Taipei High Administrative Court Judgment that Pacific Construction Co., Ltd. violated the Fair Trade Act by failing to allow buyers a five-day contract review period when selling pre-sale units

Taiwan

Case:

Taipei High Administrative Court Judgment that Pacific Construction Co., Ltd. violated the Fair Trade Act by failing to allow buyers a five-day contract review period when selling pre-sale units

Key Words:

pre-sale units, contract review period

Reference:

Taipei High Administrative Court Judgment (91) Su Tzu No. 155

Industry:

Real Estate Investment (6611)

Relevant Law:

Article 24 of the Fair Trade Act

Summary:

1. The plaintiff in this case, Pacific Construction Co., Ltd., was reported for its suspected violation of the Fair Trade Act due to its failure to allow buyers a five-day contract review period when selling its "Pacific Construction New Celebrity Award" pre-sale units. Upon investigation, the defendant, the Fair Trade Commission (FTC), had discovered that the plaintiff, when selling the disputed units, demanded that buyers pay a deposit before they would be allowed to review the contract. Such an obviously unfair act was capable of affecting trading order, thus constituting a violation of Article 24 of the Fair Trade Act, and a disposition was accordingly rendered pursuant to the forepart of Article 41 of the same Act. Unwilling to accept the disposition, the plaintiff filed an administrative appeal, and after the appeal was dismissed, an administrative litigation.

2. Determination of what constitutes "other deceptive or obviously unfair acts that are capable of affecting trading order," as defined in Article 24 of the Fair Trade Act, should be based upon the nature of the Fair Trade Act as an economic law and its legislative purpose, and such acts should be regulated in a manner most suitable to the economic condition of the time. The question of the legality of competitive methods in business should be judged from the perspective of whether they directly or indirectly form an impediment to "competitive functions," and if trading parties are not on equal footing in terms of contract negotiation, then in terms of overall economic development and the public interest, there has already been a violation against the nature of public order and moral custom. Where this creates an impediment to fair competition by competitors in the same industry or leaves trading counterparts unable to make correct decisions, then it should be deemed a violation of Article 24 of the Fair Trade Act. As to "market position," market power should not be decided merely by transaction volume, trading amounts, or market share. It should be decided on a case-by-case basis and in consideration of the reciprocity of trading terms between the parties. Trading, therefore, should be regulated both in the case of competitive relations between two enterprises and in the case of the trade relationship between an enterprise and a consumer. In this respect, the prohibition against the exploitation of asymmetric market position by a contracting party was in fact no different from the prohibition against abuse of advantageous market position by reason that the common purpose for theses two prohibitions was to maintain overall trading order, and Article 24 of the Fair Trade Act should apply in both cases.

3. The personnel dispatched by the defendant, the FTC, launched an investigation at the reception center of the "Pacific Construction New Celebrity Award" pre-sale units together with Taoyuan county government officers. They found no blank contract templates posted there for review by buyers. It was only when the investigators requested to review the contract that Chang Ya-hui, a sales representative of the plaintiff present at that time, produced a contract template for review on the spot. The investigator asked to bring the contract back for review, yet Chang said that it was only possible when a deposit was paid first. She also mentioned that deposits were required for both pre-sale and finished units. Her statements could be certified by reference to the investigation records of the defendant attached to the original disposition. In addition, the "Real Estate Purchase Order" submitted by the plaintiff specified that "a contract template is attached hereto," a fact further proving that the plaintiff provided the contract for buyers' review at home only after they had signed the purchase order and paid the deposit. The terms and conditions of the written contract did not disclose trading particulars to buyers except for the price and area of the pre-sale units. The plaintiff possessed far more information than buyers, and an obviously unequal status thus existed between the contracting parties. The plaintiff took advantage of buyers' misgivings that their deposits might be forfeited if they did not ultimately sign the formal contract and compelled them to make trading decisions, which conduct constituted an obvious violation of Article 24 of the Fair Trade Act. Therefore, the original disposition in this case was deemed proper, and the decision rendered during the administrative appeal to sustain the disposition was also deemed appropriate. It was decided that the plaintiff's appeal for revocation of the disposition was groundless and should be overruled.

Appendix:
Pacific Construction Co., Ltd.’s Uniform Invoice Number: 11099009

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