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Japanese Contract and Anti Trust Law A Sociological
and Comparative Study 1st Edition Visser T'Hooft Digital
Instant Download
Author(s): Visser t'Hooft
ISBN(s): 9780700715770, 0700715770
Edition: 1
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Language: english
Japanese contract and Anti-Trust Law
Japanese Contract and
Anti-Trust Law
A Sociological and Comparative
Study

Willem M.Visser ‘t Hooft

E.M.Meijers Institute
of Legal Studies
Leiden University
The text of this book was defended as a PhD thesis on March 22nd, 2000, Leiden
University.
First Published in 2002
by RoutledgeCurzon
11 New Fetter Lane,
London EC4P 4EE
Simultaneously published in the USA and Canada
by RoutledgeCurzon
29 West 35th Street, New York, NY 10001
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
RoutledgeCurzon is an imprint of the Taylor & Francis Group
© 2002 Willem M.Visser ‘t Hooft
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing in Publication Data
A catalogue record for this book has been requested

ISBN 0-203-39838-6 Master e-book ISBN

ISBN 0-203-39973-0 (Adobe eReader Format)

ISBN 0-7007-1577-0 (Print Edition)
 Table of contents

ACKNOWLEDGEMENTS vii
LIST OF ABBREVIATIONS ix

1 INTRODUCTION 1
1 The Japanese interest in continuing domestic trade 1
relationships
2 Distribution agreements, definition and terminology 3
3 Unilateral termination of distribution agreements 6
4 Problems for distributors and the legal response 9
5 The main purposes of this study 11
6 Structure of this study 13
7 Discussion on Japanese attitudes toward contracts 17
8 Explanation of the following chapters 19
2 JAPANESE CONTRACT LAW AND THE UNILATERAL 21
TERMINATION OF DISTRIBUTION AGREEMENTS
1 Introduction 21
2 Japanese civil and commercial codes 22
3 Case law 25
4 Legal literature 39
5 A brief comparison with the Dutch judicial approach 42
6 Barriers to litigation 43
7 Conclusion 47
3 JAPANESE ANTI-TRUST LAW AND THE 51
UNILATERAL TERMINATION OF DISTRIBUTION
AGREEMENTS
 v

1 Introduction 51
2 Substantive Japanese anti-trust law 52
3 Public law enforcement of anti-trust law 59
4 Private vate law enforcement of anti-trust law 63
5 Complaint with the FTC 78
6 conclusion 80
4 TERMINATION DISPUTES WITHIN THE JAPANESE 83
DISTRIBUTION SYSTEM FOR LUXURY COSMETICS
A CASE STUDY: MANUFACTURERS V.
DISCOUNTERS
1 Introduction 83
2 The development of the Japanese luxury cosmetics distribution 87
system
3 Shiseido v. Fujiki 91
4 Kao v. Egawakikaku 100
5 Victories for discounters before the Tokyo district court 103
6 Leading Cosmetics Manufacturers v. Kawachiya 107
7 The first Tokyo High Court decision in favour of Shiseido 111
(september 1994)
8 The FTC recommendation against Shiseido (june 1995) 115
9 The second Tokyo High Court decision in favour of Kao (july 120
1997)
10 The Supreme Court decision (december 1998) 123
11 Conclusion 127
5 DUTCH LAW AND THE UNILATERAL 133
TERMINATION OF DISTRIBUTION AGREEMENTS
1 Introduction 133
2 The situation in the Netherlands 134
3 Dutch contract law 135
4 Anti-trust law 148
5 Applicable contract law and eu anti-trust law in the Dutch 166
distribution system for luxury cosmetics
vi

6 A DISCUSSION ON JAPANESE ATTITUDES TOWARD 179

CONTRACTS
1 Introduction 179
2 The emphasis on cultural factors 180
3 Criticism of the emphasis on cultural factors 184
4 My own conclusion 187

BIBLIOGRAPHY 195
APPENDIX I CASE LAW: JAPAN 207
APPENDIX II CASE LAW: THE NETHERLANDS 211
APPENDIX III CASE LAW: EUROPEAN UNION 213
PUBLICATIONS IN THE MEIJERS SERIES 215
CURRICULUM VITAE 219
 Acknowledgements

First and foremost I would like to express my gratitude to the late Prof. A.A.G. Peters who
was my supervisor when I started this research in 1993. He was a great inspiration to me.
His enthusiasm for the study of Japanese law motivated me to pursue this research. His
proposal that I conduct a few in-depth case studies in Japan has indeed proved to be very
rewarding.
With the financial support of a two-year scholarship from the Japanese Ministry of
Education I was able to conduct my research at the faculty of law of Tokyo University from
1993 to 1995. I am profoundly indebted to Prof. Yoshihisa Nōmi and Prof. Takashi Uchida
who were my supervisors during this period. For the many stimulating discussions with
them, which were very helpful in developing my research questions, I am very grateful. I
also wish to express my appreciation for the assistance that I received from many other staff
members of the faculty of law of Tokyo University.
In particular, I would like to thank Mitsuo Matsuzawa (the General Editor of the
Commercial Law Centre) who assisted me in my field research into the termination disputes
within the Japanese distribution system for luxury cosmetics. Through his numerous
contacts he was able to arrange the many interviews I conducted in Japan. Without his
assistance these interviews would not have been possible. Furthermore, he continuously
provided me with much of the necessary Japanese legal material. And, of course, I would
also like to express my sincere appreciation to all those I interviewed in Japan.
A grant from the Isaac Alfred Ailion Foundation enabled me to continue my research at
Leiden University and to return to Japan during November 1997 for the second part of my
field research.
I would also like to acknowledge the support I received from the Dutch law firm, Trenité
van Doorne, where I worked as a part-time employee from 1996 to 1998. Their strong
interest in my research was very stimulating. They also provided numerous opportunities
for gathering information on Dutch law and practice, which enabled me to bring my research
in Japan into perspective.
I also wish to express my gratitude to the practicing attorneys G.van der Wal and
R.F.K.Visser who provided invaluable information about the termination disputes within
the Dutch distribution system for luxury cosmetics.
viii

I am very grateful to Nobuko Karthaus-Tanaka who corrected my correspondences

written in Japanese. And I thank Peter Morris who was very helpful in proof reading and
correcting my English.
Last but not least, without the strong support and encouragement of my wife, Lucie, I
would never have been able to finish this study.
 List of abbreviations

BGB Bürgerliches Gesetzbuch

ECLR European Competition Law Review
ECR European Court Reports
FTC Fair Trade Commission
FTI Fair Trade Institute
HR Hoge Raad (Dutch Supreme Court)
HR Helena Rubinstein
KG Kort Geding
LDP Liberal Democratic Party
Minshū Saikō Saibansho Minji Hanrei shū (Collection of Civil Cases of the
Supreme Court)
MITI Ministry of International Trade and Industry
M&M Markt & Mededinging
NJ Nederlandse Jurisprudentie (Dutch Law Reports)
NJB Nederlands Juristenblad
NTBR Nederlands Tijdschrift voor Burgerlijk Recht
o. c. op. cit.
OJ Official Journal of the European Communities
p (p). page (s)
PRG Praktijkgids
Rvdw Rechtspraak van de Week (Dutch Law Reports)
SEW Sociaal-Economische Wetgeving
TVVS Tijdschrift voor Verenigingen, Vennootschappen en Stichtingen
v. versus
Vol. Volume
x
 1
Introduction

1
THE JAPANESE INTEREST IN CONTINUING DOMESTIC TRADE
RELATIONSHIPS
Since the beginning of the 20th century, starting in the 1920s, there has always been a strong
interest in domestic continuing trade relationships (keizokuteki torihiki)1 among legal scholars
and practitioners in Japan. In the first 20 years there had been much influence of German
legal doctrine upon these scholars.2 During that period the labour and lease contract were
the main representatives of continuing contracts. Yet, their interest was not so much based
on practical cases. It was not focused on the actual condition of these relationships, but
rather on general theory. There was mostly a theoretical interest in continuing trade
relationships.3
In contrast, particularly since the 1960s, many Japanese scholars and practitioners
became more interested in Japanese ‘living law’ and more empirical research was conducted
on commercial relationships within the distribution sector. For this reason, many of these
scholars started to gain more interest in distribution agreements as one type of continuing

