How Safe Are AD Deposits?

[Boaters]

I personally would not do a deposit no way not in these times.

[jgmvm2087]

Some interesting replies here.

First, I am not a legal professional and this is not to be taken as legal advice. I hold no liability for individuals acting on their own based upon my OPINIONS.

Second, I did major in legal studies which included a class on contract law.

A deposit involves what is known as an implied contract. You make deposit, seller produces the piece, you pay the remaining balance, you then own the piece. If you make a deposit and the seller doesn’t produce the piece, they are in breach. That means you are entitled to be made whole. You get your deposit back. If they provide the piece, and you don’t pay the remaining balance, you are in breach. They keep your deposit.

That being said, if in the implied contract a date of fulfillment is not specified (meaning the AD will provide you with a HULK when they reopen their doors, or by such and such date) the implied contract is open ended. They could hold your money until they fulfill their contract obligation. That is, unless, you make it clear that at anytime before they fulfill their promise (providing the piece) you are entitled to a full refund of the deposit should you decide not to proceed.

There is no such thing as an AD taking a deposit for a piece they don’t intend to provide and keeping your money. If they do, they are committing fraud which is against the law both criminally and entitling you to civil recourse. A real Rolex AD would not act this way.

Again, this is not legal advice. Just merely my opinion.

If it were me. I would ask when they felt the piece would be available. Additionally, I would make it known that at any time before the piece is provided I was entitled to a full refund if I chose not to proceed. Lastly, the best thing you can do is get everything in writing. That is the ultimate protection that will ensure you come out unscathed.

Hope this helps.

[uhren917]

Originally Posted by jgmvm2087

Some interesting replies here.

First, I am not a legal professional and this is not to be taken as legal advice. I hold no liability for individuals acting on their own based upon my OPINIONS.

....
There is no such thing as an AD taking a deposit for a piece they don’t intend to provide and keeping your money. If they do, they are committing fraud which is against the law both criminally and entitling you to civil recourse. A real Rolex AD would not act this way.

....

Hope this helps.

Excellent post!

[illiguy]

I have and would again.

[RX0]

Originally Posted by Calatrava r

With your great relationship with this store, you would think they would forego deposits in your case. I have never understood deposits on hot pieces anyway. What's the point. They can sell them easily for cash immediately. Why tie up anyone's money.

My AD has many established collectors and they want the hot model to be allocated to collectors. The deposit is my part to show my commitment toward the purchase. I feel more secure to have deposit to secure my allocation. I put 50% deposit for a Patek 5740 since Aug 2018. At that time, they quoted delivery by Fall of 2019. It was delay and the owner mailed it to me before shelter in place become active.

[RX0]

[QUOTE=GovernorsGovernor;10531652]Sir, you win the internet today! You are completely right!! These people who claim to have great relationships with their ADs, yet putting down 50-100% have it completely backwards!

If you are putting down 50%+ on a watch, you have a TERRIBLE relationship with your AD! (The AD has the great relationship, not you! Lol)

Yeah, your family has been friends with their family for 3 generations, and blah, blah, blah...

But guess what? They don't view you in the same light as you view them! Lol... They either see a poor negotiator, a sucker, the next guy in line, or all of the above.

Folks, wake up. You have it completely backwards.

Can you help me to find an AD that is willing to offer me the first blue dial skydweller when it was released in July 2017 or an AD willing to allocate a 5740 to me for sure? I'm would be very happy if that is the case.

[RoverLR4]

Not a lawyer, but I think it’s generally straightforward for U.S. corporate bankruptcies: If you leave a deposit with a dealer that ends up filing for bankruptcy, you’re left as an unsecured creditor... not the ideal place to be in the bankruptcy waterfall.

[Rado63]

Originally Posted by golfgrouch

There are some ADs requiring deposits to reserve timepieces during the COVID-19 shutdown. However, with the combination of a severe supply constraint, a demand drop, and government mandated business operation restrictions, it stands to reason that there is elevated solvency risk for ADs. So the question is, how safe are deposits at ADs?

Would you feel comfortable placing a deposit now at an AD?

For the lawyers out there: Is there any recourse?

Which timepieces could I get if I made a deposit?

[Michael T]

I was a corporate banker or 34 years, 12 of which dealt with larger insolvencies and bankruptcies in the USA. We are in untried times. No one knows when firms will reopen again. The longer this goes, the more rent and unpaid wages will go. Most Rolex AD’s are in higher rent locations. A deposit is an unsecured obligation, behind payment in full of secured obligations, which may constitute inventory financing provided by banks.

Credit cards can give you some protection, but I would strongly advise to keep any deposit at a modest level that is below the AD’s % margin on the transaction. You want them to have some margin in closing the deal when they reopen. 40 to 100% deposits are a really bad idea.

