4.Contract Drafting, Review and Negotiation

Q8 (Tokyo Ordinance on Organized Crime Groups)

I heard that, under the [Tokyo Metropolitan Ordinance for Eliminating Organized Crime Groups], each contract is required to include a provision on the elimination of organized crime groups.  What is this?

You must make efforts to include the following provisions in each contract. Since the obligation is only to make an effort, there is no penalty. But we think it is desirable to include the following provisions.
(1) If a party discovers that the other party to a contract, its representative or an agent is associated with an organized crime group, the first party can terminate the contract without notice;
(2) If a party discovers that the other party’s subcontractor or a party to another related contract of the other party is associated with an organized crime group, the first party can demand that the subcontract or other related contract be terminated;
(3) If the other party to the contract refuses to terminate the subcontract or other related contract under (2) above, the first party can terminate the contract with the other party.

(Posted: January 27, 2012)