1 Continuing contracts can be structured in a variety of ways: ‘long-term’ contracts with stipulated,
periodic deliveries and payment; long-term master contracts under which a series of subsidiary,
independent sales are made; open-ended contracts with an alternating series of obligations; or a series
of orders placed with a transaction partner on the same terms each time, within a trading relationship.
See Veronica Taylor (1993), ‘Continuing Transactions and Persistent Myths: Contracts in
Contemporary Japan’, 19 Melbourne University Law Review 371.
2 German legal doctrine had a strong influence on Japanese civil law after the enactment of the
Japanese Civil and Commercial Codes at the end of the 19th century. They were drafted largely along
the lines of the German Civil and Commercial Codes.
3 Takashi Uchida (1997), ‘Keizokuteki torihiki ni kansuru jisshōteki kenkyū no mokuteki to igi’ (The Meaning
and Purpose of Empirical Research in Relation to Continuing Trade), 627 New Business Law 6. For a
list of these Japanese studies, see Hiroyasu Nakata (1994), Keizokuteki baibai no kaishō (The Termination
of Continuing Trade), p. 20–24.
4 H.Nakata (1994), Ibid., p. 28,44.
2 CHAPTER 1

commercial contract. This was also triggered by the growing number of termination
disputes concerning distribution agreements which received their attention.4
Of a slightly different nature is the recent focus in Japan among legal scholars and
economists on continuing commercial trade relationships and Japanese trade customs
(nihonteki torihiki kankō). During the period of great economic growth in Japan there had
already been an interest in these customs, but particularly the recent trade problems
between Japan and the US have caused this interest to becomemuch stronger than
previously. During the Structural Impediment Initiative (SII) talks between the US and
Japan which started at the end of the 1980s, the US negotiators criticised Japan for its
traditional transaction practices and also argued that continuing commercial contracts in
Japan were an invisible trade barrier which prevented new market entrants from establishing
business in the distribution sectors of the Japanese economy. They further contended that
continuing contracts are a means by which unfair competition devices such as resale price
maintenance and rebates are established and that such practices are seldom made explicit
in the terms of the contract.5
Although some disagreement exists in Japan among legal scholars and economists about
what exactly constitute Japanese trade customs, they all agree that it is the existence of
many enduring trade relationships in Japan which enhances the use of these Japanese trade
customs. Many recent economic studies concerning Japan also point to the fact that
continuing transactions are integral to the operation of Japanese-style capitalism.6
The legal scholar Takashi Uchida indicates that so far among the Japanese there have
been three ways of discussing continuing trade relationships in Japan.7 In the first approach
the distinct nature of the Japanese preference for continuing contracts is emphasised and
explained by Japanese culture. Several Japanese legal practitioners pointed out that in Japan

5 See Veronica Taylor (1993), op. cit., p. 364.

6 T.Uchida (1997), o. c.,p. 6–7.
7 Ibid., p. 7–8.
8 For example see Kenji Iwaki (1995), ‘Kakaku hakai genshōka no keizokuteki torihiki’ (Continuing Trade
and the Phenomenon of Price Destruction) Zadankai (Round Table Discussion), 560 New Business Law
10. Non-Japanese such as the British sociologist Dore have asserted that opportunism may less often
threaten the integrity of a deal in Japan and have emphasised the prevalence of moralised trading
relationships of mutual goodwill in the Japanese economy. Dore also argues that the continuation or
extension of these relationships has strong moral connotations in Japan. See Ronald P. Dore (1987)
Taking Japan Seriously–A Confucian Perspective on Leading Economic Studies, p. 173–182; Also R.Dore
(1983), Goodwill and the Spirit of Market Capitalism, 34 The British Journal of Sociology 459–82;
R.Dore (1986), Flexible Rigidities,
9 Many Japanese have argued that under certain conditions the preference for continuing transactions
can be explained rationally. See for example Motoshige It ō (1992), ‘Organisational Transactions and
Access to the Japanese Import Market’ in: P.Sheard (ed.) (1992), International Adjustment and the
Japanese Firm, p. 50 and P.Sheard, ‘Introduction’, in P.Sheard o. c., p. 5. The theory of economist
Oliver Williamson had much influence upon them. See O.E.Williamson. (1986), The Economic In
 INTRODUCTION 3

continuing or extending a continuing trade relationship has strong moral connotations,

which means that one party to the contract cannot easily back out of a continuing contract. 8
A second approach, which has recently gained strength, explains the economic rationality
of continuing contracts. Because it emphasises the universal nature instead of the uniqueness
of Japanese continuing contracts, it functions as the antithesis of the first cultural approach.
A preference for dealing on a long-term basis is not seen as a cultural peculiarity but rather
as a rational risk-minimisation strategy. Continuing transactions have an internal logic and
for this reason they are also common in many other modern industrialised countries.9
A third approach, which is adopted by legal scholars, distinguishes itself by its strong
emphasis on the distinctive features of continuing contractual relationships in contrast to
the one-shot deal envisioned by classical contract law in the Civil Code. Generally speaking,
the growth of contract types such as distributorship agreements has strengthened the view
among many Japanese that the paradigm contract in Japan is not this one-shot deal but a
continuing contract. These scholars especially focus their attention on the problems caused
by the termination of continuing contracts, such as whether the termination is retrospective,
whether an advance notice period is required and whether termination is valid without
good reason. One type of contract commonly described by these scholars has been the
distribution agreement.

2
DISTRIBUTION AGREEMENTS, DEFINITION AND
TERMINOLOGY
When Japanese manufacturers wish to sell their products they have many possibilities. In
most cases they appoint independent merchants to resell the products to other wholesalers,
retailers or ultimate consumers.10
There is no codified legal definition in Japan of a distribution agreement. Moreover, it
is difficult to give a clear definition of a Japanese distributor. These independent traders
are usually called tokuyakuten, dairiten or hanbaiten.11 The exact definition of the word for
distributor, tokuyakuten, which is used most frequently, is not very clear. The vagueness

stitution of Capitalism: Firms, Markets, Relational Contracting.

10 See Yoshinori Hosoya assisted by Anthony Zaloom (1992), ‘Agency and Distributorships’, in:
Zentarō Kitagawa (ed), Doing Business in Japan, Volume II, Chapter 5, p. 4; for the variety of
distribution agreements in different industries see Kenji Kawagoe (1996), Hanbaiten keiyaku no
handobukku (Handbook of Distribution Agreements), p. 293.
11 However, there is no clear distinction between them in commercial usage and they usually mean
the same. See about these different terms: Kenji Kawagoe (1988), Keizokuteli torihiki keiyaku no shūryō
(The Termination of Continuing Trade Contracts) New Business Law (Bekkan) (Separate Volume), Vol.
19, p. 5–6.
12 H.Nakata (1994), o. c., p. 48–49.
13 See Y.Hosoya assisted by A.Zaloom (1992), o. c., p. 6.
4 CHAPTER 1

surrounding this word is caused by the various expressions used in actual business, in legal
discourse and judicial decisions. Furthermore, in trading relationships between
manufacturers and distributors the contents of the actual trade are also sometimes not very
clear.12 Usually, it is not the name which parties give to the contract that is determinative,
but the actual circumstances of the trade. Generally speaking, a distributor is an independent
trader who sells the products of his supplier in his own name and for his own profit.
In Japan the term distributorship is commonly used to describe a sales representative
who purchases products from the supplier for resale to other wholesalers, retailers, or the
ultimate consumers, with the ownership right to the goods usually passing to the distributor
at the time of delivery of the products.13 The essence of a distributorship is not the mere
repetition of purchase and sale of the principal’s products, but rather a grant to the
distributor by the principal of the right to sell the products of the supplier and a continuous
supply to the distributor by the supplier of its products to effectuate such a sales right.
It is very difficult to discover a brief and clear definition of a distribution agreement in
Japanese legal material. Most Japanese legal scholars only describe the characteristics of
this agreement without providing any brief definition. Based on these descriptions I use the
following definition of the distribution agreement:
An agreement whereby one party, the distributor, agrees to purchase and resell in his
own name and for his own account products and/or services of a certain company on a
continuing basis and agrees to co-operate with the marketing policy of that company. In
turn the company, or its importer or higher-level distributor, agrees to sell and supply these
products and/or services to the distributor.
Although ownership and control generally rest with the individual distributor, it is still
very susceptible to the control exercised by the manufacturer or higherlevel distributor,
often because of the terms of the distribution agreement. Although both parties are mutually
dependent, they are not equal. There are differences in economic power and social status,
which are also characteristic of distributorships in other modern industrialised nations.
Generally speaking, I assume that distributorships in Japan share many common
characteristics with distributorships elsewhere.14 It must be noted that distribution
agreements often represent a highly developed form of retailing in which a product or
service is bundled together with an efficient delivery system. Distributors purchase not
only the products themselves but also expertise and management advice. Producers choose
distributors who will promote the product as if it were their own. Therefore, they also
need to control the quality of service offered by the distributor. The value of the trademark
must be maintained by providing the products and services in the agreed manner.

