Chu Ta Construction Co., Ltd. was suspected of violating the Fair Trade Law for selling their pre-sold units, “Hsin Ti Lai Heng No. 69 Chi Tsuan Hsin Ti”

Chinese Taipei

Case:

Chu Ta Construction Co., Ltd. was suspected of violating the Fair Trade Law for selling their pre-sold units, “Hsin Ti Lai Heng No. 69 Chi Tsuan Hsin Ti”

Key Words:

contract review, mezzanine

Reference:

Fair Trade Commission Decision of February 24, 2005 (the 694th Commissioners’ Meeting); Disposition Kung Chu Tzu No. 094015

Industry:

Real Estate Investment (6611)

Relevant Laws:

Articles 21 and 24 of the Fair Trade Law

Summary:

1. This case originated from the complaints filed by two citizens alleging that the sample unit of the pre-sold housing units, “Hsin Ti Lai Heng No. 69 Chi Tsuan Hsin Ti,” sold by Chu Ta Construction Co., Ltd. (hereinafter referred to as “Chu Ta Construction”) had a mezzanine design with two bedrooms on the upper floor and one kitchen and one living room on the lower floor, in suspected violation involving false advertisement. Moreover, Chu Ta Construction failed to provide the purchasers with a contract review period before signing the contract, in violation of Articles 21 and 24 of the Fair Trade Law.
   
2. It was found that the upper and lower floor plans (furniture placement plans) of the duplex apartments of Hsin Ti Lai Heng No. 69 Chi Tsuan Hsin Ti and the advertisement contained words “Japanese style commercial residence,” “Living room + master bedroom + single room,” “Commercial study + cozy master bedroom + Japanese-style room of Zen,” and “impressive study + cozy master bedroom + Japanese-style room of Zen + delicate dining room.” The furniture placement floor plans also showed an upper layer and a lower layer. Additionally, the actual layout of the sample unit had an upper layer and a lower layer that were separately two meters high. The aforementioned advertising materials and the sample unit were sufficient to mislead consumers into believing that to purchase the building in question could have double space by using the mezzanine design with the least floor areas. Moreover, according to the Public Works Department of the Taipei City Government, the originally approved design did not include the mezzanine and the elevated ceiling design, and, therefore, building additional mezzanines would have constituted a violation of the relevant provisions of the Building Code. It was sufficient to determine that Chu Ta Construction employed the illegal sample unit as advertisement of the building in question without approved by the aforesaid competent authority. Chu Ta Construction misled consumers into believing that upon or after the delivery of the units, they could obtain the space of mezzanines. Thus, the consumers falsely believed that they could in effect purchase more floor areas at a lower price and possibly entered into transactions with the company upon such a consideration. Chu Ta Construction noted in the advertising materials that the floor plans were the “references for furniture placement” and that “The building for sale contains an elevated ceiling design. Additional mezzanines or partitions constructed by the householders or the mezzanines or partitions of the sample unit are all constructions without the construction permit and shall not be included in the square measures of property right. Our company do not promise or guarantee the legality of the aforesaid construction.” Although Chu Ta Construction had the expectation or knowledge of the fact that its tender under the contract would not match the advertisement, yet it still employed the advertising materials in question to appeal to non-specific or relevant public. By the overall impression and effects, the aforesaid advertisement was sufficient to cause a considerable number of general or relevant public to have false cognition or decision. Therefore, [it is found that] Chu Ta Construction made false and misleading representations in terms of the mezzanine design in the advertisement of the building, in violation of Article 21 (1) of the Fair Trade Law.
   
3. It was also found that although certain purchasers signed a declaration which contained “…I have already reviewed the contract or have fully comprehended it through the detailed explanation given by the salesperson of the company before signing the contract” at the day when paying the deposit and signing the contract, Chu Ta Construction could not provide the complainants’ declarations in question to prove that the complainants had actually reviewed the contract. Moreover, upon the on-site investigation conducted by this Commission’s personnel (acting as a consumer), the sales place did not show or have contract samples for the public to view or take away. The salesperson also informed the investigator that the contract could only be reviewed on the spot after a deposit and a contract fee of NT$ 480,000 were paid. Thus, before collecting deposits or signing contracts, Chu Ta Construction did not provide purchasers with adequate time to review the contract. Such an action was an obviously unfair conduct sufficient to affect trading order in violation of Article 24 of the Fair Trade Law.

Summarized by Chen, Ei-Chen
Supervised by Chen, Yuhn-Shan

Appendix:

Chu Ta Construction Co., Ltd.’s Uniform Invoice Number: 80307869