Pacific Construction Co., Ltd. required prospective buyers for their pre-sold units in the housing project to first pay deposits before a copy of the purchase agreement would be provided for their review. This constitutes a patently unfair practice sufficient to affect trading order, which had violated Article 24 of the Fair Trade Law
Case:
Pacific Construction Co., Ltd. required prospective buyers for their pre-sold units in the housing project to first pay deposits before a copy of the purchase agreement would be provided for their review. This constitutes a patently unfair practice sufficient to affect trading order, which had violated Article 24 of the Fair Trade Law
Key Words:
pre-sold units, deposit, patently unfair
Reference:
Fair Trade Commission Decision of February 1, 2001 (the 482nd Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 036
Industry:
Construction Investment Industry (6811)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. Complainant went to respondent's construction development site on 23 July 2000 to purchase one of the pre-sold units the respondent was promoting. Before signing, the complainant requested a copy of the contract for his review at home. The respondent refused the request on the ground that the complainant must first issue a promissory note and signed the purchase order and contract before a copy of the contract could be given. In view of the facts that the respondent was given less than 15 minutes to review the contract on the spot and that one of the clauses in the contract stipulating that: " ... Party A (the buyer) shall be given a period of no less than five days to review the contract before signing (signing in less than five days indicates that Party A has no objections)", the complainant maintains that the respondent had violated Article 24 of the Fair Trade Law and requested an investigation be undertaken by the Fair Trade Commission (the Commission). 2. Findings after the investigation by the Commission are as follows: (1) Pacific Construction Co. (respondent) maintained that the company routinely provides prospective clients with copies of its contracts and sales agreements for their reference. However, a visit by the Commission investigators together with the investigators from the Taoyuan County Government to the Pacific Construction pre-sold unit sales center proved otherwise. When requesting a copy of the contract for review, the Commission investigators were told by the company representatives that a deposit must first be paid before the documents could be furnished for review. The company also maintained that sample copies of the standardized contracts and sales agreements were on display on the floor of the sales center for review by prospective buyers. But the Commission investigators who visited the sales center found that there was no public notice or display of contract copies anywhere on the floor of the sales center for prospective buyers to either review at the sales center or to take home for further study. Only after repeated requests by the investigator did an employee at the sales center bring out a copy of a sales contract for review on the sales center floor. It is quite obvious that the company's actions had the effect of improperly suppressing the prospective clients to the extent that they will interfere their purchase decisions, which constitute patently unfair practices sufficient to affect trading order. (2) Regarding the period for the review of contract With regard to the clause in the contract stating "... Party A (the buyer) shall be given a period of no less than five days to review the contract before signing (signing in less than five days will be assumed to have done so without exception)," Pacific Construction maintained that this clause was inserted prominently near the area where the buyer was required to sign the contract and was printed in bold type. Pacific maintained that when signing the contract the complainant certainly saw the clause yet willfully proceeded to sign the contract, thereby waiving rights to the five-day review period and negating the need for the mandated consumer protection. The provisions of purchase contracts are standardized and unilaterally drawn up by the respondent, and the complainant becomes aware of those provisions only after paying a deposit or just prior to signing the contract. At the time of signing, the complainant was placed in a decidedly disadvantageous position. If the complainant made any objections to the content of the contract that the respondent deemed unacceptable or if the respondent insisted on signing the contract on the basis of the existing terms, the complainant would risk losing the deposit and would have no avenue to revise the contract in a manner they see fit. In this instance, the respondent's earlier statements are inapplicable. 3. Disposition and Grounds (1) Pacific Construction, in marketing the pre-sold units of its "Pacific Hsin Ming Jen Shang" development, required prospective buyers to first pay a deposit before providing them with a copy of the sales agreement. This practice was sufficient to affect the trading order and constituted a patently unfair practice in violation of Article 24 of the Fair Trade Law. (2) Taking into consideration the respondent's motives and its anticipation of improper benefits, the extended period of harm to the trading order, the respondent's operational situation, market position and degree of cooperation with the investigation into the alleged improper practices, the Commission thereby ordered Pacific Construction to immediately cease the aforementioned acts and imposed a fine of NT$200,000 in accordance with the forepart of Article 41 of the Fair Trade Law.Appendix: Pacific Construction Co., Ltd.'s Uniform Invoice Number: 11099009 Summarized by Lin, Chien-Ching; Supervised by Horng, Der-Chang