2.1
Standard Patterns in the Phrasing of Distribution Agreements
These agreements are usually standard-form. Typical clauses of a distribution agreement
are the following:15
 INTRODUCTION 5

First, there is usually a clause which formally appoints the distributor as a tokuyakuten of
the manufacturer’s brand. In addition, there are clauses, which stipulate that the distributor
shall endeavour to expand the sales and they furthermore oblige that distributor to provide
information about its customers to the manufacturer. The standard-form contracts also
usually impose duties upon the distributor as to how to use the trade and service marks.
These contracts may also contain provisions for minimum annual purchases or resales.
Sometimes these provisions are imposed in the form of a legal obligation but in most cases
they are only included in the form of targets which the distributor shall endeavour to reach
(doryoku mokuhyō). Occasionally, the contracts set out the limits on the amount of credit
extended to the distributor but in most cases the manufacturers do not wish to clearly
express these limits.
These contracts may also include non-competition clauses and sales territory clauses
which make the contracts exclusive. The more exclusive the transaction the more
interdependent the parties will be. Finally, typical clauses are those in which the
manufacturer shall provide the distributor with information about the products and the
market, shall cover part of the advertisement costs and shall train the distributor’s personnel.
In most cases these standard-form contracts also set out the contract period and include
automatic renewal clauses. Furthermore, they usually include intermediate termination
clauses, which entitle one of the parties to cancel immediately in case important obligations
are not honoured by the other party.

2.2
Franchise Agreements
A special distribution agreement is the franchise agreement where the manufacturer
exercises the most control over the distributor.16 In the franchise agreement the ‘franchiser’
usually has almost unlimited decision-making authority over the ‘franchisee’. It provides
the marketing concept, product ideas and design and develops procedures for delivering
the products. In return for the payment of royalties franchisees may utilise the ‘bundled’
services and/or products provided by the franchiser which are to be resold under a certain
image which is determined by the franchiser. It must be noted that franchising systems have
increased very rapidly during the 1990s within Japan.17

2.3
Differences with other Agreements within the Japanese Distribution
Sector
Finally, it is important to distinguish the distribution agreement from the commercial agency
agreement (dairishō keiyaku) and the consignment sales agreement (itaku hanbai keiyaku).

14 See also V.Taylor (1993), o. c., p. 372.

15 Kenjir ō Egashira (1992), Shōtorihiki hō (Commercial Trade Law), p. 207–209.
6 CHAPTER 1

First, a commercial agent refers to an independent trader who makes repeated sales of
products of his principal. He has no ownership right to the products he sells and he does
not purchase products from his principal. He sells products for the account of his principal
and in return he receives a commission from his principal. In general, from the standpoint
of termination the difference between distribution and agency agreements is that the amount
invested by an agency in its business and in promoting the principal’s products is likely to
be lower than the amount invested by a distributor.18
Second, the consignment sales agreement differs from a distribution agreement in that
the buyer, usually called a commission agent (toiya), sells the goods in his own name but
for the account of the producer. The producer consigns the goods to the buyer but retains
ownership of the goods. Where goods remain unsold, these can be returned to the seller
at no cost to the buyer. The producer bears the market risk and in addition he must pay a
sales commission to the commission agent. The latter is a consignor in relation to the supplier
but a seller in relation to the purchaser.19
Important factors demarcating the distributor from the commercial agent and
commission agent are not the commercial usage of the name of the entities or the name of
the contract but the legal factors, such as for whose account the trader sells the products,
who bears the loss for unsold products, who retains the title to the products and what he
receives as his income.20
Several Japanese legal practitioners have pointed out that distribution agreements are
far more frequently used within the distribution sector for selling products than commercial
or commission agency contracts.21 Moreover, terminations of such agreements have not
caused as many disputes as terminations of distribution agreements.

3
UNILATERAL TERMINATION OF DISTRIBUTION
AGREEMENTS
In such a highly competitive economy as the Japanese one terminations of distribution
agreements or the halting of supplies have occurred frequently.22 In most recorded cases
it concerns manufacturers who cancelled these agreements. Sometimes this led to litigated
termination disputes, which have been analysed in detail by many Japanese legal scholars.
These disputes especially involved medium and small-sized companies who usually
terminated in a more abrupt manner than large manufacturers leaving the distributor no
option but to litigate.23 By contrast, in only a limited number of cases have distributors
cancelled the agreement with the manufacturers. Although these may have led to some
termination disputes they fall beyond the scope of this study. I decided to focus on the

16 See also K.Egashira, Ibid., p. 203.

17 See for recent figures: M.Sugawara, J.Imai, and K.Hosoda (1999), ‘Furanchaizu no mirai’ (The
Future of Franchising) in: Nikkei Business 24 May 1999, p. 22–33.
 INTRODUCTION 7

terminations by manufacturers since these are much more frequent and lead to more
problems than terminations by distributors.
In recent years frictions between manufacturers and distributors have increased.
Recently, there have been significant pressures both to lower prices and to restructure
distribution channels in Japan. This has put a greater strain on many continuing commercial
contracts, which have been described so extensively in Japanese literature.24 Economic
pressures have not only caused further restructuring of distribution systems and subsequent
terminations of distribution agreements by manufacturers, but also a greater volume of
termination disputes.

3.1
Recent Causes for Unilateral Terminations by Manufacturers
The most important factor is the current recession. After 25 years of enormous economic
growth,25 at the end of the 1980s the ‘bubble’ economy had well and truly burst. This
caused a long period of stagnant economic growth which started in the early 1990s and led
to the current recession. It has left Japanese consumers with less purchasing power than
before. Therefore, pressures to sell at lower prices have increased, even leading to
deflationary pressures throughout the economy. This has in turn triggered the sudden
growth of discounters in the 1990s which had many repercussions in the distribution sector.26
Although there may be examples of manufacturers and distributors working even more
closely together in the current poor economic climate in order to survive, the exact opposite
also occurs. While trust in one’s business partners and standards of co-operation may work
in good times, they cannot always be counted on when the economic tide turns.27 The
current turndown has particularly struck small businesses such as distributors. Large
companies have cut back on distributors and have sometimes stopped providing goods to
them. The distributors face hard times and sometimes even bankruptcy and have increasingly
sought the help of the civil courts, since they no longer feel obligated to their long-term
partners who have abandoned them for several reasons.
Increasingly, lawsuits for specific performance and claims for damages for breach of
contract are being filed because of financial losses. Facing the possibility of recovering a