The current financial stress is unlike any other, it may clear soon, but it might not.

[Mr. Miami]

Curious as to what everyone thinks of doing a layaway? Like ordering a watch from AD and then making payments, then taking possession once payments are completed.

[GovernorsGovernor]

Originally Posted by jgmvm2087

Some interesting replies here.

First, I am not a legal professional and this is not to be taken as legal advice. I hold no liability for individuals acting on their own based upon my OPINIONS.

Second, I did major in legal studies which included a class on contract law.

A deposit involves what is known as an implied contract. You make deposit, seller produces the piece, you pay the remaining balance, you then own the piece. If you make a deposit and the seller doesn’t produce the piece, they are in breach. That means you are entitled to be made whole. You get your deposit back. If they provide the piece, and you don’t pay the remaining balance, you are in breach. They keep your deposit.

That being said, if in the implied contract a date of fulfillment is not specified (meaning the AD will provide you with a HULK when they reopen their doors, or by such and such date) the implied contract is open ended. They could hold your money until they fulfill their contract obligation. That is, unless, you make it clear that at anytime before they fulfill their promise (providing the piece) you are entitled to a full refund of the deposit should you decide not to proceed.

There is no such thing as an AD taking a deposit for a piece they don’t intend to provide and keeping your money. If they do, they are committing fraud which is against the law both criminally and entitling you to civil recourse. A real Rolex AD would not act this way.

Again, this is not legal advice. Just merely my opinion.

If it were me. I would ask when they felt the piece would be available. Additionally, I would make it known that at any time before the piece is provided I was entitled to a full refund if I chose not to proceed. Lastly, the best thing you can do is get everything in writing. That is the ultimate protection that will ensure you come out unscathed.

Hope this helps.

I like your spirit, but i feel you're missing the biggest point of all:

All of the written contracts in the world won't save you when a business goes bankrupt, and you're in the rear of a queue, waiting to be made whole.

You most likely will NOT retrieve your money.

[GovernorsGovernor]

Originally Posted by RX0

My AD has many established collectors and they want the hot model to be allocated to collectors. The deposit is my part to show my commitment toward the purchase. I feel more secure to have deposit to secure my allocation. I put 50% deposit for a Patek 5740 since Aug 2018. At that time, they quoted delivery by Fall of 2019. It was delay and the owner mailed it to me before shelter in place become active.

It's all about personal comfort level. If putting 50% down is fine for you, then cool.

Personally, I feel that's a weak position to be in for the buyer.

If I'm told I must put 50% down, then that implicitly sends me a message that the AD doesn't value my business (which is fine) as much as someone else's, and is thus putting me in a very weak negotiating position.

I don't give up that much power in negotiations.

[JDsnewwatch]

NOT A CHANCE. These guys are hemorrhaging cash and are teetering on the edge of bankruptcy and if you think you are getting paid back when that happens, I have news for you, you will be on a whole other kind of waiting list. Keep your money where it belongs (in your bank account).

[Reign]

You’re toast. It’s you vs the bank. You won’t see a penny until all the debt holders get all of there money back, it’ll take 12-24 months

[scarlet knight]

Originally Posted by JDsnewwatch

NOT A CHANCE. These guys are hemorrhaging cash and are teetering on the edge of bankruptcy and if you think you are getting paid back when that happens, I have news for you, you will be on a whole other kind of waiting list. Keep your money where it belongs (in your bank account).

If an AD goes under, you are not getting your money back. If you had a deposit held at a toilet paper store, I would say no problem, they are in for the long haul.

[GovernorsGovernor]

Originally Posted by RX0

Can you help me to find an AD that is willing to offer me the first blue dial skydweller when it was released in July 2017 or an AD willing to allocate a 5740 to me for sure? I'm would be very happy if that is the case.

Of course not! Allow me to illustrate my point:

Say you've spent a half million dollars at your AD over the years...

You walk into your AD looking for yet another piece... Doesn't matter what it is--a 5740, a blue Sky D, or just a Milgauss...

If that AD wants anything over 10%, let alone 50-100%, you, Sir, even with your exemplary history, do NOT have a good relationship with your AD!!!!!!

Why? Could be anything: You may be a poor negotiator... You may be too buddy-buddy with the AD... You may not command respect as you should... The AD just may not care about you, knowing the next guy through the door will cave to his demands.

But you know what? Guys in here like being "pals" with the AD... They like chocolate "crowns"... They like cheesy cuff links... They like ill-fitting $2 hats... They like pens...

Quite simply, they fall victim to being wined, dined, and 69'd.

[Ihatecheese]

I'd think those deposits are merely giving the ADs a bit of runway to pay their costs in this climate. V risky.

[mjr24]

Originally Posted by jgmvm2087

Some interesting replies here.

