No damages liability for cancelled eBay auction

The Federal Court of Justice (BGH) in Karlsruhe decided by judgment dated 08.06.2011 (VIII ZR 305/10) that a seller on eBay owes no damages to the current highest bidder if the seller cancels the auction for good cause before the official conclusion. In this case, no purchase contract exists between the parties, the non-performance of which could form the basis of a damages claim.

The facts underlying the judgment were as follows: the seller's offered single-lens reflex camera with a market value of approximately € 1,200 was stolen shortly after the start of the eBay auction. At that time, the later plaintiff had placed the current highest bid of € 70.00.

The Federal Court of Justice takes the same position as the lower courts in holding that the damages claim, consisting of the difference between the bid and the market value, lacks legal basis because no purchase contract exists (or no longer exists). The seller is in any event entitled to cancel an ongoing auction without detriment if there is good cause for doing so. The court bases this inter alia on the eBay Terms and Conditions, which each user accepts. It states in § 10 Abs. 1:

"Upon expiration of the auction or upon early termination of the offer by the seller, a contract between the seller and highest bidder for the acquisition of the item is formed, unless the seller was legally entitled to withdraw the offer and cancel the bids received."

Additionally, in the notes on auction procedures accessible on the eBay website, the loss of the offered item is mentioned as a reason for early termination of the offer.

The requirement of good cause for the cancellation of an offer is met in any event in the case of loss of the item for sale without the seller's fault – for example through theft. The reference in the eBay Terms and Conditions to a legal entitlement to withdraw the offer is not (only) to be understood as a reference to formal statutory provisions. The "good" reasons cited by eBay itself also entitle sellers to consequence-free termination of the offer. In this respect, there are rules of the game known to and binding on all participants. More precisely, it is only these rules of the game that permit withdrawal of the offer, because – apart from rescission for mistake – no statutory rules exist that permit such action.

In general, it can be assumed that good cause for the cancellation of an eBay auction exists whenever the item for sale is lost or destroyed before the end of the auction without fault on the part of the seller.