18 Yasuzo Takeno (1997) in: Agustm Jausàs (ed), International Encyclopedia of Agency & Distribution
Agreements, p. 169.; Also R.Christou (1996) (ed.), International Agency, Distribution and Licensing
Agreements, p. 489.
19 This transaction type is usually identified as a traditional contracting practice and is currently
gradually decreasing. See also about this transaction type V.Taylor (1993), o. c., p. 364–367.
20 Yasuzo Takeno (1997), o. c., p. 167.
21 Ibid., p. 168; K.Kawagoe (1988), o. c., p. 10; K.Egashira (1992), o. c., p. 205–206.
22 For example, see Kenji Iwaki and Noboru Kashiwagi (1995), ‘Kakaku hakai genshōka no keizokuteki
torihiki’ (Continuing Trade and the Phenomenon of Price Destruction) Zadankai (Round Table
Discussion), 560 New Business Law 8–10; See also V.Taylor (1993), o. c., p. 357.
23 See Kenji Iwaki (1995), o. c., p. 10.
8 CHAPTER 1

loss in legal proceedings can outweigh the disadvantages of litigation. They may have
invested heavily in the relationship. Furthermore, poor economic conditions decrease the
possibilities for a compromise since the parties have less leeway (extra cash) for such a
compromise. They prefer to risk litigation rather than settle.28 Special reference needs to
be made to the fact that the recession and the resulting decrease in consumer demand has
recently caused a great number of disputes within the rapidly growing franchise industry.
There has been much friction in the relationship between franchisers and franchisees which
has sometimes led to termination disputes.29
Another economic factor, which increases pressures upon the distribution sector, are
the efforts for more deregulation starting in the 1990s. This increases competition and the
need for manufacturers to restructure their distribution systems.30 A good example is the
replacement of the ‘Large Scale Retail Store Law’ by a more lenient law which enhances
the possibilities for opening large stores. It needs to be added that these factors enhance
the possibilities for foreign companies to start business in Japan, which only increases with
the competition within the distribution sector and the resulting restructuring.31
Finally, a third factor increasing pressure on the distribution sector and resulting in more
termination disputes is of a legal nature. This is the stricter enforcement of the Japanese
Anti-monopoly Act which is, in part, attributable to outside pressure from the US As will
be explained below the stronger enforcement of the Act has also triggered more distributors
to take legal measures after the distribution agreements have been terminated.
Furthermore, it is necessary to refer to the current re-evaluation of the exemption system
under which certain products were exempt from application of the Anti-monopoly Act
provisions relating to resale price maintenance. For an increasing number of products the
exemption from these provisions has been eliminated.
It must be further noted that all the above-mentioned factors also exert pressure on many
trade customs which created much mutual dependency and which were widespread during
the long period of high economic growth. These include rebate programs; quoted price or

24 Kenji Kawagoe, Kenji Iwaki, Noboru Kashiwagi and Kōji Shind ō (1995), o. c., p. 4–19.
25 I have not compared the situations in times of previous recessions, but the current recession is the
worst since World War II, resulting in more pressure on continuing contracts than previously.
26 Kenji Iwaki explains that the growth of discounters forms the third and most influential revolution
in the Japanese distribution sector since World War II. It has had more impact than the rise of super-
markets or convenience stores which are considered to constitute the first and second revolution
within the distribution system. See K.Iwaki (1995), o. c., p. 7.
27 See for a good example: Michael Gerlach (1990), Trust is not Enough: Cooperation and Conflict
in Kikkoman’s American Development’, 16 Journal of Japanese Studies 422.
28 Joseph Davis (1996), Dispute Resolution in Japan, p. 139–141; N.Kashiwagi (1992), ‘Nihon no torihiki
to keiyaku hō’ (Japanese Trade and Contract Law), 500 New Business Law 22–23. In Japan, as in other
modern industrialised countries, it is especially in the termination stage of the continuing commercial
contract that law might matter. The desire to terminate can often provide the impetus for driving
dispute resolution into the formal legal arena. At this stage, the parties may not shy away from legal
action because they accept that the commercial relationship will collapse.
 INTRODUCTION 9

suggested retail price systems, the dispatch personnel system and returns to manufacturers
of retailers’ unsold products.32

3.2
Common Types of Unilateral Termination by Manufacturers
According to Japanese legal practitioners the following two types of termination occurred
regularly in the 1990s.33 One type of termination occurs when manufacturers wish to cut
costs. In these cases the manufacturer finds a better alternative or takes distribution into
its own hands, thereby expending with the services of the distributor. This usually happens
after the distributor has expanded the sales of the manufacturer’s products and the market
has reached saturation point. Since many distributors in Japan are very inefficient, which
causes high retail prices, this type of termination has always occurred frequently, and can
be considered to be a natural process.34 However, recently this type of termination has
undoubtedly increased when the pressures to lower prices have become so much stronger.35
One other common type of termination relates much more to the current pressures
upon the Japanese distribution system. This type of termination occurs when leading
manufacturers cancel contracts with distributors who sell the products at prices which are
lower than those agreed upon with the manufacturer. These terminations have been brought
about by the rise of regular distributors which turned themselves into discounters starting
in the 1990s. It concerns distributors who want to increase their competitive power and
expand their sales by lowering resale prices. This second type of termination frequently
occurs in industries where leading manufacturers enjoy a great deal of control over the
majority of their distributors.36 They want to keep resale prices at a certain level and decide
to terminate the contract. Furthermore, they might have been subject to pressure from
regular distributors which are forced to compete with such discounters.

4
PROBLEMS FOR DISTRIBUTORS AND THE LEGAL RESPONSE
Distributors sometimes take legal measures after a termination of the contract because
terminations can be very damaging to them. Manufacturers can cause a great amount of

29 See M.Sugawara and S.Saito (1998), ‘Furanchaizu hikari to yami’ (Franchise, Light and Darkness)
in: Nikkei Business 23 February 1998, p. 23–24; Also H.Tanaka and K.Fukazawa (1998) ‘Furanchaizu
no jigoku’ (The Franchise Hell) in: Shūkan Daiyamondo 20 June 1998, p. 24–45.
30 See on the increasing dependence on civil remedies before the civil courts during this period of
deregulation: Kenji Kawagoe, Hiroshi Takahashi, Yoshihisa Nōmi, Kazuhiko Bandō (1998), ‘Kisei
kanwa jidai ni okeru hō no jitsugen’ (Law Enforcement in a Period of Deregulation), 632 New Business
Law 4–16; 633 New Business Law 43–51. (Zadankai) (Round Table Discussion).
31 Nihon Keizai Shinbun (ed.) (1993), Ryūtsū gendaishi (Modern History of Distribution), p. 358–
359. The factors which I have referred to are by no means exhaustive. But an overall overview of all
the relevant factors falls beyond the scope of this study. For example, the strong growth of large-scale
retailers can also be regarded as influential. See Roy Larke (1994), Japanese Retailing.
Other documents randomly have
different content
The run up along the reef was made with the Betsy Anne on the
inside and the Fish Hawk two hundred yards off the starboard
quarter. But the swordfisherman could see that the race was lost and
he was only keeping abreast while he thought of a new plan of
action. But even while he was thinking it over the sloop came even
with the break between the rocks and although the water raced
through the opening at express speed and lashed the boulders on
either side, Old Mitchell jammed down the helm, hauled in on his
sheet and with a swish of canvas and the creaking of blocks, the
Betsy Anne came about and slipped through and into the
comparatively smooth water inside.
“Talk about a sailor!” cried Ray, as Mitchell headed the Betsy Anne
north again toward the little beach. “Talk about a sailor! Why, there
isn’t a man along the Maine coast who could have done it prettier,
Mr. Mitchell.”
“Tut, tut, hit hall comes o’ my known t’ wies o’ me Betsy Hanne, me
boy,” said the lobsterman, but he was plainly pleased with the
compliment.
A few minutes later the little sloop came to anchor and the crew of
three rowed to the beach in Captain Eli’s dory. And as the trio
stepped ashore, Ray turned and gazed at the disappearing Fish
Hawk.
“Well, we beat you, Uncle Vance, and I hope I’ll never see your old
boat again,” he said.
But he little knew under what circumstances he would see his uncle’s
vessel once more.
 CHAPTER XI
RAY’S FIND