First, I am not a legal professional and this is not to be taken as legal advice. I hold no liability for individuals acting on their own based upon my OPINIONS.

Second, I did major in legal studies which included a class on contract law.

A deposit involves what is known as an implied contract. You make deposit, seller produces the piece, you pay the remaining balance, you then own the piece. If you make a deposit and the seller doesn’t produce the piece, they are in breach. That means you are entitled to be made whole. You get your deposit back. If they provide the piece, and you don’t pay the remaining balance, you are in breach. They keep your deposit.

That being said, if in the implied contract a date of fulfillment is not specified (meaning the AD will provide you with a HULK when they reopen their doors, or by such and such date) the implied contract is open ended. They could hold your money until they fulfill their contract obligation. That is, unless, you make it clear that at anytime before they fulfill their promise (providing the piece) you are entitled to a full refund of the deposit should you decide not to proceed.

There is no such thing as an AD taking a deposit for a piece they don’t intend to provide and keeping your money. If they do, they are committing fraud which is against the law both criminally and entitling you to civil recourse. A real Rolex AD would not act this way.

Again, this is not legal advice. Just merely my opinion.

If it were me. I would ask when they felt the piece would be available. Additionally, I would make it known that at any time before the piece is provided I was entitled to a full refund if I chose not to proceed. Lastly, the best thing you can do is get everything in writing. That is the ultimate protection that will ensure you come out unscathed.

Hope this helps.

Meh....not amazingly helpful. You took a contract class once, OK. They teach you the most basic of basics in an undergrad law class (I took them....I went to law school, too). Don't give advice based on taking one undergrad course....someone here might actually follow this advice.

Back to the story at hand.....most everyone else has hit the nail on the head. You can talk contracts, etc. but the bottom line is....in real world context, if that AD goes bankrupt, you will likely get zero. You can then sue them....and you will likely get zero. You aren't going to recover money from someone who doesn't have it.

I find it REALLY......shady.....that some dealers are asking for full deposits without the guarantee of a watch being delivered right now (and basically hiding behind that fact by using COVID) when we ALL KNOW that these dealers get very few watches per year. I'd be very skeptical of those dealers.

Only been real active on this forum for a few years.....and I know there are exceptions but Rolex ADs come in second to used car salesmen in my mind after all the things I've read on here. I had a totally neutral opinion of them when I joined this forum, too. It's weird times right now....and taking $10k for a few watches they don't have can definitely float an AD for awhile. I'm not saying these ADs' purpose is to never deliver but I think they know nothing has suddenly changed with Rolex supply. Only difference between now and then is they will have your $10k on an interest-free loan in exchange for you still being on a wait list where they gladly will still bypass you if someone comes in offering to buy 3 $10k watches.

[GovernorsGovernor]

Originally Posted by mjr24

Meh....not amazingly helpful. You took a contract class once, OK. They teach you the most basic of basics in an undergrad law class (I took them....I went to law school, too). Don't give advice based on taking one undergrad course....someone here might actually follow this advice.

Back to the story at hand.....most everyone else has hit the nail on the head. You can talk contracts, etc. but the bottom line is....in real world context, if that AD goes bankrupt, you will likely get zero. You can then sue them....and you will likely get zero. You aren't going to recover money from someone who doesn't have it.

I find it REALLY......shady.....that some dealers are asking for full deposits without the guarantee of a watch being delivered right now (and basically hiding behind that fact by using COVID) when we ALL KNOW that these dealers get very few watches per year. I'd be very skeptical of those dealers.

Only been real active on this forum for a few years.....and I know there are exceptions but Rolex ADs come in second to used car salesmen in my mind after all the things I've read on here. I had a totally neutral opinion of them when I joined this forum, too. It's weird times right now....and taking $10k for a few watches they don't have can definitely float an AD for awhile. I'm not saying these ADs' purpose is to never deliver but I think they know nothing has suddenly changed with Rolex supply. Only difference between now and then is they will have your $10k on an interest-free loan in exchange for you still being on a wait list where they gladly will still bypass you if someone comes in offering to buy 3 $10k watches.

You are so right about contracts... Even with actual judgements in your favor--I remember seeing an interview with Fred Goldman (the father of the slain Ron Goldman from the OJ trial), and he said a judgement is just a piece of paper, referring to the $40 million his family was awarded in the civil suit. He basically said, now you have to hound him for whatever crumbs are left for the rest of your/his life.

And these guys in here are thinking they'll get deposits back from bankrupted businesses. Cool story.

[SpeedyTuomas]

If the AD goes bankrupt or faces similar problems, problems lie ahead for you so I would not pay. If I would be forced to pay, I would use a credit card but am unsure if that would even help in such a case.

[Njw]

And these guys in here are thinking they'll get deposits back from bankrupted businesses. Cool story.

