitted to the meeting. If it is merely the right of a creditor to preference that is disputed, he is to be admitted to the meeting as an ordinary creditor. 1029. Creditors whose rights of claim have not been notified in the proper time or have not been established can only participate in such distributions of the assets as take place in consequence of their later establishment ; nevertheless, in the case of the rights of claim which, through having been disputed, have become the subject of litigation as well as in the case of the rights of claim of creditors abroad, for which special periods for notification and examination have been fixed, the dividends falling to them from earlier distributions are reserved. SECTION II. PARTICULAR KINDS OF CREDITORS. 1030. A right of claim notified in the bankruptcy of the principal debtor may, even in the event of composition, be enforced in full against sureties or other persons jointly liable with the debtor ; the latter are, however, entitled to notify their claims by way of recourse in the bankruptcy of the principal debtor, but are subject to the operation of the composition in his favour. 1031. Where two or more persons jointly liable have become bankrupt, the right of claim may be notified to its full amount in the bankruptcy of each of them. No right of recourse can be enforced between the different bankruptcy estates, unless the sum total of the dividends which the creditor receives exceeds the total amount of both his principal and accessory right of claim, in which case the surplus falls to the assets of the one who has a right of recourse against the others. 1032. The following rights of claim are not subject to the provisions respecting the notification and establishment of rights of claim :— i. The judicial costs, the costs of administration and the other costs of the bankruptcy proceedings ; ii. Public fees and dues ; iii. The rights of claim arising out of obligations contracted on behalf of the estate by the administrator. The above are paid out of the assets in the ordinary way in accordance with the commissioner's directions. 1033. The costs incurred by the creditors in consequence of their participation in the bankruptcy proceedings cannot be claimed against the estate. 1034. A wife can only enforce against her husband's estate such rights of claim as she is entitled to in respect of property which is exclusively her own either by law, under express agreement, or by undisputed custom. SECTION III. MEETINGS OF CREDITORS. 1035. Meetings of creditors are convened by the commissioner and presided over by him. The convening is effected by means of a public notice stating the objects of the meeting. Those who take part therein consist of the administrator and the creditors whose rights of claim have been established or who are admitted in pursuance of Article 1028 ; those creditors, however, whose right to preference is established can only take part in so far as they renounce the same or in so far as a deficiency in the event of the exercise thereof is to be presumed. The creditors may be represented by agents. The bankrupt may be cited to the meeting. 1036. Resolutions are, as a rule, passed by a majority of votes of the creditors present, and such majority of votes must represent more than one half in amount of the rights of claim of such creditors. 1037. At the meeting the commissioner reports upon the course of the proceedings as far as they have gone ; the administrator reports upon the operations and results of the administration and upon the actual condition of the estate. It is for the meeting to decide with regard to such reports and with regard to any proposal of the commissioner or of the administrator, and with regard to any propositions made by the creditors or, with the commissioner's sanction, by the bankrupt. The resolutions must be submitted to the Court for approval. CHAPTER VII. COMPOSITION. 1038. A bankrupt who has fulfilled the obligations imposed upon him by law, and who has not been convicted of, or against whom proceedings are not pending for, penal bankruptcy, is, with the sanction of the commissioner, entitled at the first meeting and, on sufficient grounds, even at a subsequent meeting, to offer his creditors a composition, but in any case only once. The first meeting is held four weeks after the general hearing for examination of claims. The proposal for composition is to be presented to the Court for public inspection at least twenty days before the meeting and public notification of the fact of this having been done is to be made by the Court. 1039. For acceptance of the composition the consent of the majority of creditors present at the meeting and representing at least three-fourths of the total amount of the rights of claim of creditors entitled to vote, is requisite. The administrator and the creditors entitled to vote, and those also whose rights of claim have been subsequently established, can within ten days lodge with the Court an objection to the composition together with the grounds therefor. 1040. The composition as accepted only becomes valid when sanctioned by the Court. The rule sanctioning or rejecting the same is made by the Court, upon the report of the commissioner, immediately after the expiration of the period fixed in the preceding Article, and may be contested by means of immediate complaint by the debtor and persons entitled to raise objection. 