Kung Hsin Rehouse violated the Fair Trade Law for failing to fully disclose trading information through passive concealment thus misleading trading counterparts

Chinese Taipei


Case:

Kung Hsin Rehouse violated the Fair Trade Law for failing to fully disclose trading information through passive concealment thus misleading trading counterparts

Key Words:

deceptive acts, concealment of important facts, information disparity

Reference:

Fair Trade Commission Decision of January 12, 2000 (the 427th Commissioner's Meeting); Disposition (89) Kung Ch'u Tzu No. 009

Industry:

Real Estate Brokerage (6812)

Relevant Laws:

Articles 24 of the Fair Trade Law

Summary:

  1. Regarding that the buyer is in an obvious inferior position to the broker with respect to access to real estate transaction information, a broker who uses its superior position to solicit a brokerage fee without fully disclosing relevant information or giving the consumer other trading options (such as using the standard Offer Form drawn up by the Ministry of the Interior [MOI]) will be deemed by the Fair Trade Commission (FTC) as having engaged in a deceptive act sufficient to affect trading order provided in Article 24 of the Fair Trade Law.
  2. In this case, a client discussed with the respondent on a house purchase. Because his offer fell under the seller's authorized price, the client paid a brokerage fee to authorize the respondent keeping the price under negotiation. The client claimed that the respondent failed to inform him that, instead of signing the brokerage fee contract, he could sign the MOI Offer Form. The respondent argued that the money paid by the client was a deposit rather than a brokerage fee.

    However, after the brokerage fee contract and the testimony of both the complainant and the respondent were examined, it was found that on the day of signing the contract the price indicated on that contract was not the finalized price of the property. Rather, the respondent was to negotiate price with the house owner and the two parties would then sign a real estate purchase contract if they reached an agreement on the terms and conditions of the transaction. Therefore, the price of the concerned property was not fixed when the client and the broker signed the contract and the fee paid by the client was by nature a kind of brokerage fee rather than a deposit.
  3. The complainant and the respondent could not agree on whether the respondent had orally informed the client the option of signing an Offer Form instead of paying a brokerage fee. The respondent called the FTC's attention to a case in which it had signed an Offer Form with its client. However, the respondent cited only one case and it was occurred after the case in dispute, which was thus inadequate as a reference. The respondent also failed to provide any other compelling evidence to refute the complainant's claim that it had failed to provide a MOI Offer Form. Therefore, it could not be believed that the respondent had informed the complainant the MOI Offer Form option.
  4. In summary, when it solicited the brokerage fee, the respondent failed to inform the consumer the option of signing a MOI "Offer Form", which constituted a deceptive act by concealing important trading information to cause the trading counterpart to trade with it and violated Article 24 of the Fair Trade Law. Therefore, the FTC, according to the forepart of Article 41 of the Fair Trade Law, ordered the respondent to immediately cease the deceptive act, which was sufficient to affect the order of trade, and to pay a fine of NT$200,000.

Summarized by Liang Ya-ch'in;
Supervised by Hung Te-ch'ang

Appendix:

Kung Hsing Rehouse's Uniform Invoice Number: 16137615


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