Has Tesla been enforcing No-Resale clause?

[sefar]

Generally I agree with you, but most do not read the agreement. Also there are a lot of ridiculous and unenforceable things in agreements. This gives a consumer 2 choices:

1. Protest the agreement and be denied the ability to purchase the product. This is a dead end with 1 outcome.
2. Purchase the product and protest the agreement when/if it comes up. The odds of having a legal fight are slim to none.

Its the old ask permission vs ask forgiveness dilemma. I dont know of any case law on this. The closest I am aware of ended in settlement. (John Cena and Ford Settle GT Resale Lawsuit)

What puts Tesla at a disadvantage is

you guys with Google law degrees! Contracts are within the purview of state, not federal law. That means that every state will have its own nuances in terms of interpretation and enforcement. Federal courts may hear a contract case, but they apply state law when they do so.

John Cena v. Ford was much different, it was not a mass produced vehicle. Those were basically bespoke cars. Without seeing what else was in that contract or what the settlement was (likely confidential), no one but the parties really know what happened.

The first sale doctrine is a concept of copyright/trademark law, and that is federal. It has nothing to do with buying a car, unless that car is a moving piece of art or something. The T on the hood of a Tesla is not the same.

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[Pops]

Actually, they can avoid liability due to negligence, at least in Missouri, under certain circumstances and with the right disclosures. Health clubs often do. Probably not in a product liability situation, FSD is a different question if you could ever prove their negligence. They possess the driving logs after all.

Great point. Tesla recently settled at fault in a FSD accident, even with all of their disclosures and agreements.
Tesla settles with Apple engineer’s family who said Autopilot caused his fatal crash

 

[Pops]

The first sale doctrine is a concept of copyright/trademark law, and that is federal. It has nothing to do with buying a car, unless that car is a moving piece of art or something. The T on the hood of a Tesla is not the same.

There are so many lines of code and a manual in a Tesla I would argue it was a book/art! Especially since the end user cannot copy or alter that programming, just like a physical book.

 

[HaulingAss]

Very few read them, regardless of age group. Here is a sample size of 2500 that only 8% are have estimated to read the agreement based on time they took to agree.

Huh? "The agreement"? I'm talking about the Cybertruck Purchase and Sale Agreement, not some user license agreement for a piece of software that might even be free! Duh! Your statistic is meaningless in this context.

Its not that simple. For example an agreement doesn't allow a company/individual to

• Avoid liability due to negligence.
• Break the law. I cant make you my slave, even if we both agree and sign a contract.

The first sale doctrine is the law, so it would be interesting to see how it is challenged in a case. It did go to the supreme court in 2012 in "Kirtsaeng v. John Wiley & Sons, Inc." They ruled in favor of the 2nd seller. Granted the specifics might be different, it shows an inclination to honor first sale doctrine.

The first sale doctrine may be reflected in case law, but it only applies to products in which there is not a purchase and sale agreement signed by the buyer. Duh! If the first sale doctrine was applicable to cars sold with a purchase and sale agreement then John Cena's lawyer would have been stupid to settle with Ford in the Ford GT resale case. It would have been an open/shut case and John Cena could have counter-sued Ford for trying to enforce an illegal purchase/sale agreement. That's all the proof you need to know the first sale doctrine doesn't apply to cars with "no resale" clauses in the purchase sale agreements. Instead of counter-suing, the result was this:

Although the amount is unspecified, Cena and Ford agreed on a monetary settlement outside an official court setting. The statement specifies that the money will go to a “worthy charity,” and in it Cena says, “I love the Ford GT and apologize to Ford, and encourage others who own the car to respect the contract.”

So stop with the playing lawyer nonsense. You have no clue what you're talking about.

 

[Pops]

I concede, I never said Tesla could not enforce the no sale clause, but I did imply there was a specific challenge to it. I was incorrect, the first sale doctrine doesn't apply.

 

[HornedHelmet]

Here's another speculation: I think Tesla needs to have the threat of legal action (and perhaps some demonstrations of using it) so that they have some recourse if flipping Cybertrucks becomes abusive and widespread.

I agree with the previously stated opinions that suing customers is a bad look, and Tesla will try to avoid that. There were a few obvious scalps at the very beginning ($220,000 sales), but now that CTs are being resold without ridiculous mark up, I suspect that Tesla will reserve the right to sue, but will do so judiciously. There's a "bad press" threshold they are considering---in my opinion.