I was offered a watch when an AD reopens for 100% deposit last week and turned it down. The people taking it are expecting to get the money back from the credit card company, not the AD if they go bankrupt. Whether they will or not, and how long that will take, I don’t know. But it’s not the AD they expect to retrieve the money from.

[enjoythemusic]

TRF should have one of the lawyers here form an agreement where a time limit for delivery is set, plus if said AD goes out of business the deposit is 100% refundable (plus any legal costs) ahead of all other AD creditors.

TRF should make it a 'sticky' at the top of this section of the discussion board.

C'mon TRF, certainly there's a lawyer here who can make this legal agreement.

[fooey]

For some of us who may have been waiting for a long time to get certain Watches i can see it might be quite tempting!
its a 100% deposit though!

[GovernorsGovernor]

Originally Posted by Njw

I was offered a watch when an AD reopens for 100% deposit last week and turned it down. The people taking it are expecting to get the money back from the credit card company, not the AD if they go bankrupt. Whether they will or not, and how long that will take, I don’t know. But it’s not the AD they expect to retrieve the money from.

Sorry, but I have to disagree with this, too. Once you put a deposit down with the AD using your CC, and it posts in a few days, you'll have to recover the funds from the AD at that point.

Haven't you ever disputed a charge before? Unless you claim a charge is fraudulent, the CC will tell you to contact the retailer, especially after it has posted. But even during temporary status, they'll tell you to make a courtesy call to the retailer. And as a side note: A business going bankrupt isn't fraudulent, even though you're left holding that bag.

I guess a CC provides a digital footprint that a cash deposit doesn't, in the event you were to lose your proof of a cash deposit, but a CC offers a layer of protection that is thinner than the CC itself when a business goes bankrupt.

[GovernorsGovernor]

During these uncertain times, to get the watch you desire, I'd consider a trusted seller, and pay above retail at a level you can stomach.

Yes, you'll have paid more. However, you have to consider:

-You'll get the watch now.
-The transaction is safe.
-You won't be hiring a bankruptcy attorney later.

Plus, did you ever think of this? Where would you turn to get your watch after your AD went bankrupt, and you lost your money? Gonna go to another AD, put down half again, establish another "great relationship" like you did with the last AD, and try to be his "buddy", too?

Or... Will you just end up going to a trusted seller anyhow!!!!! Just cut to the chase and do it now!

Again, what's the fascination with being the AD's friend? Are the crown chocolates worth it?

I actually use an AD for my purchases because I do feel it's the safest route. However, I'm not required to put down more than 5-10%--that's a good relationship! But I'm not his pal. I don't lick his plate; I lick my own plates. I negotiate like a b!tch for what I want. And I NEVER accept gifts--bad move! Keep your generic watch winder, your stale chocolates, your cheesy cuff links, your cheap champagne, etc...! Instead, put that bullsh!t toward my watch and let's get down to business!

[Njw]

Originally Posted by GovernorsGovernor

Sorry, but I have to disagree with this, too. Once you put a deposit down with the AD using your CC, and it posts in a few days, you'll have to recover the funds from the AD at that point.

Haven't you ever disputed a charge before? Unless you claim a charge is fraudulent, the CC will tell you to contact the retailer, especially after it has posted. But even during temporary status, they'll tell you to make a courtesy call to the retailer. And as a side note: A business going bankrupt isn't fraudulent, even though you're left holding that bag.

I guess a CC provides a digital footprint that a cash deposit doesn't, in the event you were to lose your proof of a cash deposit, but a CC offers a layer of protection that is thinner than the CC itself when a business goes bankrupt.

Must be different in the US. In the UK you have statutory rights (Section 75 of the Consumer Credit Act) to reclaim from the CC company if a retailer goes bankrupt. The issue is there are exceptions if 3rd party payment processing is used and there is a time limit on claiming.

[Roger Lococco]

I definitely would not give an AD a deposit at this point.

[brucethemanlee]

In this world environment it’s not


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[RKTINC1]

I used a Credit Card for my 50% deposit a few years ago. Figured I could claim on my card if the dealer went south.

[GovernorsGovernor]

Originally Posted by Njw

Must be different in the US. In the UK you have statutory rights (Section 75 of the Consumer Credit Act) to reclaim from the CC company if a retailer goes bankrupt. The issue is there are exceptions if 3rd party payment processing is used and there is a time limit on claiming.

We have those protections, but I'm sure, like yours, they're limited...

As an "unsecured" creditor now, you will be at the back of the line of ALL creditors in bankruptcy proceedings--behind any bondholders, secured lenders, employees due wages, benefits, and retirement costs, professional fees associated with the case, etc... Will there be anything left for you? Probably not.

Good luck with that in the UK, as here in the US.