# Resale prohibition in sale contract **URL:** \ **Category:** Factual Questions\ **Created:** [August 7, 2016, 4:06am UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013 "2016-08-07T04:06:58Z")\ **Posts on this page:** 14\ **Page:** 2
**Author:** ![Ken001](https://avatars.discourse-cdn.com/v4/letter/k/43a26b/32.png) [@Ken001](https://boards.straightdope.com/u/Ken001)\ **Post date:** [August 8, 2016, 12:49am UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/21 "2016-08-08T00:49:32Z")
> [@Schnitte](#): > > In most jurisdictions, it would be held to be enforceable in personam, but not in rem. > > That means that the reseller…would be liable to the first seller for breach of contract… Ah good. Its 30 years since I learned about in personam and in rem and the example you give is an excellent illustration. ---
**Author:** ![PoppaSan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/poppasan/32/189_2.png) [@PoppaSan](https://boards.straightdope.com/u/PoppaSan)\ **Post date:** [August 8, 2016, 1:48am UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/22 "2016-08-08T01:48:08Z")
> [@Me\_Billy](#): > > \*\*Some items are sold to certain people/businesses at a loss. \*\*The intention of doing this is to gain publicity or for other people to see you or your business using the product - a form of advertising. > > Or they want a specific person/business to evaluate the product, so they sell it at a reduced price (loss). > > If you go and sell it, then they are not getting what they intended. Is this the case? I run into this at work. Several times a year I can buy from my employer a restricted volume of deeply discounted [5 lbs bag for the same price as a single serving at a national fastfood chain] food appetizers. I can also buy for my extended family and friends. The order form states on it that no one involved is allowed to resell for more than what I paid for it or it will most likely mean my job if discovered. I cannot for instance give them to the school concession stand to sell at sporting events. ---
**Author:** ![enipla](https://avatars.discourse-cdn.com/v4/letter/e/54ee81/32.png) [@enipla](https://boards.straightdope.com/u/enipla)\ **Post date:** [August 8, 2016, 1:20pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/23 "2016-08-08T13:20:41Z")
In the county that I work, they have managed ‘affordable’ housing. To qualify, you must make under a certain amount and live and work in the county. There is also a stipulation that when you sell it, you can only ask a certain percentage over the price you paid for it. Keeping it ‘affordable’. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [August 8, 2016, 1:29pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/24 "2016-08-08T13:29:10Z")
> [@HMS\_Irruncible](#): > > Well, the makers care. The stated motive is that the instrument should be affordable to everyone. What’s actually happening, as economics dictate it must, is a 6-36 month wait. Of course the makers also have complete control over the waiting list, and they’re using that control to decide who deserves to have one of their instruments (personal justification letters, etcetera). > > So, in a nutshell, creative control. I disagree, but I get it. I guess I see, from a relatively limited perspective, and I’ve dealt with similar artisan items in the past. But trying to limit resale value is an absurd and convoluted way to manage this demand. They make them; they should sell them to their select buyers for whatever price they think fair. If they want to sell it to a genuine player, it’s one price; to some yupster/hipster/mogul collector, another. If their judgment about a buyer is off and someone pretends to be a player of these rare and exotic instruments and then sells it to Trump World for $50k… I dunno. I get the intent but not the practicality. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [August 8, 2016, 3:06pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/25 "2016-08-08T15:06:45Z")
> [@HMS\_Irruncible](#): > > Well, the makers care. The stated motive is that the instrument should be affordable to everyone. What’s actually happening, as economics dictate it must, is a 6-36 month wait. Of course the makers also have complete control over the waiting list, and they’re using that control to decide who deserves to have one of their instruments (personal justification letters, etcetera). > > So, in a nutshell, creative control. I disagree, but I get it. Fundamentally, the price is high because they’re excellent instruments, and they’re scarce. That’s how the world works- things that are scarce and useful command higher prices than things that are either common, or that are not useful. But trying to limit that secondary market is futile; there are probably dozens of quasi-legal ways around it that would cost the manufacturers far more to prosecute than they’d ever get back. What they should do is raise their prices to the market price, or slightly below, and let anyone buy at the higher price, and then discount for people who’ve been vetted as legitimate artists, etc… The assumption being that the vetted people would be less likely to resell it, and the people who want to resell it, can do so, but there’ s not much money to be made, so few will. The manufacturers, in the meantime, will capture a whole lot of that money that’s being earned on the secondary market for themselves. Kind of a win-win from their perspective. Or, they could go the “make more” route, and actually try and satisfy demand at their current price by upping production. This would wreck that secondary market, and they’d still make a lot more money than they would otherwise. I realize making money isn’t their goal, but someone’s going to make money off these things, so why not the people who are making them, rather than some random asshole with an Ebay account? ---
