E-commerce law: Germany’s Federal Court of Justice has specified the requirements which need to be present in order to effectively withdraw an eBay offer.
Withdrawing an off from eBay
Germany’s Federal Court of Justice (Bundesgerichtshof, BGH) has given guidance on the requirements for effectively withdrawing an offer on eBay (case ref. VIII ZR 63/13).
The defendant in the case had placed a vehicle engine for sale on eBay. After the seller had received initial bids, but before the time limit on the auction had expired, the seller cancelled the eBay auction. At that point, the claimant in the case was the highest bidder.
The seller told the bidder, that he had received a higher external offer from another purchaser.
The claimant insisted that a contract had been created and claimed compensation for lost profit which he would have made on the re-sale of the engine. The lost profit was calculated on the basis of the difference between the claimant’s bid and the market price of the engine at the time the auction was ended.
During the trial, the seller justified the cancellation of the eBay auction on the grounds that the engine had no valid MOT, something he did not know when the auction began.
The court of first instance rejected the claimant’s claim.
The Court of Appeal ruled that the lack of an MOT did indeed amount to a reason to challenge the validity of the contract, but that because the seller had not informed the buyer in a timely fashion of the circumstances, the cancellation of the auction was not valid and the highest bidder could claim performance of the contract.
The BGH reversed the Court of Appeal’s ruling.
Standard terms and conditions
The court came to the conclusion, without calling for further evidence, that on the facts presented, the seller was generally entitled to challenge the validity of the contract.
The judges drew attention to the fact that the rules concerning the conclusion of a contract and the circumstances under which validity can be challenged are to be found in the relevant platform’s standard terms and conditions (see BGH judgment from 08.06.2011 VII ZR 305/10, NJW 2011, 2643).
The eBay terms and conditions state that sellers may only cancel an auction if they have a justifiable reason. This rule concerning the retraction of an offer means that bidders can only consider the offer of a product on an eBay auction to be an offer subject to a condition.
The court ruled that the fact that terms and conditions make an offer subject to a condition, should make it clear to the bidder that there is no intention to be bound if the relevant circumstances arise.
In transferring the case back to the Court of Appeal, the BGH made it clear, that as it can only rule on points of law, it was unable to assess whether the engine did indeed lack an MOT and therefore entitle the seller to challenge the validity of the contract. This will be for the Court of Appeal to decide.
It is clear from this judgment that sellers and bidders on eBay should always be aware of the standard terms and conditions that apply to any transactions commenced or entered.