1041. The composition is to be rejected:— i. Where the provisions in Articles 1038 and 1039 contained have not been complied with ; ii. Where individual creditors are thereby without their consent unequally treated to their prejudice ; iii. Where it has been brought about by deceit or in any other dishonest manner ; iv. Where it is contrary to public interests. 1042. If the debtor is subsequently convicted of penal bankruptcy or is proceeded against therefor, the composition in the first case lapses of itself, and in the second case is suspended until the debtor is released from prosecution or acquitted. Objection may also be raised to the composition even after it has been sanctioned by the Court upon the grounds in the preceding Article iii specified. 1043. As soon as the composition has become legally operative, the administrator is to discontinue his duties and render an account thereof. The debtor, excepting in so far as the terms of the composition may otherwise determine, may receive back his property under his own free administration and disposition. The composition is to be carried out under the supervision of the commissioner. 1044. In the event of the composition being rejected, or of it subsequently lapsing or being annulled, or of it being cancelled on account of non-fulfilment, the bankruptcy proceedings are revived and without further delay brought to a close by realization and distribution of the assets. In the revived proceedings those creditors also are allowed to take part whose rights of claim have arisen in the meantime. In the event of non-fulfilment the sureties for the composition are not released from their obligations. CHAPTER VIII. DISTRIBUTION. 1045. The assets remaining after payment of the rights of claim mentioned in Article 1032 and of the rights of claim having the right of preference, are distributed amongst the remaining creditors in equal proportions. If the bankrupt has carried on two or more businesses with separate capitals, the creditors of each individual business are satisfied in preference out of the assets of the business in question. 1046. Distribution takes place after the general hearing for examination of claim has been concluded, and as often as sufficient assets are available in pursuance of a scheme of distribution which is to be prepared by the administrator and is subjected to the sanction of the commissioner ; it has to be signed and sealed by the latter and is to be kept at the Court for public inspection. The fact of it being so kept is to be publicly notified. Objections to the scheme of distribution can be raised before the Court within fourteen days from the date of such public notification. 1047. If within the above-mentioned period no objections are raised or they have already been settled, payment is made by the administrator to each creditor on production of his document attesting the debt, and the amount of the payments from time to time made is to be noted thereon ; if such document cannot be produced, payment can be made with the sanction of the commissioner in virtue of the entries in the schedule of claims. In every case the creditor is required to give a receipt on the scheme of distribution. 1048. When the realization and distribution of the assets have been completed, a meeting of creditors is to be convened at which the administrator renders his final accounts. As soon as such accounts are concluded, the Court, upon the application of the commissioner, rules the closure of the bankruptcy proceedings. The rule is to be publicly notified. 1049. After the closure of the bankruptcy proceedings the unsatisfied creditors can unrestrictedly prosecute their rights of claim against the debtor in virtue of the legal title they have acquired by their establishment in the bankruptcy proceedings. CHAPTER IX. PENAL BANKRUPTCY. 1050. A debtor adjudged bankrupt is punished for fraudulent bankruptcy if, either before or after suspension of payment or adjudication of bankruptcy, he contrated obligations that he had no intention of fulfilling or which he was to his own knowledge not in a position to fulfil ; or if, with intent to prejudice his creditors, he has totally or partially concealed, made away with or left out his assets, or exaggerated his liabilities ; or if he has destroyed, concealed, or forged or fraudulently altered his trade books. 1051. A debtor adjudged bankrupt negligent bankruptcy if, either is punished for before or after suspension of payment or adjudication of bankruptcy, he has:— i. Greatly diminished his assets or greatly burdened himself with debts through excessive personal or household expenditure, or by gaming, transactions in differences, or excessive speculative undertakings ; ii. Raised the means for making payments by transactions entailing loss with the object of deferring his suspension of payment ; iii. After suspension of payment favoured individual creditors by making payments or giving guaranty to the prejudice of the estate ; iv. Kept his trade books in a disorderly manner or concealed or destroyed them, or failed to keep any at all ; v. Not fulfilled the obligations prescribed in Articles 32, 979, and the second paragraph of Article 1003. 1052. The penal provisions in the last two Articles contained apply also to managing partners and directors and liquidators of commercial partnerships and companies respectively ; and those contained in Article 1050 to bankruptcy administrators and to all those who have assisted the perpetrator in the commission of the punishable act or have committed it in the interest of a bankrupt. 