 

[Woodrick]

Great point. Tesla recently settled at fault in a FSD accident, even with all of their disclosures and agreements.
Tesla settles with Apple engineer’s family who said Autopilot caused his fatal crash

I don't think that was "at fault"

My guess is that the family realized that the writing was in the wall, too many things were pointing to gross negligence of the driver. I mean, he did the same thing multiple times and the car did the same thing. He was obviously braking state law by driving while distracted.
And this was back when "FSD" was significantly less than intelligent than the Autopilot in the Cybertruck is today. Yes, it did have lane keeping, but it was immature.

 

[carsly]

Very few read them, regardless of age group. Here is a sample size of 2500 that only 8% are have estimated to read the agreement based on time they took to agree.



Its not that simple. For example an agreement doesn't allow a company/individual to

• Avoid liability due to negligence.
• Break the law. I cant make you my slave, even if we both agree and sign a contract.

The first sale doctrine is the law, so it would be interesting to see how it is challenged in a case. It did go to the supreme court in 2012 in "Kirtsaeng v. John Wiley & Sons, Inc." They ruled in favor of the 2nd seller. Granted the specifics might be different, it shows an inclination to honor first sale doctrine.

I am not a lawyer, but I did stay at a Holiday Inn Express last night.

I was in a C-level job at one of the largest educational publishers when Kirtsaeng came down. It's not an analogous situation as in the case of textbooks - which was the good in question - there is no purchase agreement between the buyer (student) and reseller (bookstore) that precludes additional sales. What most people don't realize is the publishers primarily sell to bookstores with only 20-40% of sales going direct to student. Even in the direct to student case, which was de minimis sales for the industry in 2012, there was not a signed contract between the seller and student/buyer that contained a resale restriction.

For any of you thinking Tesla can't pursue legal action, I'd suggest you reconsider your position and do a little more homework on precendents. Sure, there is the John Cena case, but most Land Rover/Range Rover dealers in the US have resale clauses that are a separate addendum to the sales contract. Typically, these are designed to prevent cross-border exportation and not secondary resale within the market of first sale, but there are penalties in the tens of thousands of dollars range and these aren't new. I'm guessing Tesla's "hard core legal team" did their homework, or perhaps own a few Land Rover products personally.

I can't speak with any experience on Ferrari (never owned) or Porsche's GT-line and once-per-decade hypercars but I would be surprised if resale were unencumbered.

With Cybertruck secondary market values falling with the imminent launch of lower-priced variants if I were Tesla Legal I'd wait until those lower-priced trucks launched and then tally up all the early sales - for which I had been collecting data - and start filing suits en masse. It's just more efficient to batch them.

 

[Arctic_White]

I was in a C-level job at one of the largest educational publishers when Kirtsaeng came down. It's not an analogous situation as in the case of textbooks - which was the good in question - there is no purchase agreement between the buyer (student) and reseller (bookstore) that precludes additional sales. What most people don't realize is the publishers primarily sell to bookstores with only 20-40% of sales going direct to student. Even in the direct to student case, which was de minimis sales for the industry in 2012, there was not a signed contract between the seller and student/buyer that contained a resale restriction.

For any of you thinking Tesla can't pursue legal action, I'd suggest you reconsider your position and do a little more homework on precendents. Sure, there is the John Cena case, but most Land Rover/Range Rover dealers in the US have resale clauses that are a separate addendum to the sales contract. Typically, these are designed to prevent cross-border exportation and not secondary resale within the market of first sale, but there are penalties in the tens of thousands of dollars range and these aren't new. I'm guessing Tesla's "hard core legal team" did their homework, or perhaps own a few Land Rover products personally.

I can't speak with any experience on Ferrari (never owned) or Porsche's GT-line and once-per-decade hypercars but I would be surprised if resale were unencumbered.

With Cybertruck secondary market values falling with the imminent launch of lower-priced variants if I were Tesla Legal I'd wait until those lower-priced trucks launched and then tally up all the early sales - for which I had been collecting data - and start filing suits en masse. It's just more efficient to batch them.

So you're saying that just because Tesla hasn't sued yet, they may sue later on?

I think Tesla's hands are too full with other things: Elon's comp package, move to TX from DE, etc. I think you are right: once Tesla's legal team has some time, they will go after those who sold for a large profit (read: $50K+).

Time will tell, though.

 

[Leifmb]

I'm of the belief that you shouldn't sign a purchase agreement that you intend to break. If you don't like the terms of the sale, don't buy it.

Whether Tesla enforces it, and when they choose to enforce it, is up to Tesla.

