Chu Ho Fa Construction Co., Ltd. violated Article 21 of the Fair Trade Law in its “Ti Ching Villa” pre-sale house advertisement

Chinese Taipei

Case:

Key Words:

False advertisement, pre-sale house

Reference:

Fair Trade Commission Decision of March 16, 2006 (the 749th Commissioners’ Meeting), Disposition Kung Ch’u Tzu No. 095022

Industry:

Buildings Construction (3901)

Relevant Laws:

Article 21, , Paragraph 1 of the Fair Trade Law

Summary:

1. Chu Ho Fa Construction Co., Ltd. (hereinafter referred to as Chu Ho Fa) in the advertisement of 3D night scene diagram “KING BORDER courtyard chapter” for “Ti Ching Villa” construction project, has drawn the first floor of each building as parking space and one to two vehicles were parked at the parking space. A comparison to the floor plan of the whole area showed that the left sides of unit A9 to unit A1, the downsides of unit A1 to unit D1, and the right sides of unit D1 to unit D7, the garages were marked with both dotted and real lines. In addition, taking the case of “layout plan for a furnished unit D7”, the said plan included wordings such as “a new way of parking RV and enjoying life, double parking spaces, not exposed to wind and rain, safe from being coveted by thief……, in addition to satisfy the wish of homeowner to wash and wax his loving car personally, the design has also allowed the villa entering into the new era of RV recreation. There is a green space at the backyard of the villa.” A garage for two cars to park side by side (a horizontal dotted line was depicted inside the garage) and wall pillars were drawn at the bottom of the diagram.
2. The investigation found that the Taichung City Government has determined arcade of the said building as squatter. In addition, according to the construction drawing and as-constructed drawing approved by the Public Works Department of Taichung City Government for the said construction project, the base inside the building line of “Ti Ching Villa” construction project was applied for and approved as land for arcade and arcade, the first floor was for parking spaces. However, in the aforementioned advertisement, bedroom and bathroom, yard and a garage for two cars were illustrated for the first floor. It is substantiate to conclude that the layouts and garage illustrated in the advertisement of the said construction project indeed were squatter building. Chu Ho Fa argued that the garage at issue was indicated with dotted lines, and the sales and purchase agreement has stated clearly that the garage was constructed in the second time construction and the complainant was informed this fact beforehand. However, a dotted line was indicated in the garage of the aforementioned advertisement, such design may cause a misuse of space for arcade as garage and thus has violated the relevant law. It is difficult for the ordinary consumers to understand that the layout indicated in the advertisement at issue has violated the construction laws. Even if the second time construction was carried out and Chu Ho Fa was able to handover the building as indicated in the advertisement, the risk that the construction being reported and torn down still existed. Therefore, the representations and symbol of the advertisement were greatly different from the knowledge of ordinary consumers and such discrepancy had exceeded the level acceptable by ordinary consumers. In addition, even if Chu Ho Fa had notified consumers the aforementioned issues, either by means of contract or in words, the general understanding of ordinary consumers is that an advertisement shall make representations or symbol that are indeed consistent with the product itself. In order to prevent the false advertisement from misleading consumers into making the decision of trading and hence harming his or her rights and interests, and causing the competitors to loose the trading opportunities, Chu Ho Fa could not be excused for providing supplemented explanations in the advertisement or contract.
3. Taking into consideration the motivation, purpose and expected improper benefit of the unlawful acts of Chu Ho Fa; the degree and duration of the act’s harm to market order; benefits derived on account of the unlawful act; scale, operating condition, and market position of the enterprise; whether or not the type of unlawful act involved in the violation has been the subject of correction or warning by the Central Competent Authority; types of, number of, and intervening time between past violations, and the punishment for such violations; remorse shown for the act and attitude of cooperation in the investigation, and other factors, therefore, a fine of NT$ 3,000,000 is imposed on Chu Ho Fa according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by: Kuo, An-Chi;
Supervised by: Yeh, Tien-Fu

Appendix:
Chu Ho Fa Construction Co., Ltd.’s Uniform Invoice Number: 86640027