BGH decides on premature termination of Ebay auction

Yesterday, the Federal Court of Justice (BGH) issued a decision on the conditions under which the seller may cancel the bid of a prospective buyer on the Internet platform eBay without being 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 applicable at that time read in part:

§ 9 No. 11: Vendors who place a binding offer on the eBay website may only cancel bids and withdraw the offer if they are legally entitled to do so. More information. […]

Three days after the auction began, the defendant ended it prematurely, cancelling all bids. At that time, the plaintiff was the highest bidder with a bid of – as he submitted – €112. The plaintiff claims that he could have sold the radiator for the market value of €4,000 and demands this amount less the €112 he offered (€3,888) in his action.

The defendant refused to hand over the radiator to the plaintiff and justified this to him with the – disputed – claim that he had to break off the auction because the radiator had been destroyed after the auction had started. Later, the defendant claimed that he had since learned that the plaintiff, together with his brother, had recently withdrawn 370 purchase bids placed on eBay.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 had been entitled to cancel the plaintiff’s bid.

The action was unsuccessful in the lower courts. The Regional Court considered 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 deletion of the offer; the seller did not have to communicate the reason for the deletion, nor did it have to be the cause of the deletion at all.

The purchaser’s appeal was successful and led to the reversal of the appellate judgment and the remittal of the legal dispute to the Regional Court.

The VIII. 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 that, under certain conditions, an individual bid of a potential buyer may be cancelled and thus prevent a contract from being concluded with this interested party. This is also possible – in addition to the examples expressly mentioned in the auction conditions – if there are weighty circumstances which correspond to a legal reason for dissolution of the contract (such as rescission or withdrawal).

However, the district court did not find such reasons. Insofar as it refers to the fact that the plaintiff and his brother had withdrawn 370 purchase bids within six months, this may be an indication that there was not a legitimate reason for the withdrawal in all cases. However, the conclusion that the plaintiff is a dubious buyer who would not fulfill 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 obligated 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.

In contrast to the Regional Court, the Federal Court of Justice 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, the decisive factor for the cancellation of the bid was not the plaintiff’s conduct 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 its own and whether the defendant was therefore entitled to cancel its bid.