Hello. I am attorney Shin Joon-sun of Cheongchul Law Firm.
Recently, the applicability of the 'Act on Visit Sales, etc.' (hereinafter 'Visit Sales Act') regarding real estate lease contracts has become an important legal issue. If the exercise of the right to withdraw from the purchase under the Visit Sales Act allows for the cancellation of the lease contract without forfeiting the deposit, there has been an increase in cases asserting the right of withdrawal under the Visit Sales Act in recent lawsuits. Consequently, what criteria the court uses to determine the applicability of the Visit Sales Act has become an important practical issue. In this article, I will systematically analyze the scope of application of the Visit Sales Act, the requirements for exercising the right to withdraw, and related trends in rulings.
[Question] Is it possible to cancel a lease contract by exercising the right of withdrawal under the Visit Sales Act?
[Answer]
1. First, it is necessary to determine whether it falls under the Visit Sales Act.
For the application of the Visit Sales Act, it is essential to first review whether the contract signing process corresponds to 'visit sales' or 'telephone solicitation sales' as defined by the Visit Sales Act. Additionally, it is necessary to separately confirm whether the contracting party is considered a 'consumer' protected by the Visit Sales Act.
(1) Whether it corresponds to 'telephone solicitation sales' for the application of the Visit Sales Act
According to Article 2, Item 3 of the Visit Sales Act, 'telephone solicitation sales' refers to the act of selling goods, etc., by soliciting consumers through the use of telephone or inducing them to return calls. In other words, merely engaging in simple telephone advertising is not recognized as telephone solicitation sales; the court emphasizes the causal relationship between the signing of the contract and the telephone solicitation. Particularly, in lawsuits based on the Visit Sales Act demanding the return of deposits, the court used to easily recognize cases where the contracting parties were lured to visit through telephone calls as telephone solicitation sales. However, recently, there has been a tendency to exercise more caution in such judgments.
l In a ruling by the Seoul Southern District Court on December 22, 2023, case number 2023가단249283, the court found that when the person in charge of sales continuously promoted by phone and the consumer visited the sales office to sign the contract, it was deemed to fall under telephone solicitation sales. In this case, the court determined that the Visit Sales Act applied based on a Supreme Court precedent that stipulates 'telephone solicitation sales include cases where the consumer is induced to respond and engage in conversation by using telephone, leading to a meeting for subscription or contract signing'.
l Conversely, in a ruling from the Suwon District Court Seongnam Branch on May 3, 2023, case number 2022가단222811, it limited the definition of telephone solicitation sales to 'telemarketing', stating, “The term ‘telephone solicitation seller (telemarketing)’ should be interpreted narrowly, to refer to 'telemarketing' that is characterized by a specific telephone selling organization selling goods to unspecified or numerous consumers face-to-face (should reach the stage of receiving calls for subscription or signing contracts, merely inducing subscription through telephone solicitation does not constitute a sale).” Accordingly, it concluded that the employee of the leasing company could not be seen as a telephone solicitation seller, and thus it could not be subject to the Visit Sales Act.
l As similar issues can lead to different judgments by lower courts based on detailed factual circumstances, it is essential to be cautious when claiming a contract cancellation based on the Visit Sales Act and confirm whether the conditions are met through legal advice.
(2) Whether the contracting parties are 'consumers' protected by the Visit Sales Act
Since the Visit Sales Act is a law intended to protect 'consumers', whether the contracting parties can be recognized as consumers is also an important issue. According to Article 2, Item 12 of the Visit Sales Act, a 'consumer' refers to a person who uses or utilizes goods provided by a business for their consumer life. However, as seen in the following case, the court has shown a tendency to deny consumer status when the contract's purpose has a business character.
l In the ruling of the Seoul Northern District Court, case number 2023가단127119, the court did not recognize consumer status based on the fact that the contracting party was registered as a rental business. In that ruling, the court concluded that it was difficult to consider the plaintiff, who had even registered as a rental business, to fall under the definition of 'consumer' as stipulated by the Visit Sales Act.
2. Whether the period for exercising the right of withdrawal (14 days) has been adhered to
According to Article 8, Paragraph 1 of the Visit Sales Act, consumers can withdraw their subscription within 14 days from the date they receive the contract. However, if the supply of goods is delayed beyond the date of receipt of the contract, the consumer is entitled to withdraw within 14 days from the date of commencement of supply.
Based on this provision, some parties have argued that even if 14 days have passed from the contract signing date, it falls under the category of delayed supply of goods until the purpose real estate has been completed and can be delivered, but these arguments have not been accepted.
l In the ruling of the Uijeongbu District Court, Goyang Branch on August 23, 2023, case number 2022가단101451, and the Suwon District Court Pyeongtaek Branch on April 5, 2023, case number 2022가단69702, the contracts in question were recognized as falling under the telephone solicitation sales defined by the Visit Sales Act, yet they judged that “The stipulation in Article 8, Paragraph 1, Item 1 of the Visit Sales Act that permits withdrawal within 14 days from the date of receiving the contract only applies if the supply is delayed, is intended to give time to withdraw after receiving the goods, recognizing that until the actual state and necessity are clear, such as misinformed or hasty subscriptions prior to looking at the physical goods. In the case of newly constructed buildings, like this office building, it is not appropriate to consider that waiting for completion falls under 'delayed supply of goods' since the contracts are generally made based on understanding the critical contents at the time of signing.”
That is to say, a real estate lease contract is made under the assumption that the major contents of the goods have already been confirmed, so it is not reasonable to extend the withdrawal period just because the completion of the real estate is delayed.
3. Conclusion
By comprehensively reviewing the recent rulings regarding the exercise of the right of withdrawal under the Visit Sales Act, it is evident that the judgments have become stricter. In particular, the standards for determining the applicability of telephone solicitation sales and consumer status are increasingly being tightened; however, it appears that, barring a few special cases, the courts still generally recognize visits to sales offices and model houses through telephone solicitations as constituting telephone solicitation sales under the Visit Sales Act.
However, simply having a fact of telephone advertising may not lead to a determination that the Visit Sales Act applies. Therefore, parties preparing for a lawsuit should secure sufficient evidence to prove the facts related to whether they fall under telephone solicitation sales. Additionally, legal advice should be sought to thoroughly analyze the purpose of the contract and the overall process to cautiously consider the applicability of the Visit Sales Act based on whether the party qualifies as a consumer protected by it.
