Kung Yan Shih No. 6: Scope of deduction for bonus or remuneration after rescission of contract under Article 5(1)(iii) of the Supervisory Regulations Governing Multi-Level Sales
Case:
Kung Yan Shih No. 6: Scope of deduction for bonus or remuneration after rescission of contract under Article 5(1)(iii) of the Supervisory Regulations Governing Multi-Level Sales
Key Words:
payment of bonuses and remuneration, recovery
Reference:
Fair Trade Commission Decision of May 6, 1992 (the 29th Commissioners' Meeting)
Relevant Laws:
Article 5 of the Supervisory Regulations Governing Multi-Level Sales
Summary:
1. Request for explanation The applicant requested an interpretation of the requirement under Article 5(1)(iii) of the Supervisory Regulations Governing Multi-Level Sales that when a participant rescinds the contract and returns goods, the organization may deduct "any bonus or remuneration already paid to the participant for such goods." Does "participant" narrowly refer to the participant who ordered the goods, or does it broadly refer to all participants who ordered the goods? 2. The Fair Trade commission (the Commission) resolved that: (1) When a multi-level sales organization pays bonuses or remuneration for each order from a participant, its counterparts include not just the individual participant, but also the participants above that participant (i.e. those who introduced the participant). Under Article 5(1)(iii) of the Supervisory Regulations Governing Multi-Level Sales, a multi-level sales organization may deduct "any bonus or remuneration already paid to the participant for such goods." when the participant rescinds the contract and returns goods. (2). The deducted bonus of remuneration referred to in Article 5(1)(iii) includes all bonuses or remuneration paid out for the order. However, when taking returned goods, the enterprise should only deduct the portion of bonuses and remuneration paid out to participant who returns goods. The enterprise should attempt to recover bonuses or remuneration paid out for that order from individual participants. The organization shall not deduct the entire amount from the value of the goods that the participant who rescinds the contract returns. To do so would be unfair to the party returning the goods. Summarized by Kuo An Chi; Supervised by Lin Ching Tarng