Non-resale clause inconsistency - is it legal?

[Crissa]

Yeah, Ford hadn't thought to provide a floor for depreciation or use the more standard 'first right to' refuse to buy it back as a way out of the agreement.

-Crissa

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[HaulingAss]

That just adds another layer of risk for any Cybertruck flipper who wants to also take the $7500 tax credit. Nobody wants to go up against the IRS!

I'm thinking I might get my Cybertruck earlier than I expected!

 

[TruckDaddy]

That just adds another layer of risk for any Cybertruck flipper who wants to also take the $7500 tax credit. Nobody wants to go up against the IRS!

I'm thinking I might get my Cybertruck earlier than I expected!

The Founder's edition is not under $80k and will not qualify for the $7500 tax credit.

 

[HaulingAss]

These kinds of agreements are not frowned upon by the courts, courts have long upheld the rights of consenting adults to enter into legally binding contracts. The only way the courts would frown upon this is if:

1) The consent was forced, ie, the buyer had no choice but to buy.

2) The clause was not clearly disclosed, ie, it was worded in such an obtuse manner than it was unclear what it meant.

Neither of these things are present. Regardless of how awesomely desirable the product is, nobody is being forced to buy one. It was even disclosed on the reservation agreement that you were not making the reservation for the purpose of reselling. One thing you can count on, if you know how Tesla operates, once the market has stabilized, and supply and demand are in balance, Tesla will remove the clause. It's only there to prevent a flipping shit-show from developing. Tesla doesn't want scalpers taking over functions that Tesla can more equitably fulfill themselves, costing the ultimate consumers more money or more time (or both).

Remember, a scalpers profit doesn't come from nowhere and the impact to the market doesn't stop at the parties directly involved (because there is a limited supply of Cybertrucks relative to demand, at least for the first several months and up to a couple of years).

Only someone wanting to profit financially from how awesome the Cybertruck is would take issue with such a clause. If you don't want to profit, you can still sell your Cybertruck in the first year, you just have to give Tesla the right to buy it back with very reasonable depreciation. I can see a sincere buyer having trouble with a clause that says it loses 25% of it's value as soon as you drive it off the lot, but Tesla isn't doing that here.

 

[HaulingAss]

1) The earlier link to Wikipedia on "equitable servitudes on chattels" had a lot of case law on products that were not sold with specific Purchase and Sale agreements at the point of sale. These cases were example of a manufacturer with a patented item putting broad restrictions on that item to anyone who came into possession of their product, through any means. That is vastly different from a manufacturer selling an item to a specific individual with a specific purchase and sale agreement.

As a lawyer, you should know the difference here.

2) I never claimed it was a right of first refusal. A right of first refusal typically requires the holder of that right to match any standing offer. This clause gives Tesla the right to buy it back (with very reasonable depreciation) before it is offered to anyone else.

Nothing in the clause is legally repugnant. If you don't like the terms of the sale, don't buy it.

 

[Tanquen]

Not a fan of scalpers or flippers, but if you truly bought the vehicle with genuine interest and a few months later decide you didn't want it, it would be nice to have options. It sucks to have to wait but we've already waited four years and when anything new comes out you end up waiting a little bit longer because of scalpers and folks with more money than sense.

Maybe we shouldn't allow car loans. It's not fair if somebody works hard and waits to save up money to pay cash and somebody else can just go to the dealership and buy the car with a big old loan and encourage higher prices.

Then Tesla and other manufacturers turn around and do the same thing by offering foundation editions etc. for a bunch more money that many people that were waiting for 4 years for a $50,000 vehicle will not have. Or just when they advertise base prices for a base price vehicle they make two of a year or never get made and or when you go to buy a car and they've added several thousand dollars worth of add-ons that you don't want and so on and so forth.

I do wish companies would do something about it and in the end I think the clause is a good thing. It's still more of a fox guarding the hen house kind of thing. Maybe every vehicle or product over $1,000 should have one for 6 months. Computer gaming enthusiasts have had a nightmare the last few years trying to get a video card because everybody thinks they're going to get rich scalping them.

 

[HaulingAss]

Not a fan of scalpers or flippers, but if you truly bought the vehicle with genuine interest and a few months later decide you didn't want it, it would be nice to have options.

I'm not sure how this is a bad thing (relative to a normal vehicle purchase that loses 20% of it's value the minute you drive it off the lot).

If you buy a Cybertruck, drive it around for a month or two, decide it's not a good fit, you let Tesla know you want to sell it, they reasonably only have around 30 days to buy it back or you can sell it on the open market for whatever it will bring. Unless you've trashed it or driven it big miles, you're going to lose a lot less than with your typical vehicle that has more supply than there is demand.

As long as you don't go into the purchase thinking you're going to break even or make a bunch of profit, you will be fine.

 

[HaulingAss]

The Founder's edition is not under $80k and will not qualify for the $7500 tax credit.

I don't live in California or Texas so a lot of people will be getting their non-Founders Edition Cybertruck before me. This just helps filter out the scalpers between me and my Cybertruck.

 

[Tanquen]

I'm not sure how this is a bad thing (relative to a normal vehicle purchase that loses 20% of it's value the minute you drive it off the lot).

If you buy a Cybertruck, drive it around for a month or two, decide it's not a good fit, you let Tesla know you want to sell it, they reasonably only have around 30 days to buy it back or you can sell it on the open market for whatever it will bring. Unless you've trashed it or driven it big miles, you're going to lose a lot less than with your typical vehicle that has more supply than there is demand.

As long as you don't go into the purchase thinking you're going to break even or make a bunch of profit, you will be fine.

It is what it is. I'm just saying that they're admitting that you could get more for the vehicle so they're making you sign something that says you can't sell it for more.

On the other hand, Tesla is letting people cut in line so to speak, if you're willing to pay 20 grand (on top of the large price increases they get to decide on) more for stuff you probably don't want. They could at least add a free year of charging or something, that like everyone could use. Then if later you decide you don't want it, you can't break even or get a little extra and or have to wait 30 days or more probably. You have to agree to whatever depreciation they want to put on it, as though it's not worth enough for you to break even or even make a little more. It's still a better deal than buying another luxury vehicle and losing $10,000+ the moment you drive it off the lot or what have you.

 

[jtdiddy]

I'm a litigator and if challenged in an actual case, I wouldn't be surprised if a Court didn't enforce it on the same grounds as non-competition clauses are rejected (especially in CA) but not sure how serious Tesla themselves are in enforcing this term on people and it seems more of a scare tactic than anything.

 

[Crissa]

If they don't, as you pointed out, it wouldn't stand in court. "Reasonableness" is a standard in law. A really waffly one.

-Crissa

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