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The Korea Fair Trade Commission (KFTC) ordered the U.S. electric vehicle giant Tesla's Korean unit to correct five unfair clauses in the automaker's Motor Vehicle Order Agreement.

Previously, if a vehicle is damaged during the car delivery process, Tesla Korea simply reimbursed 100,000 won ($84) of the Order Fee to the customer. Now, with the revised terms, the automaker will be responsible for any damages caused by the intentional acts or negligence of the firm.

Tesla Korea did not bear the responsibility for any damage after the specified period of a car delivery has elapsed. Under the revision, the automaker has the responsibility to deliver the vehicles to customers even after the specified delivery period has elapsed, and should be responsible for damage or loss caused by the intentional acts or negligence of the automaker.

In its previous agreement, the automaker could cancel any order if it determines that the customer is making orders or acting in “bad faith.” With the revised terms, the automaker clarified the term "bad faith."

Lastly, Tesla Korea amended unfair terms related to the transfer of contract and the venue for claims.

By correcting the unfair terms and conditions of Tesla, the KFTC expects to prevent possible consumer damage as well as provide institutional grounds to protect the rights of consumers.


BACKGROUND OF THE MEASURE
Recently, Tesla has seen explosive growth in the Korean market. Accordingly, the KFTC decided to conduct an investigation into the automaker's Motor Vehicle Order Agreement terms to prevent possible consumer damage.

Upon the KFTC’s order, Tesla Korea has voluntarily corrected all unfair terms and conditions, and implemented them.


CLAUSES REVISED
A. Clause limiting the liability and capping the amount of damages
(Prior to revision) Tesla Korea was not liable for any indirect or special damages, except for direct damages, arising out of the Motor Vehicle Order Agreement. Also, the automaker limited the remedy under the agreement exclusively to the reimbursement of the Order Fee (100,000 won).
(After revision) Tesla Korea will be responsible for all damages caused by the intentional acts or negligence of the company, and for special damages known by the company.

Prior to revision : Limitation of Liability. We are not liable for any incidental, special or consequential damages arising out of this Agreement. Your sole and exclusive remedy under this Agreement will be limited to reimbursement of your Order Fee.
After revision : Limitation of Liability. We will compensate for damages caused by our intentional acts or negligence in connection with this Agreement, but we are not liable for damages beyond the normal scope due to special circumstances, except for our intentional acts or negligence.

B. Clause exempting Tesla Korea from the responsibility for any damage after the specified period of a car delivery has elapsed
(Prior to revision) Tesla Korea did not bear the responsibility for any damage after the specified period of a car delivery has elapsed. Previous terms also stated that the automaker is not under obligation to deliver vehicles to customers after the specified delivery period has elapsed.
(After revision) Tesla Korea will be responsible for any damage caused by the intentional acts or negligence of the company. The automaker also removed the term that states the company is not responsible for vehicle delivery after the specified delivery period has elapsed.

Prior to revision : Delivery. You are responsible for the risk of loss or damage to the vehicle after the specified delivery period (including the extended period approved by us) has elapsed.
Failure to take delivery within the specified delivery period (including any extension approved by us) constitutes a breach of this Agreement and we will not be liable to you for the delivery of the vehicle under this Agreement.

After revision : Delivery. You are responsible for the risk of loss or damage to the vehicle after the specified delivery period (including the extended period approved by us) has elapsed, except for any damage caused by the intentional acts or negligence of the company.
Failure to take delivery within the specified delivery period (including any extension approved by us) constitutes a breach of this Agreement and we may cancel or terminate this Agreement with you upon notice.

C. Arbitrary cancelation clause
(Prior to revision) Tesla Korea may unilaterally cancel any order if the automaker believes the order has been made in bad faith or the customer is acting in bad faith.
(After revision) The automaker clarified the term "bad faith."

Prior to revision : Cancellation. Tesla and its affiliates sell cars directly to end-consumers, and we may unilaterally cancel any order that we believe has been made with a view toward resale of the Vehicle or that has otherwise been made in bad faith. We may also cancel your order and refund your Order Fee ... if we determine that you are acting in bad faith.
After revision : Cancellation. Tesla and its affiliates sell cars directly to end-consumers, and if we believe the order has been made for purposes other than final consumption purposes, such as for the purpose of reselling the vehicle, we may cancel the order. In addition, if you order a vehicle for other illegal purposes, such as ordering a vehicle for criminal use, we may