Case:

Supreme Administrative Court judgment finds that Kua Niu Tsu Realty Ltd. engaged in deceptive acts sufficient to adversely affect trading order in real estate brokerage transactions

Key Words:

deposit, Ministry of the Interior Offer Form, real estate brokerage transaction

Reference:

Supreme Administrative Court Judgment (91) P'an Tzu No. 1488

Industry:

Real Estate Agencies (6612)

Relevant Law:

Article 24 of the Fair Trade Law

Summary:

1.	In the course of real estate brokerage transactions, buyers are generally in an obviously inferior position vis-?-vis brokers in terms of information asymmetry. For a broker to take advantage of its superior position to collect deposits without fully disclosing relevant information and giving consumers the option to choose their preferred form of transaction is considered “deceptive or obviously unfair” sufficient to affect trading order in violation of Article 24 of the Fair Trade Law. The complaint filed by the complainant Tseng Mao-lung specifically stated that the appellant company's (the broker's) employee Wu Meng-kui failed to inform Tseng at the time the parties signed a Home Purchase Offer that Tseng was entitled to the option of signing instead a standard offer form issued by the Ministry of the Interior which would relieve Tseng of the requirement to make a deposit. Furthermore, during the investigation by the appellee (the Fair Trade Commission), witness Wu Meng-kui and Tseng Chung-lung both stated that the appellant company did not make use of the blank contract based on the Ministry of the Interior version offer form. These statements were sufficiently corroborated with the allegations in the complaint.
	According to the testimony of the witness Wu Meng-kui, who was summoned to testify in the trial, the Home Purchase Offer in this case was signed at the office of the complainant rather than at the office of the appellant company, and the promissory note used for the deposit was provided by Wu Meng-kui. In such circumstances, judging by the rule of common experience, the facts set forth by the complainant in the complaint should be deemed to be true. Although, in the hearing before this Supreme Administrative Court, the appellant submitted photocopies of offer forms it had signed with other clients, those offer forms bear no direct relation to the facts of this case.
2.	The purpose of Article 24 of the Fair Trade Law is to establish a competitive order in the market and to regulate “deceptive acts” or “obviously unfair acts” that are “sufficient to affect trading order.” The greatest concern of the Fair Trade Commission in each individual case is whether a party to a transaction has employed misleading means such as “deception” or “concealment of material facts” to solicit the business of trading counterparts or to cause competitors to lose trading opportunities. The complainant in this case specifically stated in the complaint that if he had known he had the option not to make a deposit he would not have signed the promissory note for that deposit. Thus, we can conclude that the appellant (broker), in failing to disclose other options to the buyer, obviously exploited its double advantage in legal information and market information and ignored previous supervisory requirements set out by the appellee (the Fair Trade Commission). The appellant’s conduct constituted “causing trading counterparts to trade with it by concealing material facts” and met the elements of a violation of Article 24 of the Fair Trade Law. The appellee made no error in rendering its disposition under Article 41 of the same Law. The decision in the administrative appeal to uphold the disposition was also appropriate. The administrative court of previous instance therefore made no error in upholding the original decision and original disposition, and dismissing the appellant's appeal.

Appendix:

Kua Niu Tsu Realty Ltd.’s Uniform Invoice Number: 96955854

Summarized by Lai, Chia-Ching;
Supervised by Wang, Rong-Ging