German Federal High Court rules on two eBay listing cases

On 12 November 2014, the German Federal High Court (“BGH”) ruled that a used-car sales contract concluded on the internet platform eBay was valid, even though the seller ended the listing early when the buyer’s initial offer of EUR 1 remained the highest bid (BGH VIII ZR 41/14). As the defendant (the seller) subsequently sold the car elsewhere, the BGH granted the plaintiff (the buyer) damages amounting to the lost profit (the value of the car minus the bid of EUR 1). In another decision dated 10 December 2014, the BGH confirmed the aforementioned decision and granted the plaintiff damages after the defendant selling a power generator had ended the eBay listing early and had sold the generator elsewhere (VIII ZR 90/14).

The facts of the cases were as follows:

  1. In the first case, the defendant listed his used car on eBay. He set the amount of EUR 1 as the minimum offer. Shortly after the defendant put his offer online, the plaintiff entered an initial bid of EUR 1 and an upper limit for his offer of EUR 555.55. A couple of hours later, the defendant ended the listing of the car and informed the plaintiff that he had sold the car to someone else (offline) for a price of EUR 4,200. The plaintiff claimed for damages, asserting that the car had a value of EUR 5,250. Hence, the total claimed damages amounted to EUR 5,249. The defendant argued that he was entitled to end the listing early by virtue of eBay’s terms of use and that there would be a significant disparity between the bid of EUR 1 on the one hand and the value of the car and thus the damages on the other hand. Therefore, such damages would be contrary to public policy (contra bonos mores).
  2. In the second case, the plaintiff placed a bid of EUR 1 for a power generator offered on eBay, which was worth EUR 8,500. Again, the defendant ended the listing early and sold the generator elsewhere. The plaintiff claimed for damages and the defendant argued that he was – pursuant to eBay’s terms of use – entitled to end the listing without compensation as the offer expired in more than 12 hours.

The BGH ruled in the first case that, in the course of an internet auction, a gross disparity between the maximum offer of the potential purchaser and the actual value of the offered item would not automatically lead to the conclusion that the bidder acted with a “reprehensible attitude” in the sense of the respective provision of the German Civil Code. The contract would thus not be void. The court stated that the bidder’s chance of securing a bargain and the seller’s chance of making a better profit due to outbidding are what gives internet auctions their special charm. Further, the Court of Appeal (second instance) was not able to find any special circumstances which would prove the plaintiff’s reprehensible attitude.

Moreover, the BGH reasoned in both cases that the defendant deliberately chose to accept the risk by setting the minimum initial bid at EUR 1 and that it was the defendant’s unjustified early ending of the auction that led to this risk materializing. Instead, and this is the court’s basic statement, offers listed on eBay and other auction platforms are binding even at an early stage of the bidding process, unless very special circumstances occur. Better offline offers for the listed items do not constitute such special circumstances and eBay’s terms of use do not suggest another interpretation. The BGH has now rejected the appeal against the decisions of the second instances in both cases.

In a contrasting case, on 15 January 2015, the Regional Court of Heidelberg rejected claims for lost profits in the case of an early-ended eBay listing (3 S 27/14). In this case, the defendant had listed a car on eBay for 10 days, but ended the auction after two days when he discovered jerking movements and ignition failures in the listed car. The Regional Court argued that, in its terms of use, eBay allows the early ending of a listing without compensation if the seller was mistaken at the time of listing the item or when the item becomes damaged during the listing period. It applied these exceptions to the present case.

Hence, based on recent case law, internet auctions in Germany may be ended early, but only for a valid reason. Otherwise, the seller may face claims for the bidder’s lost profits.