Chu Chan Construction Company was complained for the untrue advertisement of the Hsiao-ming Li-ching pre-sale apartments
Chinese Taipei
Case:
Chu Chan Construction Company was complained for the untrue advertisement of the Hsiao-ming Li-ching pre-sale apartments
Key Words:
untrue advertisements, apartments with additional floor layers
Reference:
Fair Trade Commission Decision of June 14, 1995 (the 192nd Commission Meeting) ; Disposition (85) Kung Yi Tzu No. 059
Industry:
Construction Investment Industry (6811)
Relevant Laws:
Article 21 of the Fair Trade Law
Summary:
1. According to a consumer complaint, a consumer placed an order for purchase of an apartment at the 11th floor of Hsiao-ming Li-ching C8 on July 12, 1994 at a price of NT$2.4 million. However, the apartments were selling for only NT$2.02 million in advertisements in the July 9 newspapers. The consumer later changed his purchase order to an apartment with additional floor layer on the 8th floor of C10, which had a ceiling height of 3.6 meters. After learning that the second layer of the apartment was illegally constructed, the purchaser, through a dispute resolution committee, requested for either a contract cancellation or to purchase a standard apartment. The contractor, who maintained that the construction of the additional layer is at the discretion of the purchaser, rejected the request.
2. Whether an act violates Article 21 of this Law shall be determined based on if the contents of the advertisements as disseminated by an enterprise are false, untrue or misleading. The respondent claims that the height of 3.6 meters is allotted to maximize interior decoration and space allocation, and that the purchaser has the discretion whether to fully utilize the 3.6 meters, and that such fact has been repeatedly emphasized to prospective buyers during the sales period. However, Article 21(1) of this Law aims to regulate product advertisements, preventing trading counterparts from making misguided decisions due to false, untrue, and misleading advertisements. If the trading counterpart did not have adequate knowledge regarding the apartment in question, or if he did not go to the actual apartment site before purchase to verify the important issues, discrepancies between the actual apartment and the advertisement contents would not have been discovered. In addition, the advertisements in question included phrases such as "one bedroom, one living room, and dining room, one bathroom, one Japanese-style room, one den, and one walking closet", "elevated 3.6-meter interior, turn a single floor layer into multiple layers, a suite into an apartment", and "double the floor space for half the price." The advertisement also included colored pictures of apartments with additional floor layers, three-dimensional cross-section, and floor plans that mark the "upper" as well as the "lower" floor layers. Such wordings and pictures are sufficient to mislead the consumer into believing that the additional layer is legal.
3. The "additional layer" refers to the floor layer between the floor and the ceiling. In accordance with the Construction Law, an application shall be filed together with the application of construction permit if an additional layer is to be constructed. Construction shall commence only upon approval of such application; otherwise, an application for design change on the floor area within legal limits should be filed. Although the respondent argues that the on-site sales persons have told prospective buyers that buyers themselves should take care of the construction of the additional layer after ownership of the apartment has been transferred, the apartment license for use after ownership transfer only covers the finished apartment. If the owner wishes to construct an additional floor layer, thus resulting in an increase in floor space of the original apartment, a new construction license is required to enable the owner to legally construct, own, and use the additional floor layer. If the owner did not apply for such construction license in accordance with law and proceeds to construct the additional floor layer, such act is in violation of the Construction Law. In accordance with Article 86 of the Construction Law, a fine shall be imposed and the construction of the additional layers shall be ceased and removed. Despite knowing knowledge that his construction license did not include the permit to construct additional floor layers, the respondent failed to disclose such fact and thus adversely affected the interests of the consumers. The prospective buyers were misinformed to believe that after apartment ownership has been transferred, an additional floor layer may be constructed without need for further application, and that ownership of the additional floor layer would be legal. Prospective buyers were misled into believing that they can purchase more floor area at a lower price, resulting in trade with the respondent. Therefore it is determined that the respondent has provided false, untrue, and misleading information on his product advertisements.
Summarized by Lu, Li-na
Supervised by Wu, Tsui-feng
＠: For information of translation, click here
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