This paper begins with a critical review of studies of property law and contract law, which experienced dramatic changes in Taiwan during the Early Japanese Colonial Period. We then re-analyze the meanings of modern property laws and relationship between these laws and the capitalist economy from the legal and economic interaction perspective. We point out that the civil law norms at the beginning of Japanese rule were complicated by the elements of the person or territory, but the essence of the legal system had been reformed so as to increase its similarity to modern Western European capitalist law. Fundamental legal concepts were being gradually created in Taiwan.