Learn in the textbookLaws on Fair Trade, Finance, and Product Liability
DefinitionThe Act on Fair Subcontracting for Small and Medium Enterprises (中小受託取引適正化法) is the law that stops businesses commissioning work from using their stronger position to force disadvantages on the small and medium-sized contractors that take the work on.
ExplanationAn amendment in force from January 2026 renamed the law formerly known as the Subcontract Act, and the terms changed too: the parent business became the commissioning business, and the subcontractor became the small or medium-sized contractor. The commissioning business must state trade terms and set a payment date, and it may not delay payment, cut the price unfairly, or refuse to accept delivery. Whether the law applies depends on the kind of transaction and on the size of both parties, measured by stated capital and similar criteria.
AnalogyIn a deal between a large prime contractor and a small workshop, it is an arrangement that puts promises only on the stronger side, to make up for the gap in power.
Memory hookIts short name in Japanese is Toritekihō. Read the word for contractor (jutaku, the side that receives the work) in its name as the protected party, and you will not lose track of whom the law is for.