ESA - now eligible even with dealer in chain of ownership?

[deaddog]

As best I can tell, originally the Extended Service Agreement was available only to the original owner. Tesla then changed policy to permit subsequent owners to purchase the ESA (assuming mileage/time limits met) so long as the car was always bought/sold by private parties - but anytime a dealer took title the car was no longer eligible for an ESA to be purchased by the dealer or by any subsequent private purchaser.

Has that changed? I was looking at purchasing from a private seller who had obtained the car from a dealer - so chain of ownership was Tesla to original owner; original owner to dealer; dealer to second owner; and, potentially, second owner to me. I assumed that the car was no longer eligible for ESA but second owner has a screenshot from MyTesla showing that the car is eligible for ESA.

If this is, in fact, a change, I think it provides a huge benefit to used purchasers as it widens the pool of available cars to those who want an ESA. Of course, all the other caveats about buying from dealers still apply -- but I'd really like to know the answer to this.

Thanks

 

[HankLloydRight]

I don't think anything changed. Sounds like a little loophole or crack in the rules. What does the carfax say? If Tesla never knew it went through a dealer, the ESA eligibility wouldn't change. If somehow they find out later they might cancel it with a prorated refund, but I seriously doubt they would dig that deep or even bother.

 

[Evil Twin]

This is what the Tesla website says about eligibility to purchase the ESA, as of today:

"Can anyone purchase an Extended Service Agreement?
Owners (excluding 3rd party dealers and vehicles purchased from a 3rd party dealer) with Model S or X vehicles subject to the New Vehicle Limited Warranty which are still within the eligible purchase period can purchase the Extended Service Agreement."

Vehicle Warranty | Model S and Model X

I don't see the change. If it were me and I found a dealer car I wanted, I would strike a deal and tell the dealership it's contingent on you being able to purchase the ESA......try and purchase before you give the dealer money. If it works, pay the man. If it doesn't, walk away.

None of the above, however, guarantees that Tesla won't do some underwriting at the TIME YOU MAKE A CLAIM (i.e. bring it in for a repair), only to be told at that point that your car didn't actually qualify for the ESA. Then they refund your ESA money and you have an a car out of warranty.

 

[deaddog]

Anybody know of any instance where Tesla has cancelled somebody's ESA for any reason? I haven't seen the fine print of the agreement but, absent obvious fraud (altered VIN, for example) or modifications to the vehicle, I'd be surprised if Tesla would or could do that. Of course, Tesla does lots of crazy things but I would really like to know if this is just speculation or based on knowledge of actual occurences.

 

[Evil Twin]

I have no actual knowledge of an ESA being cancelled. However, they absolutely could do that if they discovered something like the car came from a 3rd party dealer and an ESA was accidentally or fraudulently procured.

Someone with a lot of money to gamble, give it a try and post your results

 

[deaddog]

Unless the ESA contract says Tesla can cancel the ESA at its discretion, I strongly suspect that they can't cancel it if Tesla makes a mistake and accidentally sells an ESA on a car that had a dealer in the ownership chain (assuming that nobody lied to Tesla about that fact - that is, absent fraud). But I don't think you can cancel a contract because you made a mistake/accident unless the contract gives you that right.

Obviously, this isn't legal advice and we're all just speculating - but interesting question.

 

[HankLloydRight]

I'm pretty sure the contract allows Tesla to cancel it at will, with a pro-rated refund.

 

[DrMike]

I'm pretty sure the contract allows Tesla to cancel it at will, with a pro-rated refund.

Then that would arguably be a completely worthless warranty. The whole point of a warranty is that you (the consumer) are gambling that the cost of the warranty will be less than the cost of repairs, while the company providing the warranty is making the reverse gamble. If the company has the right to cancel the warranty any time they choose, and offer a pro-rated refund, then if a repair becomes necessary that would cost more than paying off the warranty, they would just cancel it. So there would be no reason for the consumer to buy it, since the vendor has the option of making sure they don't come out on the losing end.

It would be like going to a casino where the "house" has the right to cancel any game any time they want, including after it has been determined that they would lose. You think you win at Roulette? Nope, game cancelled, we'll give you your dollar back. Would you like to try again though and see if this time you win? (and we cancel it again)

 

[Evil Twin]

Then that would arguably be a completely worthless warranty. The whole point of a warranty is that you (the consumer) are gambling that the cost of the warranty will be less than the cost of repairs, while the company providing the warranty is making the reverse gamble. If the company has the right to cancel the warranty any time they choose, and offer a pro-rated refund, then if a repair becomes necessary that would cost more than paying off the warranty, they would just cancel it. So there would be no reason for the consumer to buy it, since the vendor has the option of making sure they don't come out on the losing end.

It would be like going to a casino where the "house" has the right to cancel any game any time they want, including after it has been determined that they would lose. You think you win at Roulette? Nope, game cancelled, we'll give you your dollar back. Would you like to try again though and see if this time you win? (and we cancel it again)

No, Dr. Mike. We're talking about a hypothetical situation where an ESA was issued on a non-eligible car.

 

[DrMike]

I know that was the original discussion, but the post I quoted said the contract says they can cancel it "at will", which implies that they can cancel it at any time they choose - rather than there needing to be a reason. That's what I was referring to, not the previous posts.