**Author:** ![sbunny8](https://avatars.discourse-cdn.com/v4/letter/s/c77e96/32.png) [@sbunny8](https://boards.straightdope.com/u/sbunny8)\ **Post date:** [August 8, 2016, 8:06pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/26 "2016-08-08T20:06:11Z")
I can think of three specific examples where, for various reasons, I have purchased an item which I cannot legally sell to someone else. Example #1: Software which I later discovered to be counterfeit. I didn’t break the law when I bought it, but now that I know its true nature it would be illegal for me to sell it. Example #2: Food items which come several to a pack and the smaller items are labelled “Not For Retail Sale”. The point is that the larger package has nutritional facts printed on it, how many calories, etc., but the smaller items don’t. Example #3: Items sold without sales tax, to a tax-exempt organization. When I worked at a school in Tennessee, we could buy anything at all without paying sales tax, by showing a special form explaining that we were tax-exempt. But the form required my signature at the bottom and included a clause stating that these items were only for our use and would not be resold. However, if I wanted to put such a restriction into an ordinary sales contract, that would be pretty unusual, hence such a restriction would have to be clearly stated in big bold letters rather than buried in the fine print on page three. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [August 8, 2016, 9:09pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/27 "2016-08-08T21:09:00Z")
> [@sbunny8](#): > > I can think of three specific examples where, for various reasons, I have purchased an item which I cannot legally sell to someone else. > > Example #1: Software which I later discovered to be counterfeit. I didn’t break the law when I bought it, but now that I know its true nature it would be illegal for me to sell it. Software’s not actually “sold”. What you’re buying is a licence to use the software. The old notion that you “bought” the software was more of an unfortunate consequence of not being able to easily manage the licensing of retail software. > [@sbunny8](#): > > Example #2: Food items which come several to a pack and the smaller items are labelled “Not For Retail Sale”. The point is that the larger package has nutritional facts printed on it, how many calories, etc., but the smaller items don’t. Not quite the same thing; they’re not contractually enjoining you not to sell it, but rather, you’d be in violation of the labeling laws if you were to sell them. The original company doesn’t care. > [@sbunny8](#): > > Example #3: Items sold without sales tax, to a tax-exempt organization. When I worked at a school in Tennessee, we could buy anything at all without paying sales tax, by showing a special form explaining that we were tax-exempt. But the form required my signature at the bottom and included a clause stating that these items were only for our use and would not be resold. Again, it’s not the original company saying you can’t resell them- it’s the state’s sales tax laws that you’d be running afoul of, if you resold them, as you’re buying them at retail w/o sales tax, and reselling them. You’d need to be set up as a retailer to do that, and to collect sales taxes on them and remit that tax money to the state. ---
**Author:** ![RaftPeople](https://avatars.discourse-cdn.com/v4/letter/r/6f9a4e/32.png) [@RaftPeople](https://boards.straightdope.com/u/RaftPeople)\ **Post date:** [August 8, 2016, 9:27pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/28 "2016-08-08T21:27:32Z")
A snippet From FTC website: "Manufacturer-imposed Requirements Reasonable price, territory, and customer restrictions on dealers are legal. Manufacturer-imposed requirements can benefit consumers by increasing competition among different brands (interbrand competition) even while reducing competition among dealers in the same brand (intrabrand competition). For instance, an agreement between a manufacturer and dealer to set maximum (or “ceiling”) prices prevents dealers from charging a non-competitive price. Or an agreement to set minimum (or “floor”) prices or to limit territories may encourage dealers to provide a level of service that the manufacturer wants to offer to consumers when they buy the product. These benefits must be weighed against any reduction in competition from the restrictions. Until recently, courts treated minimum resale price policies differently from those setting maximum resale prices. But in 2007, the Supreme Court determined that all manufacturer-imposed vertical price programs should be evaluated using a rule of reason approach. According to the Court, “Absent vertical price restraints, the retail services that enhance interbrand competition might be underprovided. This is because discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate.” Note that this change is in federal standards; some state antitrust laws and international authorities view minimum price rules as illegal, per se…" Edit: This doesn’t really match the OP exactly as the price at retail is typically higher than wholesale, but it could be relevant, not sure ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 9, 2016, 6:53pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/29 "2016-08-09T18:53:50Z")
