On September 23, 2015, the Federal Court of Justice rendered a decision on the conditions under which a seller may cancel a bidder's offer on the eBay internet platform without becoming liable for damages to that bidder.
The defendant offered an Art Nouveau cast-iron radiator on the eBay internet platform with a starting price of €1. The eBay General Terms and Conditions applicable at that time stated, in part:
“§ 9 No. 11: Sellers 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 auction began, the defendant prematurely ended it by canceling all bids. At that time, the plaintiff was the highest bidder with an offer of – as he claimed – €112. The plaintiff claims he could have sold the radiator for its market value of €4,000 and, in his lawsuit, demands this amount minus his bid of €112 (€3,888).
The defendant refused to hand over the radiator to the plaintiff, justifying this by the – disputed – assertion that he had to cancel the auction because the radiator had been destroyed after the auction began. Later, the defendant asserted that he had since learned that the plaintiff, together with his brother, had recently withdrawn 370 purchase bids placed on eBay. In view of this conduct, he was entitled to cancel the plaintiff's bid.
The lawsuit was unsuccessful in the lower courts. The Regional Court opined that the numerous bid withdrawals provided objective indications of the plaintiff's lack of reliability. Therefore, the defendant was permitted to cancel the plaintiff's bid, meaning no contract was concluded between the parties. It was sufficient that a reason for canceling the bid existed; the seller did not need to communicate the reason for the cancellation, nor did it even need to be the actual cause of the cancellation.
The buyer's appeal was successful, leading to the annulment of the appellate judgment and the remand of the legal dispute to the Regional Court.
The VIII Civil Senate of the Federal Court of Justice, responsible inter alia for sales law, ruled that an eBay seller's offer is to be interpreted as being (also) subject to the proviso that, under certain conditions, an individual bid from a potential buyer may be canceled, thereby preventing a contract from being concluded with that interested party. This applies – in addition to the examples explicitly mentioned in the auction terms – also when significant circumstances exist that correspond to a legal ground for rescinding the contract (e.g., voidance or withdrawal).
However, the Regional Court did not establish such grounds. While it focused on the fact that the plaintiff and his brother had withdrawn 370 purchase bids within six months, this may be an indication that a legitimate reason for withdrawal did not exist in all cases. However, this does not lead to the conclusion that the plaintiff is an unreliable buyer who would not fulfill his contractual obligations – primarily his obligation to pay the purchase price in the event of a successful bid – especially since in an eBay auction, the seller is not obligated to perform in advance when delivering the purchased item, but rather delivery is typically made either against prepayment or concurrently upon collection of the goods.
Unlike the Regional Court, the Federal Court of Justice further ruled that a reason for withdrawing an offer during an ongoing auction must not only exist but also have been the direct cause. However, this was not the case, as, according to the defendant's submission, the decisive factor for the bid's withdrawal was not the plaintiff's conduct, but the (disputed) destruction of the goods.
In the renewed hearing of the case, the Regional Court will therefore have to investigate whether the radiator was destroyed without fault within the auction period and whether the defendant was consequently entitled to withdraw his offer.
Judgment of the Federal Court of Justice of September 23, 2015 – VIII ZR 284/14
Lower Courts:
Regional Court Neuruppin – Judgment of September 24, 2014 – 4 S 59/14
Local Court Perleberg – Judgment of november 21, 2013 – 11 C 413/14
Source: Press release of the Federal Court of Justice
Goldberg Attorneys 2015
Attorney Michael Ullrich, LL.M. (Information Law)
Specialist Attorney for Information Technology Law
Email: info@goldberg.de
