On 12 November 2014, the German Federal High Court (BGH) ruled that a sales contract for a used car 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 had ended the eBay listing of a power generator early and had sold it elsewhere (VIII ZR 90/14).

The facts of the cases were as follows:

  1. In the first case, the defendant offered 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 555.55 EURO. 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 4,200 EUR. The plaintiff claimed for damages asserting that the car had a value of 5,250 EURO. 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 to make a bargain and the seller’s chance to make a better profit due to outbidding is 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 to EUR 1 and that it was the defendant’s unjustified early ending of the auction that led to the materialization of this risk. 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 count as such special circumstances and eBay’s terms of use do not give rise to 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 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 put a car on ebay for 10 days but ended the auction after 2 days when he discovered jerking movements and ignition failures of the listed car. The Regional Court argued that in its terms of use eBay allows ending a listing early without compensation if the seller was mistaken at the time of listing the item or when the item is damaged during the time of its listing. 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.