Issues about the pruchaser's right to examine real estate sales agreement

Chinese Taipei


Case:

Issues about the pruchaser's right to examine real estate sales agreement

Key Words:

obviously unfair , dominant position, agreement review

References:

Fair Trade Commission Decisions of May 11, 1994 ( the 135th Commission Meeting), November 30, 1994 (the 164th Commission Meeting), December 7, 1994 (the 165th Commission Meeting), January 25, 1995 (the 173rd Commission Meeting), April 12, 1995 ( the 183rd Commission Meeting) and June 7, 1995 (the 191st Commission Meeting); Letter of (84) Kung I Tzu 04548

Industry:

Construction Investment Industry (6811)

Relevant Laws:

Article 24 of Fair Trade Law

Summary:

1. In the practical transactions of pre-construction sale of condominiums, condominium purchasers usually are required to pay a down payment before they are given any opportunity to examine or review the purchase agreement, and will sign the purchase agreement in a few days after having paid the down payment. Even if the condominium purchaser has any objection to the contents of the purchase agreement prepared unilaterally by the construction company, such objection will usually be denied by the construction company. Some construction companies even insist, as they have received the down payment, that the contents of such ready-made purchase agreement must remain unchanged, or else the down pre-paid payment will be forfeited. Under such circumstance, condominium purchasers usually would not venture to insist on their objection. In practice, in the initial stage of pre-construction sale of condominium, the subject of sale are not yet constructed, purchasers can only get relevant information about the condominium from advertisements and the oral description made by the salesmen. The real information that can disclose to the purchasers the details of the object to be purchased with a huge amount of money, are set forth only in the contents of the terms and conditions of the purchase agreement. The purchasers will not be able, according to the existing practice, to learn the rights and obligations of both buyers and sellers under the purchase agreement until after certain amount of the down payment has been duly paid and accepted. Since the purchase agreement is prepared unilaterally by the construction company, it is no doubt that the construction company, is absolutely in the dominant position so far as the contractual relations of the rights and obligations between the two parties to the purchase agreement is concerned. So, if the construction company is allowed to collect down payment prior to disclosing the contents of the purchase agreement subsequent to the purchaser’s refusal to sing the contract, and to confiscate the down payment. Construction company’s collection of such down payment will obviously put condominium purchasers to an absolutely inferior or disadvantageous position which is certainly unfair to condominium purchasers. Furthermore, the contents of a condominium purchase agreement contain professional terms which would require the purchasers to spend much time for verifying and understanding those term thereof. Therefore, even if the construction company has provided the purchase agreement prior to collecting the down payment, the contract bargaining power of condominium purchasers will not be significantly improved if the contract-reviewing period provided to condominium purchasers by the construction company is not in a reasonable length of time.

2. In order to make the condominium purchasers' right to review the purchase agreement before signing it duly exercisable so as to correct the unbalanced relation pertaining to the access to the contract information between the construction company and building purchasers, the Commission resolved at its 191st Commission meeting that if a construction company conducts any of the following acts, such act will likely constitute an "obviously unfair act" as defined in Article 24 of the Fair Trade Law:

(1) To require customers to pay a down payment before providing them with the purchase agreement;

(2) To provide customers with insufficient time for them to review the purchase agreement prior to the execution of such agreement. The duration of contract review period shall at least be not less than five (5) days; or

(3) To refuse, without good reason, to amend or revise the purchase agreement when the customer requests an amendment to any part of the terms and conditions of such agreement, and to refuse to refund the down payment pre-paid by the customer for reserving the purchase opportunity. The construction company shall have the burden of proof in regard to whether it has any good reasons for its refusal to make amendment or refund as required.

 

Summarized by Lin, Hsin-Wen
Supervised by Hu, Kuang-Yu


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