F or some time following their adventure with Warden Williams’

lobster patrol and their subsequent chase by the Fish Hawk, Ray
and Jack were kept rather busy about the construction camp, for the
lighthouse builders were working at full speed and taking advantage
of the excellent August weather. Mr. Warner was staying awake all
hours of the night, working out construction problems in his little
office, and of course the two lads had to keep his place in order and
do a great deal of checking up after these sessions of activity.
They paid daily visits to Cobra Head, also, to watch the progress of
the work there, and during each of their visits they learned
something new about the problems of erecting a sea-swept
lighthouse. In spite of the excellent weather that the workmen had
been blessed with, it seemed to the two lads that they were making
unusually slow progress. In truth, though they had been laboring a
little more than six weeks there were but four courses of stone laid.
Jack remarked about this to Mr. Warner on one occasion when the
engineer had accompanied the boys to the rocks.
“Huh,” said Mr. Warner, “if you think that is slow just look up the
construction records made on other lighthouses and you will
understand what slow work is. We’ve been particularly fortunate
here in being so well above the water. Why, there are some jobs
where the tide and waves will only allow the men to work a few
hours every month, and then they have to accomplish their task with
one hand on a life-line, so to speak.
“Look at the conditions that the workmen were forced to contend
with while building Minot’s Ledge light, for instance. The old rock
was but three feet out of water at the best tide and the engineers
had to build a steel structure over the ledge and attach life-lines to it
and station a lookout to watch for big waves. When the lookout saw
a large one coming which he knew would curl over the rock he
shouted a warning and every man grabbed his life-line and threw
himself flat upon the rock to keep from being washed overboard.
They always worked in wet clothes and they were mighty lucky to
have whole legs and arms after a wave had passed. Why, they didn’t
get in but 130 hours’ work the first year and it took five whole years
to build the beacon.”
“Jiminy, that must have been some job,” said Jack.
“You bet it was,” assured Mr. Warner. “Why, they had to think of all
sorts of tricks to keep old Neptune from beating them. When they
were building the foundation on the ledge, they had to bring bags of
sand out and construct veritable cofferdams about the spot that had
been pared down to hold a building block. Then every time they put
cement onto a block to hold the next one in place they had to put
cheese cloth over the cement to keep stray waves from sneaking up
and licking the block clear before the new block could be put in
place.”
“Did they take the cheese cloth off before they put the next stone in
position?” asked Ray.
“No, they let it stay. The cement oozed through the mesh of the
cloth and gripped the block just the same,” said Mr. Warner.
“Hum, that’s a queer wrinkle,” said Jack.
“Well, we may do some of that work here the early part of the Fall
when the tides run unusually high and the seas get to curling up on
us. Yes, we’re mighty lucky in having the top of the Head so high
above water. Also we have been fortunate so far as weather
conditions are concerned. Goodness knows some lighthouse builders
have had to fight storms almost all the time. Look at the crew that
undertook to build the famous Tillemook light under Ballantyne.
They fought the weather incessantly, and they even stuck to the
rock during a blow that developed into a real tornado which
smashed and carried away the storehouse in which their provisions
were kept. It was several weeks before more provisions could be
brought to them, and in the meantime all they had left was some
hard bread and coffee and a little bacon. Those are conditions to
work under, lads. Why, this is like dallying in the lap of luxury
compared with Tillemook, Minot’s Ledge, Eddystone and the rest of
the difficult marine engineering stunts that have been undertaken.”
“Lighthouses have to be mighty strong structures, don’t they?” said
Ray, who had been examining the way the heavy stones were
interlocked, cemented, and then double fastened with iron “dogs.”
“Strong? I should say so,” assured the engineer. “Why, some of them
have to stand wind and waves that tear solid stone to pieces. I
remember hearing once of a light over in England, or Ireland, rather,
on the Fastnet Rock, the first light steamships sight on their way to
England. In a storm a big section of the rock itself, three tons or
more it weighed, was torn loose, but before it could fall into the sea,
a second wave seized it and hurled it into the air squarely against
the lighthouse tower on the top of the rock.”
“Did the tower stand up under that?” exclaimed Jack in wide-eyed
amazement.
“Yes, it did, and many another beating almost as bad. Why, they say
that storms are so heavy over there that the tower trembles and
sways under the force of wind and water. Cups have been jarred
from the table to the floor, glasses knocked down and broken, and
many other disagreeable things have happened. Yet the tower stood
up under it all and still stands, although there has been a new tower
erected since. I think that one of the famous Stevensons had
something to do with it.”
“Stevensons?” said Jack. “Oh, I’ve heard of them. They were related
to the author, Robert Louis Stevenson, weren’t they?”
“Yes,” said Mr. Warner, “the author of Treasure Island came from a
family of renowned lighthouse builders. There are many lights along
the Scottish and English coast that stand as monuments to the skill
of the author’s kinsmen. Among them are the Chicken Rock light on
the Isle of Man and Skerryvore.”
“Tell us, Mr. Warner, have many lights been swept away into the sea
by storms?” asked Jack, as he and Ray started to climb into the little
cable-car that carried them over the aerial railway back to shore.
“Indeed, there have been many. Some have been swept away so
completely that only a twisted steel bar or two remained to tell that
a light once marked the spot. And always the keepers disappear with
them for they are too brave to desert their posts even in the face of
death. Take the fate of the keepers of the Grand Manan, which was
located not so very far north of here. The light and men disappeared
in a storm and never were heard of again. The first Minot’s Ledge
light in Boston harbor went the same way and with it went the
keepers too. Oh, yes, many a brave man has gone to his death in
the Lighthouse Service.”
Such little talks as these with the engineer and the workmen added
interest to the boys’ life on the island and the days passed as if on
wings. Captain Eli, the lighthouse keeper, also told them tales of the
service and the lads spent many an hour in his company while he
was on watch in the tower or off duty in his little cottage. Taking it
all in all the boys were having quite a delightful time, and if it had
not been for Ray’s periodical “blues” (as Jack called them) over his
inability to fit another model of his non-sinkable lifeboat together,
neither lad would have had a single thing to complain about.
As August wore on Ray’s blue spells occurred more often, however,
for he realized that in a few weeks or a month at best Jack would be
leaving Hood Island to return to school, while he—well, he didn’t
know exactly what he would do. From all appearances there would
be no school for him, as much as he wanted to attend. Indeed,
sometimes he grew quite beside himself with his unhappiness and it
was all that Jack could do to change his frame of mind.
His lonesomeness was emphasized frequently too when a lighthouse
tender put in at the island to bring additional supplies and any mail
that was meant for the working men. On every visit of the mail
steamer Jack was almost certain to have from two to a dozen letters
from his father and schoolboy friends who were scattered over the
country during the vacation period. But the pleasure of receiving
letters was denied Ray simply because he had no friends and
relatives in the outside world to communicate with him.
Aside from the visits of the lighthouse tender no vessels touched at
the island at all. The lads, almost daily, saw the trails of black smoke
above the horizon, left by transatlantic steamers traveling the water
lanes across the ocean, but usually these craft were hull down by
the time they reached Hood Island. Fishing vessels bound for the
banks were occasionally sighted also, and once in a while a stray
swordfishing schooner or yawl would hover about the island for
several hours in search of their elusive prey.
Once or twice the lads also sighted the trim little Betsy Anne,
Mitchell’s boat, dancing on the waves far outside the reef. Since their
adventurous two days with the timber-legged lobsterman the lads
had always intended walking across the island and locating his
house, but nearly two weeks passed before they could find time to
pay him a visit.
And strangely enough, on the very day they had planned to cross
the island (they had cleared up all their work and Mr. Warner had
given them time off), the Betsy Anne came scudding up inside the
