Violation of Fair Trade Law by Yen Hsin House Brokerage Ltd. Co. for engaging in a deceptive act sufficient for influence on trading order
Case:
Violation of Fair Trade Law by Yen Hsin House Brokerage Ltd. Co. for engaging in a deceptive act sufficient for influence on trading order
Key Words:
housing brokering transactions, agreement
Reference:
Fair Trade Commission Decision of April 12, 2000 (the 440th Commissioners' Meeting); Disposition (89) Kung Ch'u Tzu No. 062
Industry:
Real Estate Brokerage Industry (6812)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. If an enterprise leads people to make mistakes by means of deception or concealment of important facts, and such an act causes the enterprise's trading counterpart to trade with the enterprise or causes the enterprise's competitors to lose trading opportunities, such an act would constitute a "deceptive act sufficient to affect trading order" under Article 24 of the Fair Trade Law. When the complainant was being shown a house, the respondent assured him that a premium interest rate of 5.65% would apply in this deal. In addition, in Article 7 of the "Offer Sheet," the respondent underlined that " a premium interest rate of 5.65% shall apply in this matter. If the financing is not concluded, this matter shall be terminated without any condition." Believing that he was assured the premium interest rate would apply to the [total] financed amount, the complainant agreed and paid New Taiwan Dollars 100,000 as a "brokerage fee." The complainant later learned that the 5.65% premium interest rate applied only to one-third of the [total] financed amount and that a rate of 8.5% applied to the rest. After realizing he had been deceived, the complainant indicated to the respondent that he wanted to terminate the deal. The respondent informed the complainant that the brokerage fee had turned into the down payment, and that the house owner had taken the money. The complainant argued that when the respondent asked him to sign the "Offer Sheet" and to pay the brokerage fee, he was not informed at all that he could elect to use a Ministry of the Interior Offer Standard Sheet and engage in price negotiation. For the foregoing reasons, the complainant argued that the respondent violated the Commission's principle of "house brokerage rectification." As a result, he instituted legal proceedings with the Commission. 2. According to Article 3 of the "Offer Sheet" provided by the respondent regarding the "attachment of conditions of termination, termination deposit, and its efficacy," by signing the document, the buyer shall be willing to pay the termination deposit in the amount of New Taiwan Dollars ________ (with no receipt given) (the buyer shall not be required to pay the termination deposit unless it is requested by the seller). The seller must agree to sell the house according to the terms of the "Offer Sheet" before the termination deposit is turned into the down payment. If the seller does not agree to sell the house, the termination deposit shall be returned without interest. Therefore, although the contract on its face has been called an "Offer Sheet," it is in fact a brokerage contract. According to general business practice, given that the aforementioned part of Article 7 of the "Offer Sheet" concerning the interest rate was of great importance to the complainant, and that he did not know he was enti tled to elect to use either a brokerage fee contract or an Offer Sheet, and that he was induced by the respondent [with the use a brokerage fee contract], it was extremely easy for the respondent to ask him to sign the "Offer Sheet." As a result, the Commission found insubstantial the respondent's claim that it had genuinely informed the complainant of his right to elect to use the Ministry of the Interior (MOI) Standard Offer Sheet. Although brokerage fee contracts provided by house brokerages to house buyers clearly state that the buyer may elect to use the MOI Standard Offer Sheet, the information in the contracts regarding the MOI Standard Offer Sheet is inadequate. Due to this inadequacy and the complainant's unfamiliarity with the MOI Standard Offer Sheet, it is extremely easy for a consumer to make a misjudgment. For these reasons, the Commission has recommended that if brokerages give disclosures in written form, they should be separate documents that are signed by the consumer. In this way, the consumer is better informed of his right to elect to use a brokerage fee contract or an MOI Standard Offer Sheet. The Commission investigated and found that in the part of the "Offer Sheet" pertaining to the MOI Standard Offer Sheet, the respondent merely recorded the words that "I, the person entering into this document, (the "buyer"), have read and thoroughly understand the contents of the Ministry of the Interior Offer Shee t and this Offer Sheet, and have elected to use this Offer Sheet." However, the information regarding the MOI Standard Offer Sheet such as its main contents and the fact that the house buyer may elect to use the MOI Standard Offer Sheet were not detailed in the "Offer Sheet." Furthermore, according to the complainant, he signed the "Offer Sheet" very late in the night. All factors considered, the Commission found it hard to expect that, in such a short period of time, the respondent could have shown the MOI Standard Offer Sheet to the complainant and make him understand its contents and his right of election. Therefore, when the respondent underlined the aforementioned words in the "Offer Sheet," he was only providing himself with an argument to evade responsibility later. His arguments are unpersuasive. As a result, the Commission found that the respondent failed to fulfill its obligation to make its best efforts to notify the house buyer of his right to elect to use a brokerage fee contract or the MOI Stan dard Offer Sheet. 3. When Yen Hsin House Broker Ltd. Co. asked the complainant to use the brokerage fee contract, it failed to inform the house buyer that he may elect to use the MOI Standard Offer Sheet. This act was a deceptive practice sufficient to affect the trading order and was in violation of Article 24 of the Fair Trade Law. Although the company had previously been rectified by the Commission for this type of unlawful act, it still failed to comply with the order. In conclusion, in consideration of the company's motivation for its act, the harm that its act had caused to the trading order, and so on, the Commission ordered the company to cease its unlawful act, and imposed on the company an administrative fine of New Taiwan Dollars 2,500,000 pursuant to the fore part of Article 41 of the Fair Trade Law. Appendix: Yen Hsin House Brokerage Ltd. Co.'sUniform Invoice Number: 16893266 Summarized by Lee Li Shiu; Supervised by Horng Der-Chang