EXACTLY, have some integrity!

 

[carsly]

So you're saying that just because Tesla hasn't sued yet, they may sue later on?

I think Tesla's hands are too full with other things: Elon's comp package, move to TX from DE, etc. I think you are right: once Tesla's legal team has some time, they will go after those who sold for a large profit (read: $50K+).

Time will tell, though.

BINGO.

It also wouldn't surprise me if Tesla legal doesn't touch these directly. This is the type of thing you'd engage outside counsel for on a contingency basis - i.e., the external firm keeps a % of the money they recover from filing claims/suits on Tesla's behalf.

Why farm it out? It saves tying up internal counsel and gives Tesla some plausible deniability on how these suits are pursued and/or settled.

For 5-10 sales that breached the purchase agreement, they would probably manage in house. But for dozens to hundreds? Farm it to outside counsel on contingency all day long and twice on Friday.

Just because the day of reckoning hasn't happened yet does not imply that it isn't coming at all.

 

[Arctic_White]

BINGO.

It also wouldn't surprise me if Tesla legal doesn't touch these directly. This is the type of thing you'd engage outside counsel for on a contingency basis - i.e., the external firm keeps a % of the money they recover from filing claims/suits on Tesla's behalf.

Why farm it out? It saves tying up internal counsel and gives Tesla some plausible deniability on how these suits are pursued and/or settled.

For 5-10 sales that breached the purchase agreement, they would probably manage in house. But for dozens to hundreds? Farm it to outside counsel on contingency all day long and twice on Friday.

Just because the day of reckoning hasn't happened yet does not imply that it isn't coming at all.

Call me whatever but man, I'd be so happy if these suckers get sued for breaching their contracts.

I am happy both as a Tesla shareholder and also as someone who takes contract law seriously.

 

[REM]

I follow the CT and Tesla news very closely. I have not seen a single case of Tesla taking action after a sale. Its possible Tesla doesn't want the bad press of suing their customers, even if they are in the right.

There was a post here on this forum of a person that said Tesla cancelled their reservations (they had 3 pending) because they simply posted their VIN on an auction. I do not believe the sale went through. I do not recall if this story was confirmed as true or not.

I love my Cyberbeast, but if I could have I would have sold it for $100k profit. That window of opportunity is gone.

Most of the time large companies contact the person who is in breach of contract and gives them a second chance to settle outside of court. This comes with an NDA of not discussing details, of course.

 

[REM]

you guys with Google law degrees! Contracts are within the purview of state, not federal law. That means that every state will have its own nuances in terms of interpretation and enforcement. Federal courts may hear a contract case, but they apply state law when they do so.

John Cena v. Ford was much different, it was not a mass produced vehicle. Those were basically bespoke cars. Without seeing what else was in that contract or what the settlement was (likely confidential), no one but the parties really know what happened.

The first sale doctrine is a concept of copyright/trademark law, and that is federal. It has nothing to do with buying a car, unless that car is a moving piece of art or something. The T on the hood of a Tesla is not the same.

Any case with a high profile celebrity is going to be different because a company don't want to tarnish their image for the sake of a single instance of breach.

 

[sefar]

Call me whatever but man, I'd be so happy if these suckers get sued for breaching their contracts.

I am happy both as a Tesla shareholder and also as someone who takes contract law seriously.

BINGO.

It also wouldn't surprise me if Tesla legal doesn't touch these directly. This is the type of thing you'd engage outside counsel for on a contingency basis - i.e., the external firm keeps a % of the money they recover from filing claims/suits on Tesla's behalf.

Why farm it out? It saves tying up internal counsel and gives Tesla some plausible deniability on how these suits are pursued and/or settled.

For 5-10 sales that breached the purchase agreement, they would probably manage in house. But for dozens to hundreds? Farm it to outside counsel on contingency all day long and twice on Friday.

Just because the day of reckoning hasn't happened yet does not imply that it isn't coming at all.

Tesla can't be anonymous if they sue someone. Suits have to be brought in the name of the party in interest. They may hire outside counsel and probably would as their in house folks are not litigators, but that doesn't change the basic requirement that Tesla has its name on the case. A lawyer who takes a case on contingency fee is no different than one who charges an hourly fee or is internal/ in house in that regard.

I have only seen one news report of someone who said Tesla was charging him for trying to sell. He ordered the thing, moved before delivery and it wouldn't fit in his new garage. But like most things in the media involving Tesla, I am sure there are lots of facts missing if it is even true.

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