reef, towing a dory. The small boat was piled high with lobster traps
as was the cockpit of the little sloop, and the boys wondered what
the old seaman was about.
From the edge of the cliff they hailed him while he was yet some
distance off. And when he saw them standing there he hallooed
back, and then quite suddenly brought the Betsy Anne up into the
wind and waved to them to come down to the beach.
When the boys had made their way down the winding path from the
promontory to the sandy strip, the old lobsterman was waiting for
them, having rowed ashore in his seemingly overloaded dory.
“Why, blime me; blime me and blow me, say I, where about are you
younkers been a-keeping of yersel’s? Blow me an’ sink me, hif ’e
ain’t t’ most onsociablest coves as ever was. Why’n’t ’e ever come
fer t’ see Hole Mitch, I axe ye?”
“Why—well—you see—the truth is we were going to walk across the
island some time to-day—truly we were—don’t grin like that as if you
doubted us.”
“I ain’t given’ for t’ doubt ’e, I ain’t. But seein’ as ’ow I spends most
o’ my days an’ considerable o’ my nights a-tryin’ fer t’ make a livin’ I
ain’t t’ ’ome much. Like es not ye’d never been findin’ o’ me ’ome hif
ye ’ad a-come ’crost. I’m hup at four, I are, and hout hin me hole
Betsy Anne a-tendin’ o’ my traps ’till hits too dark fer t’ see.”
“What are you doing up at this end of the island? I never saw you
come up this way before,” said Jack.
“Right an’ so, right an’ so. Never does I come hup ’ere fer t’ fish, me
bein’ given t’ string my traps hout to t’ sow’east’ard. But lobsterin’
been s’ poor hin my usu’l wisinity that I guest I’d try hout a score o’
traps to t’ nor’west’ard, seein’ as ’ow t’ bottom’s likely hout there.
I’m goin’ fer t’ try hout these ’ere traps. That’s where I’m bound.
Want t’ ship hon this ’ere cruis’, lads?”
“Do we? You bet we do. But—but, will that dory hold all of us? She’s
loaded down now,” said Jack.
“Tut, tut, them traps is light. Come along, we’ll make a day of hit, er
we’ll make as much o’ a day of hit as t’ weather ’ll let us, fer she’s
goin’ t’ blow some this a’ternoon,” said Old Mitchell, making a place
for the lads in the dory.
Presently the boys tumbled aboard the Betsy Anne and a few
minutes later they were under way. Up along the island coast they
sped, the tumultuous currents that slipped between the reef and the
land making the little sloop dance and yaw in surprising manner. As
they sped past the promontory and plunged tossing and pitching
through the line of breakers that marked the joining of the mill race
of water with the ocean just off the point of the high promontory,
Jack and Ray hallooed as loud as they could to the workmen on
Cobra Head and waved a passing salute. Mr. Warner was on the rock
and when he saw the lobsterman’s sloop go dancing by he took off
his hat and waved a farewell to them.
Beyond the breaker line were the long rolling ground swells of the
broad Atlantic, over which the little craft scudded swiftly. Out, out,
oceanward they raced, the boys thoroughly enjoying the sail. For
two miles to the northwest Old Mitchell kept a straight course and
watched the water with critical eye. Finally, after he had prefaced his
remarks by spitting over the side, he said:
“Well, ’ere’s es good a place es any fer t’ try a trap. ’Ow say ’e t’
puttin’ one ower t’ side?” Then heading the sloop into the wind he
examined one of the traps in the stern of the Betsy Anne, and after
seeing that the little mesh bag inside the slat-like prison was well
baited with dead fish he shoved it overboard. Two stones in the trap
caused it to sink immediately and the lobsterman played out the
warping line until he reached the point where a big stone jug was
fastened. He examined the stopper in the jug to see that it was
airtight, then tossed this over too, and a little later the black and
white buoy, to which the end of the line was fastened. This floated
away from the sloop, bobbing and dancing in a fascinating manner.
“There,” said Mitchell, “I ’opes as ’ow when I comes t’ see ’e t-
morrer er t’ next day ye’ll ’ave a ’alf dozen o’ t’ biggest lobsters es
ever was.”
“We hope the same,” said Ray with a grin.
“Thank ’e, lad, thank ’e,” said Mitchell. Then he added, “’Eavens
knows I need ’em. This ’ere is t’ sheddin’ season and hits t’ blimdest
time o’ year ever fer hus lobster coves.”
“Shedding season?” said Jack. “Do lobsters shed their shells too? I
thought only crabs did.”
“They’re t’ sheddinest fish as ever was,” said the lobsterman. “I’ve
’ad ’em shed over night on me. Put a lot o’ big uns in t’ lobster car
one day an’ when I comes t’ wisit ’em t’ next day there’s ’alf o’ ’em
just crawled hout o’ their shells. An’ they ain’t no good arter they’re
shed neither. Just es soft es putty.”
“That’s mighty interesting,” said Jack. “Tell us something about
lobsters, will you, Mr. Mitchell? How do they live? How fast do they
grow? What do they—?”
“Tut, tut, not s’ fast, lad,” said Mitchell, holding up his hand.
“Lobsters is pecooliar fish, seein’ ’as ’ow their chise allus runs t’ livin
on rock bottom. Ye’ll never find a lobster as is livin’ hin water wi’ a
sand bottom. They eats most heverythin’ too; that is heverythin’
what’s dead. Mostly they eats dead fish, an’ t’ best bait fer ’em is
flounders. That’s what I baits my traps wi’. They’re ’eathens too; jest
reg’lar cannibuls. I’m meanin’, by that, hif I puts three or four
lobsters as ain’t got a little wooden plug stuck hin their nippers, hin
my car together, why the next mornin’ I finds that they’ve chawed
each other up in fine shape. Bite each other t’ pieces jest like
cannibuls does.
“As fer growin’, why, lobsters grows habout a hinch er a hinch an’ a
’alf a year. When they sheds as ’ow I tol ye, why then t’ new shell as
grows on ’em is habout a hinch too big for ’em; like a pair o’ daddy’s
pants as is on a younker. Durin’ t’ year their body grows an’ fills hup
t’ hinch o’ space, an’ next Summer they’re ready fer t’ shed and
grow another hinch.
“When a lobster sheds ’e goes an’ crawls down hin t’ kelp an’ lives
there ’till ’es shell grows hon agin. If ’e didn’t ’e’d get et hup by
fishes as is lookin’ fer soft lobsters. In Maine ’ere we can’t take no
lobsters what ain’t growed ten hinches long. Them’s called
‘counters.’ Nine hinch lobsters, what is sold in N’York and Bosting is
called ‘Nippers’ and lobsters less ’en nine hinches is called just plain
‘bugs.’ An’ hif a Maine cove as catches lobsters ’as heny bugs hin ’es
lobster car when Warden Williams come ’round ’e’s liable fer t’ get
fined a dollar fer every one o’ ’em as is there.”
“Jiminy, is that so?” exclaimed Jack, who had been listening eagerly
to all Mitchell had said. “How big do some lobsters grow?”
“Well, lad, an huncommon lobster is one as is seven or height
pound, though I did see one as weighted twenty-seven pounds
down Portland wi’ last time I went there. But when we gets a three
or four pound lobster ’ere we don’t raise no ’oller habout bein’
cheated,” said the old salt dryly.
“I think I remember reading somewhere about how, when a lobster
loses a leg or a claw a new one begins to grow on immediately. Is
that so?” asked Jack.
“Right an’ so lad, right an’ so. I’ve ketched ’em as ’ad one claw
which is a big one and t’other which ain’t ’alf as big, en I’ve seen big
lobsters wi’ a couple of little small legs as looks ri-dic’lus, too.”
“The Winter season is the best, isn’t it, Mr. Mitchell?” said Ray.
“T’ best for ketchen ’em, but hit ain’t t’ best weather t’ be hout a-
hauling hof t’ traps. Why, lads, sometimes hits been s’ cold as me
nippers ud freeze fast t’ me ’ands and many’s t’ time I’ve ’ad t’ hang
me whiskers ower t’ back o’ a chair near the fireplace when I got
’ome so’s t’ git t’ hice outen ’em.”
The mental picture of the old lobsterman sitting with his beard
hanging over the back of the chair tickled the lads, and they roared
with laughter, much to the amusement of the one-legged fisherman.
“Lobstering is mighty good sport though,” said Ray. “I’ve been out
with the fellows down Ascog way and had a heap of fun. The
lobstermen down that way are bad ones though, and they are
constantly getting into trouble with one another. They have regular
feuds sometimes; the French Canadians and the Yankees. I
remember Uncle Vance telling a story once of how one fellow
planted a half dozen lobster traps near an island and then hid behind
a rock until he saw one of his rivals, a French Canadian, haul one of
his traps. He blazed away at him from shore with a rifle he’d taken
out there, and the Frenchman shot back with a revolver. They had a
hot time until the Frenchman got hit in the knee.”
“Them ’air Cannucks is t’ natchralest lobster piruts as ever was,” said
Mitchell with emphasis.
Thus did the crew of the Betsy Anne chat as they sailed here and
there in the water north of Hood Island while Old Mitchell dropped
his twenty-odd lobster traps overboard. The lobsterman explained,
as he finished this task, that these were merely by way of trying out
the new location, and that if it proved a good fishing ground he
would shift a hundred or more traps north of the island. This amount
he said was about one-third of the total number he owned. He also
assured the lads that three hundred lobster traps were about as
many as one could handle conveniently and that some lobstermen
limited their string to half that number.
