Damages for premature termination of an eBay auction?

The Federal Court of Justice (BGH) had to address the legal question of whether a purchase contract concluded on an eBay auction by bidding on a minimum offer is valid when there is a gross disparity between the purchase price and the value of the auctioned item.

The seller of a used motor vehicle wanted to auction his car on eBay. For this reason, he listed his car with a minimum bid of EUR 1.00 on the auction platform. Shortly after the eBay auction began, a consumer bid EUR 1.00 for the used car and set a maximum price of EUR 555.55.

The owner of the used car terminated the eBay auction on the same day and informed the bidder by e-mail that whilst he was the highest bidder at the time of termination, he had found a buyer outside the internet auction who was willing to pay EUR 4,200.00 for his motor vehicle.

The bidder was unwilling to accept this and sued the motor vehicle owner for damages for non-performance. In his view, he had accepted the owner's minimum bid on eBay and thereby concluded a valid contract.

The owner argued in response that the contract was void due to a disparity between the purchase price and the value of the vehicle.

Court decision

The Federal Court of Justice (BGH) ruled in favour of the bidder by judgment of 12.11.2014 – Az. VIII ZR 42/14 (Press release) – .

In its reasoning, the BGH stated that a valid purchase contract had been concluded between the parties. The start of an auction on eBay constituted a contractual offer which the bidder had accepted through his bid. A valid purchase contract had thus been concluded.

This contract was also not void due to a disparity between the purchase price and the value of the auctioned motor vehicle. The very appeal of an internet auction is that both parties have the opportunity to acquire the auctioned item at a "bargain price" or, through outbidding, to achieve a high selling price.

Conclusion

Caution is advised when prematurely terminating an eBay auction if there is already a bidder. In case of doubt, the contract will have been concluded with the consequence that the seller must also transfer ownership of the offered goods.