What to Change in How You Order Design and App Development Under Japan's New Subcontracting Law

Plenty of design and app projects in Japan still start with no purchase order at all. Someone writes "let's go in this direction" in a chat, and work begins.

Speaking as the person on the receiving end, that alone is rarely the problem. The problems come later: when the scope grows, when revisions keep coming, and when nobody can say when acceptance will be done.

Since January 1, 2026, a lot of that is much more likely to be a legal problem too. Here is what buyers should know to avoid a fight. I am not a lawyer, so check with the Japan Fair Trade Commission's materials and your counsel about whether your company is covered.

The Subcontract Act is now the Toriteki Act

According to the Japan Fair Trade Commission's page, the Subcontract Act was revised and renamed on January 1, 2026. People now call it the Toriteki Act, short for a Japanese name that roughly means the act on fair dealings with small and medium-sized contractors. The terms changed too. The "parent company" is now the "commissioning business," and the "subcontractor" is now the "small or medium-sized contractor."

Design and software were already covered. The commission's briefing slides list software, video content and all kinds of design as examples of commissioning the creation of information products.

The big change is who falls under the law. It used to depend only on paid in capital. Now there is also a test based on employees. If you commission software and have more than 300 regular employees, orders to companies with 300 or fewer, or to individuals, are covered. For design and other work that is not software, the line is 100 employees. A small capital figure no longer keeps you out.

The most common violation is the order itself

The commission published its results for fiscal 2025 on June 10, 2026. There were 39 formal recommendations, up from 21 the year before, and 8,261 cases of guidance.

By type, failing to state the terms of an order was the largest category, at 6,242 cases. Of the 7,228 violations of prohibited conduct, 3,787, more than half, were late payment. In the services category, which includes software and design work, late payment made up 60.9% of prohibited conduct violations.

So most violations are not about bad intent. They come from orders that leave out what they should say, and from payments that arrive late. Both are everyday scenes in design and development outsourcing.

Where design and development orders go wrong

1. The scope is not decided. Plenty of projects start with "a nice landing page" or "improve the app." Under the Toriteki Act, you have to state what is being delivered, the price, the payment date and so on, in writing or by email. If something is not decided yet, you state why, and the date you expect to decide it. You do not have to decide everything up front. You have to say what is still undecided.

2. Acceptance never ends. The payment date must be within 60 days of receiving the work, and as short as possible. The commission's slides spell it out: the clock runs from when you receive the work, not from when it passes inspection. If your internal review drags and acceptance slips, the payment deadline does not move.

3. Revisions never end. When the contractor is not at fault, making them redo work after you have received it, without covering the cost, is prohibited. In fiscal 2025 there were 332 cases of unjust changes or redos. Agreeing on the number of design revisions at the start protects the buyer as much as the designer.

4. The scope grows, but you will not talk about price. The revision added a new prohibition: refusing a contractor's request to negotiate price and setting the price on your own. The commission's leaflet says that ignoring the request, or putting it off again and again, also counts.

5. Bank fees come out of the payment. Deducting the bank transfer fee from the payment is a violation, even if the contractor agreed to it. Paying with promissory notes is now prohibited as well.

If you hire individuals, the Freelance Act applies too

If your contractor is an individual with no employees, the Freelance Act, in force since November 1, 2024, also applies. The commission's Q&A says the buyer has to state the terms of the deal even if the buyer has no employees either. If the buyer does have employees, payment is due within 60 days of receiving the work.

If your company has an unwritten rule that "we don't need a purchase order for freelance designers," it is time to drop it.

What to add to your order template

With both laws in mind, I suggest adding these items to every design or development order:

• What gets delivered (number of screens, file formats, whether source code is included)
• How many rounds of revisions are included, and what happens after that
• When the work counts as received, and how many days acceptance takes
• The payment date (within 60 days of receipt)
• What is still undecided, and when you expect to decide it
• Who talks to whom about price if the scope changes

With those six written down, the contractor can quote with confidence. The range on quotes gets narrower as a result.

At the first meeting

If you are reviewing how you outsource, bring three things to the first meeting: the order form or email template you use now, how many days acceptance usually takes inside your company, and how often past projects saw extra revisions or added scope.

With those, we can fix the places where things usually go wrong before the next project starts.