By high noon the old sailor had deposited all of his traps and was
headed back toward the island. Past the northern end they sailed
and down the west coast. In the lee of the island the ocean was a
great deal calmer, for the mighty currents that swept the other side
did not reach them. The shore did not seem as rocky either, and
sandy beaches were quite numerous.
When they reached the extreme southern end the lads saw a large
cove, and on the shore, above a short sandy beach, the neatest little
cottage they had ever set eyes upon.
“Wow,” said Jack, “what a corking little place. That must be your
home, Mr. Mitchell.”
“Right an’ so, right an’ so. ’Tis t’ place I built me when I first came
’ere nigh onto twenty years ago. But we won’t stop now, lads, even
though ’tis dinner time. Ye see I been heyein’ hof them air clouds off
hin t’ nor’east there. Hits a settin’ fer t’ blow, an’ I want t’ git some
bait afore t’ waves git s’ ’igh es t’ make hit on’com’ft’bul fer t’ fish
outen t’ hole Betsy Hanne. I’m goin’ hoff that air strip o’ sand there
where t’ flounders ’angs hout. Flounders is fish as likes t’ nose ’round
hin t’ mud fer their food an’ they honly lives hon sandy bottoms.
You, lads, kin ’andle a line er two fer me, can’t ’e? Then, arter we
get hour bait we’ll go ’ome an’ git somethin’ t’ eat. ’Ow’s that strike
’e?”
“Fine,” said Ray.
“I’ll be ready for the eats,” assured Jack.
For an hour the three in the Betsy Anne fished diligently. Each one
handled two lines and was kept busy, for the flounders bit
ravenously. But the fish were all small and it took a great many of
them to fill the big box that Mitchell used to hold his trap bait. And in
the meantime great gray storm clouds were gathering in the
northeast and the wind was becoming higher every minute. The long
rolling swell changed to choppy seas that made the little sloop dance
about like a cockleshell, and the lads had difficulty in attending to
their lines and maintaining their places in the boat at the same time.
Finally Old Mitchell announced that the seas were running a little too
high for comfort, and since the bait box was nearly full he thought it
best to up anchor and set sail for the cove where his cottage was
located. This suggestion pleased both Jack and Ray for, to tell the
truth, the bucking of the boat was getting really uncomfortable.
Mitchell put his main sail up with a reef in it, which Ray helped him
tie, and without a jib ran for the shelter of the little harbor in front of
the cottage.
Inside the cove the wind seemed less fierce and the water less
violent, and in a few moments the Betsy Anne reached the square
mooring buoy to which she was fastened. It took but a few moments
to make the little craft snug in her berth with her sails furled, and
after this operation Mitchell and the lads rowed ashore in the dory.
Although the wind was blowing hard and rain occasionally spattered
down, the lads found time to pause and admire the cottage and its
surroundings before accepting Mitchell’s invitation to enter.
The old mariner had spent a great deal of time and labor about the
place, from all appearances. There was a little dooryard in which had
been cultivated the tiniest lawn the boys had ever seen. In the
center of this was an old dory with bulging sides. This had been
filled with earth and converted into a big flower box and over the
gunwale flowers and trailing vines dangled in profusion. The cottage
itself was painted white and looked unusually inviting, considering
the present weather conditions.
Old Mitchell led the way into his little dwelling and immediately set
about preparing a dinner from his well-stocked pantry shelves, while
the boys inspected his quarters. There were but two rooms to the
cottage, the largest of which was kitchen, dining-room and living-
room all in one. But, though the apartment served these many
purposes, it was scrupulously clean, and resembled very much
Captain Eli’s cottage over at the lighthouse.
It was apparent from the first that the place was the dwelling of a
seafaring man, for painted yellow canvas covered the floor and
marine prints hung about the wall. There was a picture of Farragut’s
fleet in action, with the intrepid commander clinging to the rigging
as he was supposed to have done during most of his battles. Then
there was a picture of the burning of the frigate Golden Horn, a print
of the Shannon bringing the Chesapeake into Halifax Harbor and a
score of other decorations of a similar nature.
But the section of the wall above the chimneypiece was the most
interesting to the boys, for over the shining stovepipe hung a great
old-fashioned cutlass with its brass hand-guard and its black leather
scabbard, and there too was Mitchell’s famous old “barker” sticking
from its holster. Besides these, a dirk and several vicious-looking
knives which the old salt had gathered in the “Inges” were made to
serve a decorative purpose.
On the right hand side of the mantelpiece itself was a model of a
full-rigged ship bearing in gilt letters the name “H.M.S. Bulwark.” The
tiny little craft looked very majestic with all her sails set, and the
boys were attracted to it immediately. And to balance this on the
other side of the mantel was another craft of very strange
appearance. In fact, it was of such a peculiar design that Jack was at
a loss to know just what to make of it when he saw it. But the
moment Ray caught sight of it he gave a loud cry of delight.
“Jack, Jack, look. Jove, there’s my model; my lifeboat, all safe and
sound. Oh, Mr. Mitchell, where did you get it? By George, can it
really be mine? How—where—?”
“’Ere, ’ere, what ’er ye jabberin’ habout,” exclaimed Mitchell, who
was cramming an armful of wood into the stove preparatory to
making coffee.
“Why that, that over there—the model—the little boat. Where did
you get it? It’s mine, mine. I made it. Oh, Mr. Mitchell, how did you
ever get hold of it?” cried the delighted youth as he rushed across
the room and took the metal boat down from the pedestal Mitchell
had made for it.
“That air punkin seed—that air tin kettle o’ a wessel; is that what
ye’re a-meanin’? Why now, blime ’e, ye say hit’s yours? Well, mebby
’tis. Mebby ’tis, seein’ as ’ow hit ain’t mine ’ceptin’ by right o’
salvage, which I ain’t claimin’ hif ’tis yours. ’Ere’s a go fer ’e, ain’t
hit?” said the old fisherman as he scratched his head in perplexity.
“Salvage? Do you mean you picked it up in the water?”
“Right an’ so, lad, right an’ so. ’Ere I war hout a-tendin’ of me traps
one day when this ’ere thing comes a-bobbin’ an’ a skippin’ ower t’
water, lookin’ queerer ’n all git hout. Says I t’ myself, says I, ‘’Ere’s a
strange craft, Mitchell, what ain’t got no owner aboard; why fer
don’t ’e inwestigate hit.’ So I hup an’ salwages hit and blime me hif
she ain’t t’ queerest looking wessel as ever I sot heyes on. Says I t’
myself, says I, ‘Now, hif this ain’t t’ most pecooler tin punkin seed as
ever I clapped heyes hon, I’ll eat hit.’ An’ seein’ as ’ow she war s’
queer I tikes ’er hinto port an’ stows ’er hup longside o’ t’ hole
Bulwark, I does.”
“Say, but that’s funny. Here I’ve been longing for this all Summer
and it’s been right on the same island with me,” said Ray as he
turned the model over and over.
“’Ow’s that?” said Mitchell, as he stopped in the act of putting the
dishes on the table and listened.
“Why, you see the Uncle I ran into over at Austin’s Pool a few weeks
ago—you know the one who owned the Fish Hawk and—”
“T’ feller as was sech a good sailor as we outsailed, ye mean?” asked
Mitchell with a grin, taking a big brown pie from the pantry in one
corner of the room.
“Yes, he’s t’ one. I told you that he had always treated me mean.
Well, you see, he always thought I was lazy and he was bound he’d
flog it out of me. He called me lazy because I always wanted to
potter around with new ideas and new inventions. He never believed
in anything that was progressive. All he knew was hard work,
wouldn’t send me to school, wouldn’t help me with anything; just
made me work like sin. Treated me downright nasty.
“Keeping me from school was what worried me more than anything
else, though. I wanted to go to high school mighty badly because I
hoped some day to go to college and study engineering.
“Well, I knew the only way I could ever get to school was to earn
enough money all in a lump to pay my way. About that time the
Titanic ran into an iceberg up off the banks somewhere; you
remember the time, don’t you? Well, I got an idea out of that. Why
not try to invent an absolutely safe lifeboat that could not sink or
capsize? The idea was a corker and I set to work on it. And, by
jingoes, when I got my model finished if my uncle didn’t get hold of
it and throw it overboard and flog me besides. That’s what made me
run away from him.”
“Well, blow me, hif ye didn’t make a lifeboat what won’t sink ner
capsize, fer that air wessel war right side hup and warn’t leakin’
neither when I got hit,” said Mitchell.
“Oh, you don’t know how tickled I am. I was sure it would work. I
knew I had the right idea,” said Ray as he fondled the little craft.
“Right an’ so, lad, right an’ so; but look ’ere, hif ye stand there ravin’
habout yer boat ye won’t git anythin’ t’ eat. Las’ call fer dinner,
fellers. Hits on t’ tible,” said the old seaman, drawing up the chairs.
 CHAPTER XII
THE REEF’S TOLL

