Peng Yao International Co., Ltd. was accused of making the deceptive claim “the standard terms of these provisions were taken from the model contract provided by the Fair Trade Commission” in its sales contracts, in violation of the Fair Trade Law

Chinese Taipei

Peng Yao International Co., Ltd. was accused of making the deceptive claim “the standard terms of these provisions were taken from the model contract provided by the Fair Trade Commission” in its sales contracts, in violation of the Fair Trade Law

Key Words:

model contract, deceptive claim

Reference:

Fair Trade Commission Decision of December 26, 2002 (the 581st Commissioner's Meeting); Kung Yi Tzu No. 0910012740

Industry:

Cosmetics Retailing (4652)

Relevant Law:

Articles 24 of the Fair Trade Law

Summary:

1. In a letter, a member of the public alleged that Peng Yao International Co. (Peng Yao) Ltd.'s “GIAZBEILI beauty and skin care cosmetics sales and beauty and skin care treatment contract” contained the statement “the standard terms of these provisions were taken from the model contract provided by the Fair Trade Commission (FTC).” The complainant enclosed a copy of the contract in question and requested that the FTC examine the contract to determine whether it had come from the FTC's model contract and requested a refund from Peng Yao.

2. After investigation, the FTC finds the followings:
Peng Yao maintained that the contract in question was based upon a “model form contract of weight loss and beauty care” downloaded from the website of the Department of Health, with the aforementioned weight loss content deleted and retaining the beauty care content to comprise a two-page form contract. As regards the statement contained therein “the standard terms of these provisions were taken from the model contract provided by the FTC,” Peng Yao admitted that it was negligently included in the contract. It had notified its subordinates to cease using the disputed “GIAZBEILI beauty and skin care cosmetics sales and beauty and skin care treatment contract” and immediately printed a revised version of the contract while recalling and destroying the old contract, replacing it with the revised version.

3. Grounds for disposition:
Based on the investigation, Peng Yao deceptively used the FTC's name to guarantee the quality of the products and services it provided, thus unduly influenced the purchase decisions of consumers, a charge that the company freely admitted. Although the company unilaterally took corrective measures, it is still insufficient to relieve Peng Yao from its liability of affecting trading order. Furthermore, the effect of Peng Yao's act was sufficient to induce potential trading counterparts to trade with it, resulting in lost potential trading opportunities for its competitors. Peng Yao's deceptive practices were sufficient to disrupt the trading order, thus violating the provisions of Article 24 of the Fair Trade Law.
Upon consideration of factors including the motivation, purpose and degree of disruption to the trading order caused by the unlawful practices, as well as Peng Yao's business scope, operating conditions, market position, previous violations and post-violation attitude, this matter was disposed in accordance with the provisions of the forepart of Article 41 of the Fair Trade Law and an administrative fine of NT$100,000 was imposed on Peng Yao.

Appendix:
Peng Yao International Co., Ltd.'s Uniform Invoice Number: 86493469

Summarized by Mai, Huei-Li; Supervised by Cheng, Chia-Lin