Ta T'ai Pi Fang Wu Limited Company [hereinafter "Ta T'ai Pi"] violated the Fair Trade Law for engaging in deception as to transaction price in the course of a real property brokerage transaction
Chinese Taipei
Case:
Ta T'ai Pi Fang Wu Limited Company [hereinafter "Ta T'ai Pi"] violated the Fair Trade Law for engaging in deception as to transaction price in the course of a real property brokerage transaction
Key Words:
deceptive or obviously unfair practices, deceit or covering up material facts, causing others to form a false belief
Reference:
Fair Trade Commission Decision of 28 February 1996 (the 228th Commission Meeting); Disposition (85) Kung Ch'u Tzu No. 051
Industry:
Real Property Brokers (6812)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. A seller of real property commissioned Ta T'ai Pi. The seller's original asking price for the property was NT$4.2 million. The terms of the commission were that Ta T'ai Pi would receive five percent of the asking price as a service fee plus any excess selling price. In other words, Ta T'ai Pi would be allowed to receive difference between the asking price and the actual selling price. Under a brokerage transaction like this, the mandate is to obtain the highest price for its principal (i.e., the seller). However, in this case Ta T'ai Pi initially advised the seller to reduce the asking price to NT$ 3.8 million for there was a bid at such level, which was much lower than the original asking price. Ta T'ai Pi subsequently sold the property for NT$4.2 million and earned both the amount of NT$38,000 as a service fee and NT$400,000, being the difference between the [subsequent] asking price and the amount actually received.
2. In this case, Ta T'ai Pi failed to prove where the bid price of NT$3.8 million was from. Besides, Ta T'ai Pi first stated that there were two groups within its organization. The first group worked with property sellers and appraised the value of property; the other group worked with buyers and quoted prices. Information on the transaction prices of property was not exchanged between the two groups, but given to supervisor in charge to who would determine the final price. However, Ta T'ai Pi later stated that it was company practice to inform the seller of the bid price and let the seller decide whether or not to accept the bid. The latter statement contradicts the former one and thus the statement in regard to the bid price of NT$ 3.8 million can not be accepted. In addition, there was a ten day period between the date on which it confirmed the selling price with the buyer and the date for formal signing of the agreement. During that ten day period Ta T'ai Pi did not advise the seller that the selling price was NT$4.2 million. Ta T'ai Pi was clearly not acting in the best interests of the seller and violated its obligations under the mandate. Ta T'ai Pi stated that the above was a mistake caused by the negligence or oversight of its employees. However, it had in printed forms standard contracts of exclusive agency for sales and of consent to adjustment available for its employees to use for negotiation with customers. These forms had Ta T'ai Pi's company name printed thereon and the seals of both Ta T'ai Pi and the employee handling the account were also on the forms. Therefore, the brokerage transactions were conducted in the name of Ta T'ai Pi. The acts of employees within the scope of their employment are deemed to be the acts of the company, and the company cannot be excused.
3. In summary, all information concerning the bids were under the control of Ta T'ai Pi and was unknown to the principal (seller). The seller's decision to reduce the price was made based upon inaccurate information provided by Ta T'ai Pi and was not in its best interest. The facts are sufficient to determine that Ta T'ai Pi, in order to earn extra compensation, gave false information to and concealed material facts from the principal so that the principal agreed to reduce the asking under mistakes. The conduct contravenes the industry norms whereby real property brokerage must be founded on transparency and trust. These acts violate the provisions of Article 24 of the Fair Trade Law.
Summarized by Lin, Sheng-wen
Supervised by Hu, Kuang Yu
＊: For information of translation, click here
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