T hat dinner was one of the best the lads had ever eaten, it
seemed to them. Indeed, Jack forgot about the howling of the
wind and the spattering of the rain outside, and Ray even ceased
talking of his precious model, so intent were they both on satisfying
their ravenous appetites. There were sizzling hot flounders, the
finest flapjacks that ever were cooked, cold boiled lobster, fine
homemade bread, steaming coffee and a generous apple pie, which
Jack assured the lobsterman was quite the best of its kind he had
ever tasted.
 “The finest flapjacks that ever were
cooked.”
The old seaman took as much pride in his cooking as any housewife
and it pleased him to watch the lads “git a full cargo,” as he
expressed it. In fact, he urged them to eat more, even after they
had announced that they could not possibly hold another morsel,
and finally the boys simply had to push back their chairs and cry
“enough.”
It was fully half-past three when the dishes were cleared away and
washed, and by that time the storm outside had worked up to a
furious pitch. The wind whistled about the little cottage and down
the chimney, blowing great quantities of smoke into the room from
the wood fire that Mitchell kept burning to heat his dish water. The
rain was coming down harder now, and spattering against the
window panes so furiously that Jack had difficulty in seeing out
across the cove in which the Betsy Anne and Mitchell’s dories were
moored.
“Say, Ray, this is a real storm,” he said to his young chum. “How on
earth are we to get back to the lighthouse? We can’t go by way of
the Betsy Anne. I’d never take a chance in any boat to-day no
matter how seaworthy she is.”
“Right an’ so, right an’ so, lad,” said the old lobsterman as he took a
squint at the weather through the front window. “An’ ’e needn’t be a
fearin’ as I’d ask ’e to. Hit ud take a ’ull lot of coaxin’ for t’ git me t’
take t’ Betsy Hanne hout hin weather like this ’ere even though she’s
t’ safest boat fer ’er size as ever was. But must ’e go back t’day?
Can’t ’e stiy ’ere for t’ night, mebby?”
“Goodness, no. You remember how we got a scolding for staying
away over night at Austin’s Pool, don’t you, Ray? Poor Mr. Warner
and Big O’Brien were worried to death. Thought we’d been drowned,
sure enough. And he saw us go out in a sailboat this morning too.
Jiminy, I’ll bet they think we were caught in this storm. They will
sure decide we are goners, if we don’t show up to-night. We must
get to the lighthouse, Ray. Don’t you agree with me?”
“Yes,” said Ray firmly, “Mr. Warner has been mighty good to both of
us and I don’t think we should cause him any more worry than
necessary. I was sorry that we made it so unpleasant by staying at
Frenchman’s Point last time. We must get back to the lighthouse. We
can walk across the island. I don’t mind getting wet, do you? That’s
about the worst that can happen to us.”
“Jest so, jest so,” said Mitchell with a pleased smile. “I think as ’ow
yer two boys ’as got common sense and a bit o’ feelin’ fer t’ other
feller. Glad t’ ’ear ye speak es ye do. Go, by hall means, an’ hif ye’ll
take my advice ye’ll start mighty soon fer there’s no tellin’ as t’ ’ow
long hit’ll tike ’e. An’ hif ye’re hout there when night comes on—well
hin t’ dark ye might stumble over a cliff peraps er—er—. Say, look
’ere, lads, I’ll go along wi’ ye. I don’t mind gettin’ wet an’ besides I
got ’ilers an’ a so’wester. I’ll go long wi’ ye t’ show ’e t’ wi, seein’ as
’ow ye never walked crost t’ hisland yit.”
“Great,” cried Jack.
“Finest ever,” said Ray, and the old seaman looked delighted at their
manifestations of pleasure.
“Hall right, me ’arties, we’ll start right awiy. You lads, just wait till I
git on me ilers an’ I’ll go out hin t’ boat ’ouse an’ look hup some old
duds as I got stowed awi there agin jist sech an adwersity.” And
presently the lobsterman donned his oilskins and plunged out into
the storm.
A few moments later he stumped into the room again, puffing like a
grampus and dripping wet. In his arms he clutched a bundle of
weatherworn oilskins.
“Phew, blime ’e hif hit ain’t rainin’,” said he as he deposited the
bundle of clothing on the floor. “’Ere’s a lot o’ cast-hoffs as I’ve ’ad a
’angin’ hin t’ boat ’ouse fer this long time. Some o’ ’em is putty much
worn, but they’ll shed water in spots henywi’. Sort ’em hout, lads.”
Jack and Ray began rummaging through the bundle of yellowish
gray garments and in no time they were decked out in weatherproof
clothes. Of course they wore their regular clothing underneath, as
did Old Mitchell, but even at that the lobsterman’s cast-offs were far
too large for them.
“Some fit,” said Jack as he waved a far too long sleeve in the air.
“Huh, two of us could get into this jacket, but just the same I’m glad
to have ’em. I’m ready to start—how about you?” said Ray, as he
gathered his precious model up under his arms and started for the
door. Jack followed him and the lobsterman, after a glance about the
cottage and a last poke at the dying fire in the stove, followed the
two boys.
The moment they emerged, the lads had to brace themselves to
keep from being blown down. The wind swooped around the corner
of the little cottage and tore at their garments madly, while the big
raindrops beat into their faces.
“Jiminy, some storm”, growled Ray as he forced his so’wester down
over his eyes.
“Hit’s blowin’ some ’at,” assured the lobsterman as he pulled his
collar up higher and stumped forward in the lead of the little party.
Jack was on the point of making an appropriate remark also, but the
wind snatched the words from between his teeth, it seemed, and he
decided after that to conserve his energies for the fight against the
storm.
Mitchell apparently followed some sort of a path through the forest
that clad the top of the island, for he wound his way in and out
among the trees in a peculiar manner. But if there was a path, the
boys could not detect it. All they did was follow the one-legged old
man who silently fought his way against the wind. Although the pine
trees were many and their foliage thick, the wind seemed just as
strong in the woods as out in the little opening around the
lobsterman’s cottage. It blew a veritable hurricane, it seemed to
Jack, and the tall trees bent and swayed in a most awe-inspiring
manner. In truth, branches were literally torn from some of them
and here and there the lads found a big timber that had been
uprooted and flung aside by the elements exactly as if it had been
no heavier than a clump of bay berry bushes.
On through this wind-lashed forest they plodded, watching
constantly to keep out of harm’s way for they realized that to be in
the path of one of the falling trees would be the end of them. On
and on they forced their way, backs bent and faces shielded as much
as possible against the stinging rain. Minutes seemed like hours and
hours eternal, so slow was their progress. How long they fought the
elements the boys could not guess, but gradually as they worked
their way across the island a new note was added to the terrible
growl of the storm and it gave the lads a better idea of their
location. It was the boom of the breakers upon Cobra Reef.
They were nearing the ocean side of the island now. Jack began to
detect familiar sections of the woods, in spite of the storm. He also
knew that they were approaching the top of the promontory upon
which the lighthouse was located, for they had begun to climb a
rather steep slope. On they toiled, their way growing harder as they
advanced, until suddenly they were struck by a gust of wind that
almost hurled them off their feet. Then Jack knew that they had left
the forest and entered the clearing about the construction camp.
Past the blacksmith shop and the bunk-house they trudged, until
they came to the long mess-hall. Along the lee wall of this building
they made their way until they came to the path that led to the
lighthouse. Here they paused and before leaving the shelter of the
building, took a survey of the situation.
And as Jack looked toward the beacon he caught sight of a big
group of men huddled in the shelter of the pile of granite blocks
near the steel tower of the cable-way. There must have been fifty or
more in the crowd and all were dressed in oilskins or overcoats.
“Look, there’s the whole camp. What’s wrong? What’s going on out
there? Something’s happened on the rock, I’ll bet. They are looking
out to sea!”
“Sure enough. What do you suppose is the matter?” exclaimed Ray,
as he too caught sight of the men.
“Matter! matter! Why noo, lad, hit could be something wrong on
Cobra ’Ead, but t’ my judgment hits like as not a wessel what’s
comin’ ashore, like es ’ow t’ schooner Jessie Joy did two years back.
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