A purchase negotiation service agreement consists of a transaction contract and an intermediary contract; as the transaction contract only exists between the buyer and seller and not between the business entity and the consumer, the review period under the Consumer Protection Law does not apply(Taiwan)

Ankwei Chen

The Taiwan High Court rendered the 106-Shang-Yi-1337 Civil Decision on June 7, 2017 (the “Decision”) in which it held that the Consumer Protection Law does not apply to a purchase negotiation agreement because such an agreement includes a transaction contract and an intermediary contract, and the transaction contract only exists between the buyer and the seller and not the business and the consumer.

A filed a complaint alleging that he had retained Company B to negotiate the purchase of Appellant C’s property at issue for NT$42.5 million on behalf of A, and that he had signed a purchase negotiation service agreement provided by Company B (the “Purchase Negotiation Service Agreement”). Appellant C subsequently agreed to sell the property for the amount and also executed the Purchase Negotiation Service Agreement, thereby constituting the subject purchase agreement for the property. However, Appellant C has continued to refuse to perform the seller’s duties, and the complaint requests NT$800,000 in damages for breach. The first instance decision was rendered in favor of A. Dissatisfied, C filed this appeal.

Under Article 11-1 of the Consumer Protection Law, prior to the execution of a form contract between a business and a consumer, there shall be a reasonable period of not less than 30 days to allow the consumer to review the entire terms and conditions. If such requirement is not met, those provisions do not form part of the contract, even though the consumer may still assert that such provisions are still part of the contract. However, this Decision noted that the Purchase Negotiation Service Agreement has two parts in a transaction agreement and an intermediary agreement, with the transaction agreement only existing between A and C, which was not between a business and a consumer. C’s citation of the aforementioned statute in asserting that the parties were not transaction partners was therefore unpersuasive.

Therefore, it was concluded in this Decision that a transaction agreement had been formed between the parties, and C must be held liable for the liquidated damages of NT$800,000 per the contract as a result of the refusal to perform. The original decision in favor of A was therefore not erroneous, and C’s appeal was rejected.