Contracts: Online Auctions

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The Federal Trade Commission offers a guide to online auctions. It also notes that sellers are subject to the Mail or Telephone Order Merchandise Rule. The rule requires sellers to have a reasonable basis for stating or implying that they can ship within a certain time, and to seek the buyer's consent in case of delay. The FTC provides a summary of Law Enforcement Efforts to Combat Internet Auction Fraud.

  1. Lim v. The.TV Corp. Int’l, 99 Cal.App.4th 684 (2002). The court held that the winning bid in an online auction for registration of a domain name could result in an enforceable contract, giving rise to a cause of action for breach of contract.
  2. Evans v. Matlock, 2002 Tenn. App. LEXIS 906 (Tenn. Ct. App. Dec. 23, 2002) The court held that the eBay user agreement arbitration clause does not apply to disputes between users.
  3. Durick v. Ebay, Inc., 2006 Ohio 4861 (Ohio Ct. App. 2006). The court held that the internet auction site could terminate the plaintiff's account after he offered for sale prescription drugs, controlled substances, and hazardous materials in violation of the user agreement.
  4. Gentry v. Ebay, Inc., 99 Cal. App. 4th 816 (Cal. Ct. App. 2002). Ebay was held not to have violated California's Autographed Sports Memorabilia statute for allowing a user to sell memorabilia with forged certificates of authenticity. The court ruled the internet service provider was not a dealer within the meaning of the statute, and was also immune from liability from harm caused by a third party content provider.
  5. McCready v. eBay, Inc., --- F.3d. ---, (7th Cir. July 10, 2006). McCready operated an online business buying and selling items through eBay. Several buyers complained that McCready failed to deliver the goods or goods of substandard quality. Ebay investigated and suspended his account until he reimbursed the claimants. McCready embarked on retaliatory litigation, filing and losing five separate cases. Two cases were appealed, the Seventh Circuit ruled in favor of eBay and ordered McCready to show cause why he should not be sanctioned for abuse of process.
    The court held that the suspension of an account until the user "resolve" or "recitify" fraud complaints was not an effort by eBay to "collect" a debt under the Fair Debt Collection Practices Act. Ebay's Feedback Forum is not a "consumer report" and eBay is not a "consumer reporting agency" as defined by the Fair Credit Reporting Act. The Feedback Forum compiles information according to anonymous usernames and therefore is not reporting on identifiable "consumers". In addition, the FCRA only applies to reports for consumer purposes, whereas the Feedback Forum is an inherently commercial activity.

Chapter 6 - Electronic Contracts
Click Wrap Licenses · Uniform Computer Information Transactions Act · Direct Mail Sales On The Web · Online Auctions