The Federal Court of Justice, in a recent decision, examined the conditions under which a seller may prematurely terminate an eBay auction that still has more than 12 hours remaining, and subsequently sell the item elsewhere, without incurring liability for damages to the then-current highest bidder.
On May 17, 2012, the defendant listed a power generator on the eBay online platform for a ten-day auction, with a starting price of €1. On May 19, 2012, he prematurely ended the auction. At that point, the plaintiff was the highest bidder with the initial €1 bid. Following the defendant's subsequent sale of the power generator elsewhere, the plaintiff is now claiming damages equivalent to the generator's value (€8,500).
The defendant argued that, according to eBay's General Terms and Conditions, he was entitled to terminate the auction without further justification, given that it still had more than 12 hours remaining.
The auction was conducted based on the eBay General Terms and Conditions applicable at that time. Excerpts from these terms stated:
Section 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. [...]
Section 10, No. 1, Sentence 5: Upon expiration of the auction or premature termination of the offer by the seller, a contract for the purchase of the item is concluded between the seller and the highest bidder, unless the seller was legally entitled to withdraw the offer and cancel the existing bids.
The link 'Further information' in Section 9, No. 11, led, among other things, to the following instructions:
How do I end my listing early?
When you list an item on the eBay website, you generally make a binding offer to conclude a contract for that item and are bound by this offer for its duration. However, it may be necessary to end an offer prematurely, for example, if you realize you made a mistake when listing the item, or if the item to be sold is damaged or lost during the offer period through no fault of your own.
Before ending a listing, please note:
• Ensure that your reason for ending the listing is valid. [...]
Furthermore, it also stated:
Listing still running for more than 12 hours
If the listing still has 12 hours or more remaining, you may end it prematurely without restrictions. If bids exist for the item at the time of termination, you will be asked whether you wish to cancel the bids or sell the item to the highest bidder. [...]
The District Court dismissed the claim. However, upon the plaintiff's appeal, the Higher Regional Court ordered the defendant to pay damages amounting to €8,500. The further appeal (Revision) admitted by the appellate court was unsuccessful.
The VIII Civil Senate of the Federal Court of Justice, which is responsible, among other things, for sales law, ruled that the plaintiff is entitled to a claim for damages in lieu of performance, pursuant to Section 280 (1), (3), Section 283 Sentence 1 of the German Civil Code (BGB), amounting to €8,500. A purchase contract for the power generator at a price of €1 was concluded between the plaintiff, as the highest bidder, and the defendant.
From the perspective of a bidder participating in the auction, the sales offer was to be interpreted as being subject only to a justified withdrawal of the offer in accordance with Section 9 No. 11, Section 10 No. 1 Sentence 5 of the eBay GTC. As the appellate court correctly determined, none of the reasons for withdrawing the offer specified therein were present. Therefore, contrary to the view of the appeal, the offer was not non-binding. This is because it cannot be inferred from the 'Further Information' linked to Section 9 No. 11 of the eBay GTC that an offer may be withdrawn without a justifying reason. This also applies even if the auction – as in this case – still has 12 hours or more remaining. The 'Further Information' is merely to be understood as a supplement to Section 9 No. 11 regarding the practical implementation of offer withdrawal. According to their entire content, they are not intended to further restrict the binding nature of the offer for the duration of the auction – which underlies the business model of an eBay auction – beyond what is already provided in Section 9 No. 11 and Section 10 No. 1 Sentence 5 of the eBay GTC.
Judgment of the Federal Court of Justice of December 10, 2014 – Case No. VIII ZR 90/14
Lower Courts:
District Court Nuremberg-Fürth – Judgment of January 17, 2013 – Case No. 7 O 6876/12
Higher Regional Court Nuremberg – Judgment of February 26, 2014 – Case No. 12 U 336/13
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
