Case: court acknowledged the validity of cancellation based on 2 months’ non-payment

Summary

  • Tokyo District Court acknowledged the validity of cancellation of building lease contract based on 2 months’ non-payment.

Parties of the Case

  • Kamiogumi Co., Ltd. (lender) vs. M&S Co., Ltd. (tenant; a company operating dormitory for foreign students and introducing study abroad destinations)

Claims

  • Claim to surrender building based on cancellation of building lease contract

Location and Purpose of Use of the Building

  • Dormitory for foreign students in Shinkoiwa, Katsushika-ku, Tokyo

Rent

  • 3,800,000 yen per month

Circumstances

  • In the lease contract, there was a special clause providing that the lender can cancel the contract without any demand if the tenant fails to pay the rent twice or more.
  • When the tenant did not pay the two-months rent, the lender demanded payment of the unpaid rent withing 7 days. The tenant paid the rent of one month but could not pay remaining one-month rent, so the lender cancelled the contract after 7 days passed after the demand reached to the tenant.
  • The tenant argued that there was a security deposit of 11,400,000 yen. The tenant also argued that the tenant spent huge amount of money to renew the dormitory and there were 165 foreign students living there.
  • The court judged that the special clause cannot be deemed unlawful, and that particular circumstance does not exist that the non-payment does not dissolve the relationship of mutual trust between the parties of the lease agreement.

Comment

  • This is one of the cases that cancellation of building lease contract based on two months’ non-payment was acknowledged.