1053. Bribery of a creditor with reference to his voting at a meeting of creditors is punished with respect to both parties with major imprisonment for not exceeding 2 years or with a fine not exceeding 1,000 yen. CHAPTER X. PERSONAL CONSEQUENCES OF BANKRUPTCY. 1054. A debtor who is adjudged bankrupt or a member with unlimited liability or director of a bankrupt commercial partnership or company respectively is disqualified, until he has obtained rehabilitation, from attending Exchanges, from trading as a broker, or as a member of an ordinary partnership or of a limited partnership or as a director of a joint-stock company, from exercising the functions of a liquidator, bankruptcy administrator, or representative in commercial matters, from membership of a chamber of commerce and from other mercantile posts of honour. 1055. Rehabilitation can only be obtained on it being proved that all creditors, whether a composition has been effected or not, have been fully satisfied in principal, interest, and costs, and that the debtor is prepared and is in a position to fully satisfy those creditors who on account of their whereabouts being unknown have not yet been satisfied. The creditors' receipts as well as all other requisite evidences are to accompany the application. In the event of a composition, however, the attending Exchanges and, where it relates to a commercial partnership or company, the continuance of the same by members who are unlimitedly liable or by directors is permitted without the necessity of proving that which is in the first paragraph of this Article prescribed. 1056. The application for rehabilitation is published by posting it up on the notice-board of the Court and at the Exchange, and, if the bankruptcy Court sees fit, by advertisement in newspapers, for the purpose of allowing any objections to be raised within a period of two months ; communication thereof is also to be made to the Public Procurator for purposes of examination and institution of enquiries. The Court rules respecting the same after hearing the Public Procurator. This rule can be con tested by means of immediate complaint, and is to be publicly notified when it has become final and conclusive. An application that has been rejected cannot be renewed until one year has elapsed. 1057. Rehabilitation is admissible even after the death of the debtor. 1058. Rehabilitation is not to be granted to a bankrupt who has been convicted for fraudulent bankruptcy or who through conviction for a crime or delict has been deprived of the enjoyment of his public rights or has had the enjoyment thereof suspended, so long as such deprivation or suspension continues. In the case of negligent bankruptcy, rehabilitation is only admissible after the punishment has been undergone or pardon has been granted. CHAPTER XI. RESPITE. 1059. Where in the course of trading a person is constrained, without his fault and temporarily, to interrupt payment, he may be granted by the Court of his place of seat of business or of his domicile, with the consent of the majority of his creditors on commercial transactions, a respite not exceeding one year for the payment of his liabilities towards them. 1060. To the application for respite there must be annexed:— i. A complete statement of the causes of interruption in the debtor's payments ; ii. A balance-sheet, an inventory of property and a list of creditors, stating their domiciles and the amount of their claims ; iii. Evidence as to the manner and time in which the principal and accessory claims of the creditors can be satisfied in full and as to what guaranties can be given therefor. The application, together with its accompanying writings, must be kept at the Court for public inspection, and the fact of this having been done must be publicly notified together with the fixing of a time for the meeting of creditors. The creditors are to be separately called hereto. Respite may be granted by the Court provisionally. 1061. At the time fixed the application is discussed between the debtor and the creditors under the presidency of a commissioned Judge appointed by the Court. The majority in Article 1036 specified is necessary in order to agree to such application. A protocol is kept of the discussion and voting. 1062. Upon the report of the commissioned Judge the Court rules as to confirmation of the respite agreed to. The rule may be contested by means of immediate complaint. An extension of the respite may on application be granted in accordance with the provisions in the preceding Articles mentioned, but only once and for a further period not exceeding one year. 1063. Where a valid respite has been granted to the debtor, he is not liable during the continuance thereof to execution or adjudication in bankruptcy, for debts arising out of commercial transactions previously entered into. With regard to carrying out the arrangement for respite and with regard to the conduct of his business, he is, however, under the control of the commissioned Judge. The obligations of the sureties of the debtor and of persons jointly liable with him are not affected by the respite granted. 1064. If the respite is not agreed to, or if it is rejected by the Court, or is subsequently annulled on account of deceit or dishonesty on the part of the debtor or by reason of the conditions legally required being deficient, or if its conditions are not carried out by the debtor, or if during its continuance execution is effected against his property by another creditor, bankruptcy proceedings are forthwith to be commenced against the debtor. In this case the time of suspension of payment is fixed as at the date of the application for respite.