 

[Evil Twin]

I know that was the original discussion, but the post I quoted said the contract says they can cancel it "at will", which implies that they can cancel it at any time they choose - rather than there needing to be a reason. That's what I was referring to, not the previous posts.

ah

 

[barjohn]

When you ask a court to enforce a contract you must have "clean hands." Since this is a public forum and Tesla may monitor it, it would not be hard for their attorney to discover either from this forum or during deposition that you knew Tesla's policy and were trying to take advantage of either a fraud perpetrated against Tesla or an error by Tesla in making the car eligible for the ESA. Once they establish your "knowing" then it becomes you trying to defraud Tesla and Tesla then has every right not to honor a contract entered into under fraudulent conditions. Even the scenario discussed above of having the seller obtain the ESA prior to your buying it doesn't absolve you. You cold contact Tesla and indicate that their site is showing the vehicle as being eligible for an ESA purchase even though it has been through a dealer in the chain of custody and ask if Tesla has or is willing to offer a waiver in this case. If they do and later tried to renege on the contract they would lose and you would have clea hands.

 

[deaddog]

When you ask a court to enforce a contract you must have "clean hands." Since this is a public forum and Tesla may monitor it, it would not be hard for their attorney to discover either from this forum or during deposition that you knew Tesla's policy and were trying to take advantage of either a fraud perpetrated against Tesla or an error by Tesla in making the car eligible for the ESA. Once they establish your "knowing" then it becomes trying to defraud Tesla and Tesla then has every right not to honor a contract entered into under fraudulent condition yous. Even the scenario discussed above of having the seller obtain the ESA prior to your buying it doesn't absolve you. You cold contact Tesla and indicate that their site is showing the vehicle as being eligible for an ESA purchase even though it has been through a dealer in the chain of custody and ask if Tesla has or is willing to offer a waiver in this case. If they do and later tried to renege on the contract they would lose and you would have clea hands.

I'm not going to get in a law debate but this post is way too alarmist to let go. If Tesla sells an ESA and then decides it made an error and tries to renege based on the ambiguous language quoted above, there is almost no chance you will be found to have been "trying to defraud Tesla" Sure, alter a VIN or misrepresent the car's status, you have problems. But clicking "yes" on a link Tesla puts on your MyTesla page, no way is that fraud.

Of course, this isn't legal advice and if you're concerned, consult a lawyer. Don't listen to guys on the internet (including me) spouting off about hypothetical legal issues.

 

[Evil Twin]

Close, but no cigar, Barjohn.....you are correct about the unclean hands, but Deaddog provides the alternative hypothetical scenario where the buyer is innocent.

Deaddog, there is absolutely nothing ambiguous about Tesla's eligibility language.

 

[deaddog]

Close, but no cigar, Barjohn.....you are correct about the unclean hands, but Deaddog provides the alternative hypothetical scenario where the buyer is innocent.

Deaddog, there is absolutely nothing ambiguous about Tesla's eligibility language.

If you don't think its ambiguous, you, at least, have to agree that it is poorly written. What does "Owners (excluding 3rd party dealers and vehicles purchased from a 3rd party dealer)" mean: how can "vehicles" be "Owners". Only people can be Owners, not the vehicle itself. That said, I think the only reasonable interpretation is "Owners (excluding 3rd party dealers and [any person who purchases] vehicles ... from a 3rd party dealer)".

So, you'd have to be pretty ballsy to argue that its ambiguous and doesn't disqualify a vehicle purchased from a 3rd party dealer - but I think you could pass the "red face" test, particularly in the posited instance in which Tesla sold the ESA and was trying to renege.

 

[barjohn]

When you engage in a transaction with someone and you know they are making an error in your favor that they later discover and then renege on the transaction, you are not an "innocent party." Your ability to enforce the agreement is lost, of course you can always gamble that they will never discover the error or even if they do that they will not be able to show that you knew but then what does that say about you and your ethics?

 

[Soonerorlater]

I’ve been thinking about purchasing a Tesla for awhile and while doing some research I called the Tesla center on Long Island. I was told that if there was a car dealer involved with the car that was not Tesla that purchasing an ESA was not possible.

 

[Evil Twin]

If you don't think its ambiguous, you, at least, have to agree that it is poorly written. What does "Owners (excluding 3rd party dealers and vehicles purchased from a 3rd party dealer)" mean: how can "vehicles" be "Owners". Only people can be Owners, not the vehicle itself. That said, I think the only reasonable interpretation is "Owners (excluding 3rd party dealers and [any person who purchases] vehicles ... from a 3rd party dealer)".

So, you'd have to be pretty ballsy to argue that its ambiguous and doesn't disqualify a vehicle purchased from a 3rd party dealer - but I think you could pass the "red face" test, particularly in the posited instance in which Tesla sold the ESA and was trying to renege.

Ok, I suppose I could see your way of reading it. However, after litigating these sorts of things for 20 years it's plain as day, from my point of view.

As they say, "reasonable minds can differ."

 

[Evil Twin]

When you engage in a transaction with someone and you know they are making an error in your favor that they later discover and then renege on the transaction, you are not an "innocent party." Your ability to enforce the agreement is lost, of course you can always gamble that they will never discover the error or even if they do that they will not be able to show that you knew but then what does that say about you and your ethics?

Missing the point, once again. Here, we are assuming an innocent purchaser. We all agree about the unclean hands doctrine.

Not every Tesla owner in the world is a member of these forums and there are a lot of Tesla owners who have never read the eligibility requirements.

So Joe Q. Public goes to Anytown's Local Used Car Lot and purchases a Tesla. Joe uses the Tesla app and sees a button that prompts him to purchase the ESA. Joe, being a member of the Q. Public family, has never read anything about the ESA online, including it's eligibility requirement. Joe hits "purchase"

Joe has clean hands.

Your general statement about knowing of the other party's error is not necessarily true either. The courts will not overturn a "bad deal."

Unilateral mistake of fact is a very hard burden to overcome.

 

[carnut4ever]

The second sale could have been a consignment sale and the vehicle not actually brought into a conventional dealer inventory.