More on enforceability of eBay contracts 

Following yesterday's post, Smythe v Thomas [2007] NSWSC 844 is now online ...

To recap, Thomas offered a Wirraway plane, in working order, for sale on eBay.  He specified a minimum price of $150,000.  Smythe submitted a bid for that amount immediately before the closing time.  eBay notified him and Thomas that he, Smythe, had won.  Although he did not withdraw the plane from the auction or revise the minimum price, Thomas claimed he had found someone else who was prepared to pay $250,000 and refused to deliver.

Thomas ran various arguments based on the facts (which the judge did not accept on the evidence) and a legal argument that there was no binding contract between him and Smythe; there were two separate contracts, one between eBay and him and another between eBay and Smythe.

To participate in an eBay 'auction', whether as vendor or bidder, one must sign up to eBay's rules.

Under the rules, bidders agree:

You are obligated to complete the transaction with the seller if you purchase an item through one of our fixed price formats or are the highest bidder as described below, unless the transaction is prohibited by law or this User Agreement. If you are the highest bidder at the end of an auction (meeting the applicable minimum bid or reserve requirements) and your bid is accepted by the seller, you are obligated to complete the transaction with the seller, unless the item is listed in a category under the Non-Binding Bid Policy (at http://pages.ebay.com.au/help/policies/non-payment.html) or the transaction is prohibited by law or by this Agreement. By bidding on an item you agree to be bound by the conditions of sale included in the item's description so long as those conditions of sale are not in violation of this Agreement or unlawful. Bids are not retractable except in exceptional circumstances

Under the rules, however, vendors agree:

Rein AJ found that there was no reason to treat the involvement of eBay and its automated technology for the acceptance of bids any differently to what would happen if there wre a live auction.  His Honour went on to apply an approach similar to that taken by a German court:

“acknowledgment by all participants of the auction house’s terms and conditions was a mandatory requirement for participation in the auction. In doing so both seller and buyer declared the intention to contract subject to these terms only – not merely in relation to the auction house but also amongst each other! Thus the terms built part of the contractual basis irrespective of their exact legal classification as between the parties.”

and, having regard to the eBay terms for the auction method chosen by Smythe (in contrast to the different option for making offers through the 'non-binding bid policy'), treated the vendor's 'offer page' as an offer capable of acceptance rather than an invitation to treat.

Rein AJ Thomas did not argue that the bidder's conditions (which made sale subject to the vendor's acceptance) inconsistent with the vendor's obligation to accept.  Presumably, this was because the vendor's obligation was qualified by entitlement to rescind in exceptional circumstances.

Smythe v Thomas [2007] NSWC 844 here.