> [@Amateur\_Barbarian](#): > > I guess I see, from a relatively limited perspective, and I’ve dealt with similar artisan items in the past. But trying to limit resale value is an absurd and convoluted way to manage this demand. They make them; they should sell them to their select buyers for whatever price they think fair. If they want to sell it to a genuine player, it’s one price; to some yupster/hipster/mogul collector, another. If their judgment about a buyer is off and someone pretends to be a player of these rare and exotic instruments and then sells it to Trump World for $50k… I dunno. I get the intent but not the practicality. What you describe is discriminatory pricing. Usually even more difficult to implement and enforce than resale restrictions. What is more, resale is a very simple way of circumventing discriminatory pricing, so if you want to have a marketing strategy such as the one you describe, it will collapse very quickly unless some sort of resale restriction is put in place. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 9, 2016, 7:01pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/30 "2016-08-09T19:01:19Z")
An interesting example of a resale restriction is the rule that if you own an Oscar statuette, you must offer it to the Academy of Motion Picture Arts and Sciences at a price of $10 before you can sell it to third parties. The purpose is to avoid the rise of a second-hand market in Oscars. [Has been upheld in court](https://www.theguardian.com/film/2015/jul/22/us-academy-retains-right-to-buy-oscar-statuettes-for-10). ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [August 9, 2016, 7:16pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/31 "2016-08-09T19:16:06Z")
> [@Schnitte](#): > > An interesting example of a resale restriction is the rule that if you own an Oscar statuette, you must offer it to the Academy of Motion Picture Arts and Sciences at a price of $10 before you can sell it to third parties. The purpose is to avoid the rise of a second-hand market in Oscars. [Has been upheld in court](https://www.theguardian.com/film/2015/jul/22/us-academy-retains-right-to-buy-oscar-statuettes-for-10). Interesting, but not quite the same thing- it’s a sale restriction, not a resale restriction. Kind of like a “If you accept this award, here are the conditions you’re bound by.” Not all that different really than binding covenants on land. ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [August 9, 2016, 7:20pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/32 "2016-08-09T19:20:56Z")
> [@Amateur\_Barbarian](#): > > Okay. > > Who CARES if people resell these things at a higher price? What imbalance to what universe does it create? I can buy things that my company sells at a deeply discounted price. If I were to turn around and sell it at market value I would be in direct competition with them. They make it pretty clear that they can fire me and take legal action if I do so. ---
**Author:** ![Si\_Amigo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/si_amigo/32/2877_2.png) [@Si\_Amigo](https://boards.straightdope.com/u/Si_Amigo)\ **Post date:** [August 9, 2016, 7:23pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/33 "2016-08-09T19:23:21Z")
> [@CookingWithGas](#): > > I asked a similar question recently about buying or adopting a pet, and if it’s in the contract, you agreed to it and it’s enforceable (IANAL). When I adopted my two Bengal cats they papers made it clear that I did not actually own them and could not resell them. If I want to get rid of them I need to contact the agency that I adopted them from and have them find them new homes. I’ve thought about it a couple of times when they piss me off. ---
**Author:** ![Schnitte](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/schnitte/32/9033_2.png) [@Schnitte](https://boards.straightdope.com/u/Schnitte)\ **Post date:** [August 9, 2016, 7:32pm UTC](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013/34 "2016-08-09T19:32:13Z")
> [@bump](#): > > Interesting, but not quite the same thing- it’s a sale restriction, not a resale restriction. Kind of like a “If you accept this award, here are the conditions you’re bound by.” Not all that different really than binding covenants on land. Well, it one crucial aspect the two cases are identical: The person subject to the restriction is, in fact, the owner of the item, but still subject to restrictions. The Oscar statutette is given to the winner as property; it is not merely on loan. [Previous page](https://boards.straightdope.com/t/resale-prohibition-in-sale-contract/762013.md?page=1)