Term forbidding resale of a physical good

[N30087]

Is it legal for a manufacturer to require a buyer to sign a document in which the buyer gives up the right to resell or transfer a physical good?

Additional information: the product is being sold directly to the consumer by the manufacturer. The manufacturer requires agreement with terms and conditions. The terms and conditions include: "Buyer represents it will not [...], sell, or otherwise transfer, directly or indirectly, the Product." The product is not a digital good. It is best described as a kind of tool. Copyright does not appear to be an issue. The transaction is being conducted over the internet, but does not involve any reselling web site like eBay, Amazon, etc.; it is manufacturer directly to consumer.

Naive analysis: the product can be described as dangerous. The term appears to be an attempt by the manufacturer to ensure that all users are in fact original customers who have actually signed the various safety disclaimers in the T&Cs. This may be well-intentioned. But is it legal?

 

[LdiJ]

Is it legal for a manufacturer to require a buyer to sign a document in which the buyer gives up the right to resell or transfer a physical good?

Additional information: the product is being sold directly to the consumer by the manufacturer. The manufacturer requires agreement with terms and conditions. The terms and conditions include: "Buyer represents it will not [...], sell, or otherwise transfer, directly or indirectly, the Product." The product is not a digital good. It is best described as a kind of tool. Copyright does not appear to be an issue. The transaction is being conducted over the internet, but does not involve any reselling web site like eBay, Amazon, etc.; it is manufacturer directly to consumer.

Naive analysis: the product can be described as dangerous. The term appears to be an attempt by the manufacturer to ensure that all users are in fact original customers who have actually signed the various safety disclaimers in the T&Cs. This may be well-intentioned. But is it legal?

If you have to be that vague, then you need to run your situation by a local attorney with whom you can share the actual facts.

 

[adjusterjack]

But is it legal?

Contractual agreements are legal if not prohibited by law. I don't know of any law that would prohibit such an agreement as you describe. If you sign it you are bound by it.

However, whether the agreement is enforceable is another story. If you bought the product and sold it on Craigslist, how would the manufacturer know? Does it have a serial number? Does it have to be registered with a government agency? Would a warranty only be transferable if the new owner registered it with the company? Or is the warranty good only for the original owner.

Asking your question without identifying the product gets you nowhere here.

 

[Taxing Matters]

But is it legal?

It is legal to have the term in the contract as no law says it is illegal. However whether the restriction is enforceable is another matter, and that depends on exactly what this item is and the applicable state law (and you did not mention the state).

 

[HRZ]

IT might make a lot of sense if manufacturer was seeking to move product in ways intended not to interfere with its primary distribution channels or prevailing price structure .....but as others post.....enforcement may be problematic ...then again tough enforcement terms might be in the terms of the agreement ( but I doubt it )

 

[FlyingRon]

It also matters how this "contract" is presented. If you actually sit down and sign an agreement, that's one things. Ones that are posted in stores or just printed on the box have generally been held invalid and the first sale rule applies.

 

[quincy]

Is it legal for a manufacturer to require a buyer to sign a document in which the buyer gives up the right to resell or transfer a physical good?

Additional information: the product is being sold directly to the consumer by the manufacturer. The manufacturer requires agreement with terms and conditions. The terms and conditions include: "Buyer represents it will not [...], sell, or otherwise transfer, directly or indirectly, the Product." The product is not a digital good. It is best described as a kind of tool. Copyright does not appear to be an issue. The transaction is being conducted over the internet, but does not involve any reselling web site like eBay, Amazon, etc.; it is manufacturer directly to consumer.

Naive analysis: the product can be described as dangerous. The term appears to be an attempt by the manufacturer to ensure that all users are in fact original customers who have actually signed the various safety disclaimers in the T&Cs. This may be well-intentioned. But is it legal?

Are you in the U.S? If so, what state do you live in? If not, in what country do you reside?

What is the product? Is it a weapon?

 

[N30087]

Thank you all for the replies. First, I'm sorry about the vagueness; the product is sold by a company run by a controversial individual, and I didn't want the followups to degenerate into a discussion of him. In addition, the seller attempts to make the terms visible only to actual purchasers, and not to third parties like me. I'm in the U.S. The buyer is a friend in Ohio. The object is not a firearm; firearms law doesn't apply. There are no explicit words about enforcement or consequences. I was hoping to hear that there was some kind of standing law guaranteeing my right to do whatever I want to with a physical good that I own, i.e. prohibiting sale agreements like this one, in the same sense that manufacturers are not permitted to make "warranty void if sticker is removed" clauses. I'm sad to hear that does not appear to be the case.

 

[quincy]

There is no law against parties to a contract agreeing to its terms, whatever those terms might be.

The enforceability of the contract and its terms depend on many factors, including those which you are reluctant to disclose online.

You should sit down with an attorney in your area for a personal review.

Good luck.

 

[Just Blue]

Thank you all for the replies. First, I'm sorry about the vagueness; the product is sold by a company run by a controversial individual, and I didn't want the followups to degenerate into a discussion of him. In addition, the seller attempts to make the terms visible only to actual purchasers, and not to third parties like me. I'm in the U.S. The buyer is a friend in Ohio. The object is not a firearm; firearms law doesn't apply. There are no explicit words about enforcement or consequences. I was hoping to hear that there was some kind of standing law guaranteeing my right to do whatever I want to with a physical good that I own, i.e. prohibiting sale agreements like this one, in the same sense that manufacturers are not permitted to make "warranty void if sticker is removed" clauses. I'm sad to hear that does not appear to be the case.

We don't need the company name but the product would be helpful. Or is this product unique to the controversial company?

 

[Zigner]

Just as the seller is free to insert such terms in to the contract, the buyer is free to reject said terms and buy the product elsewhere.

 

[Mass_Shyster]

There is nothing inherently illegal or immoral about breaching a contract, but the non-breaching party will have some legal recourse.

If the seller any buyer enter into a contract, the buyer is free to violate the terms of that contract, but may face consequences.

The buyer can buy the item and turn around and sell it to you. The seller has no recourse against you, since you do not have a contract with the seller. The seller's only recourse is against the buyer.

I had a client who wanted to prevent transfers of the items sold. I suggested they lease the item for 99 years, and put in the agreement that the item remains the property of the lessor and the lessee agrees to retain possession. When the items start showing up on eBay, the seller can rightfully claim that the item still belongs to seller and is not lawfully owned by the person trying to sell it on eBay.

 

[quincy]

There are (legal) drug samples provided by manufacturers to doctors (and veterinarians) that are not for resale. Doctors (and veterinarians) are not permitted to sell these drugs nor are the recipients of these drugs permitted to sell them. To do so can be illegal.

I am wondering if the "dangerous product" being discussed here could be drugs? If so, there can be legal consequences to both the manufacturer selling the samples and the buyer buying and then reselling the drugs.

 

[FlyingRon]

The not for resale on drugs is not because of contractual stipulations. It's an FDA rule based covering the way physician samples are handled.

 

[quincy]

The not for resale on drugs is not because of contractual stipulations. It's an FDA rule based covering the way physician samples are handled.

Right. But there is a contract between N30087 and a "controversial" individual/manufacturer which indicates there could be a problem with the legality of the sale (or the product being sold). This can affect the legality of the contract and its enforceability.