Chie Mao Development and Construction Co., Ltd., engaged in deceptive acts of housing sale capable of affecting trading order
Case:
Chie Mao Development and Construction Co., Ltd., engaged in deceptive acts of housing sale capable of affecting trading order
Key Words:
public facilities; corrective action
Reference:
Fair Trade Commission Decision of July 7, 1999 (the 400th Commissioners' Meeting); Disposition (88) Kung Ch'u Tzu No. 096
Industry:
Construction Investment Industry (6811)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. A complainant filed a complaint against the Chie Mao Development and Construction
Co., Ltd., ("Chieh Mao") stating that in September 1997 the complainant
had signed a purchase contract for a yet-to-be-constructed free-standing housing
unit in the Ch'eng Lung Villas. The complainant alleged that the contract neither
specified the proportion of the public facilities owned nor the items included
as public facilities. Furthermore, the company failed to fulfill its obligations
to inform the buyer, resulting in a loss of several p'ing (1 p'ing = 3.3 square
meters) to the buyer. The complainant therefore alleged that the company violated
the Fair Trade Law ("the Law").
2. The term "deceptive" as used in Article 24 of the Law refers to
the use by an enterprise of misleading means, such as deceit or concealment
of important facts, to cause trading counterparts to trade with it or cause
competitors to lose trading opportunities. The Fair Trade Commission (FTC) had
decided that in a real estate transaction the allocation of public facilities
involves the calculation of the area of the premises being purchased, and so
is a major condition of the transaction. If a construction company intentionally
conceals information relating to this condition of the transaction at the time
of signing the contract, such action would be suspected of constituting a violation
of Article 24 of the Law.
In the 216th Commissioners' Meeting, the FTC resolved that beginning on February
1, 1996, construction companies shall, in real estate purchase contracts, list
the items included in the public facilities and the method of calculating the
percentage of the public facilities allocated to the purchaser. Otherwise, such
companies may be in violation of Article 24 of the Law. In the 235th Commission
Meeting, a supplemental explanation was formulated, stating that, "[the
above requirement] may not be applicable if, at the time the contract is signed,
the property title registration for the real estate being purchased has already
been completed and the allocation of the public facilities can be known from
the title deed."
3. At the 359th Commissioner's Meeting on September 23, 1998, the FTC resolved
to dispose against Chie Mao, and Disposition (87) Kung Ch'u Tzu No. 211 was
subsequently issued on October 6, 1998. The respondent appealed the disposition
to the FTC, and the FTC's appeal review committee subsequently decided on January
28, 1999 that "the original disposition should be set aside and the original
disposing body should make a separate disposition in line with the law after
conducting a thoroughgoing investigation."
4. After re-investigation, the FTC held that the term "public facilities"
as used in the aforementioned corrective guidelines includes the "portions
for common use" referred to in Article 3(1)(iv) of the Apartment Building
Management Statute and the "joint facilities" referred to in Article
41 of the same Statute. Furthermore, since the allocation of the public facilities
of units in free-standing housing is subject to the possibility of subsequent
adjustment, and the FTC's corrective guidelines on the allocation of public
facilities are aimed at promoting the transparency of information in trading,
the FTC does not make any distinction between units in free-standing housing
and units in apartment buildings as far as information disclosure regarding
public facilities.
Although the housing units in question, the Ch'eng Lung Villas, are free-standing
housing units, their private access roads still fall into the category of "public
facilities" as described above. Investigation showed that the parties signed
the purchase contract on September 16, 1997, at which time the registration
of the title to the purchased premises had not yet been completed. No title
deed existed to show the allocation of the public facilities, so the provisions
of the FTC corrective guidelines on the allocation of public facilities were
applicable. In the purchase contract in this case, the construction company
failed to state the items included in the public facilities and failed to specify
the method for calculating the apportionment of the public facilities. This
failure constituted a deceptive act capable of affecting trading order. It violated
Article 24 of the Law, and punishment was therefore imposed pursuant to the
provisions of Article 41.
Summarized by Wu Pi-ju
Supervised by Hu Kuang-yu
Appendix:
Chie Mao Development and Construction Co., Ltd.'s Uniform Invoice Number: 86349444