Watch Out! Counterfeit Rolexes & Hublots sold as originals in Singapore for S$44,000!
Introduction
Luxury watches can be incredibly valuable, which means that counterfeiting them, unfortunately, is also a lucrative business. We all know that counterfeit watches are sold at lower prices. Typically luxury brands have enforcement procedures to stop sellers from selling imitation watches – the brands identify errant online listings of counterfeit watches by a myriad of factors, including the price of watches. If the price is too low to be true, then it is obviously not original.
BUT did you know that counterfeiters have begun passing off these imitation watches as the real ones to unsuspecting customers?
The Decision
In the recent High Court judgement, Hon G v Tan Pei Li [2023] SGHC 193 by Tan Siong Thye SJ (the “HC Judge”), the HC Judge affirmed a lower court’s decision that the authenticity of a luxury watch was deemed to be an express or implied term of the contract for a sale of 2 luxury watches.
Interestingly, the buyer managed to prove, with the help of an expert witness, that the watches were counterfeit.
The facts of this case are simple: the buyer and seller of the watches were (we suppose initially) friends, and the buyer decided to purchase a Rolex ($28,000) and Hublot ($16,000) watch from the seller. Pursuant to an oral agreement, the buyer paid $28,000 to the seller first, but refused to pay the remaining $16,000 on the grounds that the watches were not authentic.
Interestingly, the seller of the imitation watches took the buyer to court for the remaining $16,000 and the buyer counterclaimed for the $28,000 that was paid earlier. As the watches were fake, and the District Court Judge (the “DJ”) held that the lack of authenticity was a breach of contract and ordered the seller to return the $28,000 to the buyer.
The legal takeaway here is that “where there is a contract for the sale of luxury goods, it is a condition that goods must be authentic” – the breach of this authenticity condition is grounds for the innocent party to discharge the contract.
This means that if you purchase a luxury watch and it turns out to be fake, you probably have legal recourse against the seller. That said, it should be noted that it is arguable that this case hinged on its unique facts, and that the ruling here should not necessarily be taken to be a general rule of thumb.
For the lawyers reading this blog post:
[at 12] While the Applicant had pleaded that the Watches were sold on an “as-is-where-is” basis, the Applicant had also pleaded that the sale of the Watches was on the basis, express and/or implied, that the Watches were authentic.
…
[at 26] Thus, there was no prima facie case of error in the DJ’s reasoning that luxury watches are “not everyday consumer goods whose quality (including authenticity) can be readily assessed by a layperson at the point of delivery” (Trial Judgment at [70]).
Practical Lessons
Perhaps more important are the practical lessons that we can learn from this incident.
First, the authenticity of a luxury watch literally dictates its value – be extremely careful when making your purchase and be prudent in obtaining the proper documentation when buying the watch. If it makes you feel more comfortable, you may always make it a condition of the sale to have the watch authenticated with the authorised agent in Singapore first before confirming your purchase.
Second, even if a buyer has legal recourse against the seller of a fake watch, one still needs to be able to identify the seller in order to commence legal proceedings. We recommend avoiding the purchase of luxury watches from online re-sellers, especially on more unregulated platforms – not all platforms require a seller to identify him/herself before being able to sell on the platform.
If possible, ask to verify the seller’s identity and keep a record of the seller’s name, identification number, and registered address. If that is not feasible, it is a bit more comforting if the seller provides you with a Singapore telephone number (for PayNow or communications purposes) so that the seller / the money may be traced. If the number used by the seller is foreign, be wary, because it may be beyond the Singapore court’s jurisdiction to procure the identity of the foreign telecommunications subscriber or it may be a ‘burner’ number.
Ultimately, even though you might pay a premium, it is much safer to purchase luxury watches from reputable sellers, especially those with physical premises, including legitimate neighbourhood shops – this way, the money and sellers are traceable. Also, don’t you want to check the condition of the luxury item before you shell out five figures to purchase it?
Conclusion
Though a purchaser of a fake watch might have legal recourse against the seller, it is still time consuming, emotionally draining, and resource intensive to pursue the matter in court. If you want to buy an expensive watch, it would be prudent to make sure it’s the real thing before finalising the purchase. If the buyer in this case had checked the authenticity of the watches before finalising the purchase, she would not have had to waste resources fighting this legal battle – but we guess they thought they were “friends”. If you have an IP matter that you might need help with, feel free to reach out to us.
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Disclaimer
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. That.Legal LLC represents neither party in this dispute and is not privy to any confidential information pertaining to the parties. All facts stated herein are compiled from publicly available sources. If you require any advice or information, please speak to a practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of That.Legal LLC accepts or assumes responsibility, or has any liability, to any person in respect of this article.
