Violation of the Fair Trade Law by Han Kung Construction Limited Company for false advertising
Chinese Taipei
Case:
Violation of the Fair Trade Law by Han Kung Construction Limited Company for false advertising
Key Words:
false advertising, misleading, guarantee
Reference:
Fair Trade Commission Decision of December 23, 1998 (372nd Commission Meeting); Disposition (88) Kung Ch'u Tzu No. 013
Industry:
Housing Construction Industry (4601)
Relevant Law:
Article 21(1) of the Fair Trade Law
Summary:
Han Kung Construction Limited Company (Han Kung) was reported for spuriously promising in its advertising that it would guarantee buyers a two-fold increase within two years in the value of the housing constructed by the company. The report alleged that Han Kung engaged in false advertising in violation of Article 21(1) of the Fair Trade Law.
Han Kung argued that the predicted increase in housing value was based on an objective and reasonable analysis of various indicators at the time of the advertising (e.g. past economic cycles, the current state of the domestic economy, the opening up of the Second Freeway in the south, etc.). Why the prediction failed when the two-year period elapsed were attributable to factors that were beyond the original considerations such as the global financial crisis and the delay in completion of related infrastructure projects.
The data and statistics on which Han Kung based its forecast were found to be accurate. But setting its legal connotation aside, the use of the term "guarantee" in the explicit phrase "[we] guarantee a two-fold increase in two years in the value of the housing you purchased" would convey to the public a firm promise by the company that the forecast would be materialized. Not only will it critically influence consumers?purchase decisions but could also foreclose the business opportunities to other construction firms in some way. Once the content of advertising fails to materialize, it is equivalent to a breach of promise and the phrase "[we] guarantee a two-fold increase in two years in the value of the housing you purchased" could thereby be treated as misleading.
Summarized by Kung Ch'in-lung
Supervised by Chu Wei-ching
Appendix:
Han Kung Construction Limited Company Uniform Invoice No.: 34567894