On 23 September 2015, the Federal Court of Justice (Bundesgerichtshof) issued a decision on the conditions under which the seller may cancel the bid of a prospective buyer on the Internet platform eBay without becoming liable to pay damages to the buyer.
The defendant offered an art nouveau cast iron radiator on the internet platform eBay at a starting price of 1 €. The General Terms and Conditions of eBay, which were applicable at that time, read in part:
"§ 9 No. 11: Vendors who post a binding offer on the eBay website may only cancel bids and withdraw the offer if they are legally entitled to do so. Further information. [...]
Three days after the start of the auction, the defendant ended it prematurely by cancelling all bids. At that time, the plaintiff was the highest bidder with a bid of - as he submitted - € 112. The plaintiff claimed that he could have sold the radiator for the market value of € 4,000 and demanded this amount less the € 112 he had bid (€ 3,888).
The defendant refused to hand over the radiator to the plaintiff and justified this to him with the - disputed - claim that he had had to break off the auction because the radiator had been destroyed after the auction had started. Later, the defendant claimed that he had learned in the meantime that the plaintiff, together with his brother, had recently withdrawn 370 bids placed on eBay. In view of this behaviour, he had been entitled to cancel the plaintiff's bid.
The action was unsuccessful in the lower courts. The Regional Court held that there were objective indications of the plaintiff's "dubiousness" due to the numerous retractions of offers. The defendant was therefore entitled to cancel the plaintiff's offer, so that a contract between the parties was not concluded. It was sufficient that there had been a reason for the cancellation of the offer; the seller did not have to communicate the reason for the cancellation, nor did it have to be the cause of the cancellation at all.
The buyer's appeal was successful and led to the reversal of the appeal judgment and the remittal of the legal dispute to the Regional Court.
The VIII Civil Senate of the Federal Court of Justice, which is responsible, inter alia, for the law of sales. Civil Senate of the Federal Court of Justice has ruled that the offer of an eBay seller is to be interpreted as (also) being subject to the reservation to cancel an individual bid of a potential buyer under certain conditions and thus to prevent the conclusion of a contract with this interested party. This also comes into consideration - in addition to the examples expressly mentioned in the auction conditions - if there are weighty circumstances that correspond to a legal reason for dissolving the contract (such as rescission or withdrawal).
However, the Regional Court did not establish such reasons. As far as it refers to the fact that the plaintiff and his brother had withdrawn 370 bids within six months, this may be an indication that there was not a justified reason for the withdrawal in all cases. However, the conclusion that the plaintiff was a dubious buyer who would not fulfil his contractual obligations - i.e. above all his obligation to pay the purchase price in the event of a successful auction - does not follow from this, especially since the seller is not obliged to perform in advance when delivering the object of purchase in an eBay auction, but is regularly delivered either against advance payment or concurrently with the collection of the goods.
Unlike the Regional Court, the Federal Supreme Court also ruled that a reason for the cancellation of a bid during the ongoing auction must not only exist, but must also have been the cause. However, this was not the case because, according to the defendant's submission, it was not the plaintiff's conduct that had been decisive for the cancellation of the bid, but the (disputed) destruction of the goods.
When hearing the case again, the Regional Court will therefore have to consider the question of whether the radiator was destroyed within the auction period through no fault of the defendant and whether the defendant was therefore entitled to cancel his bid.
Judgment of the Federal Supreme Court of 23 September 2015 - VIII ZR 284/14
Neuruppin Regional Court - Judgment of 24 September 2014 - 4 S 59/14
Perleberg Local Court - Judgment of 21 November 2013 -11 C 413/14
Source: Press release of the BGH
Goldberg Attorneys at Law 2015