Eeet 4032 Advanced Internet Technology Assessment Answers

eBay is one of the biggest online auctioning companies in the world. Buyers and sellers of all types are able to hop online, put up something for sale, and sell it! Basically, the way it works is that you find something you want to bid on, place a bid on it, and wait to see if your bid wins. If it does, you send your information to the seller, and in return, he or she sends you your goods.

 

Is an eBay auction a legally-binding contract?

 

Consider whether a bid placed in an online auction on eBay is legally binding and, therefore, enforceable. Explain your reasoning using the elements of contract analysis that you have learned thus far, including valid offer, valid acceptance, and the various forms of consideration.

Answer:

In today’s digital era, the use of online contracts has increased with the popularity of e-commerce companies across the globe. In the e-commerce industry, eBay is a popular website which allows its users to make a bid on the products which are auctioned on the site. Many times, questions arise on the fact regarding whether the online auction bids on eBay are a legally binding contract which binds its parties into a valid contract. In order to answer this question, it is important to understand the process of eBay’s online auction. The website provides an electronic meeting place to sellers and potential buyers to make a transaction (Lin, Cheng, Wang & Chang, 2012). The process on the website allows the sellers to display the items which they wanted to sale. The buyers are allowed to place competing bids to purchase the specific items. After the beginning of a bid, the potential buyer places a bid on the item which represents the buyer’s interest to form a binding contract to buy. However, acceptance is not considered as valid unless it represents the final bid of the auction. Therefore, the individual bids which are submitted during an online auction on eBay are considered as counter-offers based on which no agreement forms between parties due to lack of consideration and acceptance (Du, Yu, Fang & Wang, 2012). Thus, an individual bid which is not the final bid did not form a legal contract that is enforceable by the law.

There are three key elements which must be fulfilled to form a contract which includes offer, acceptance and consideration. In the case of eBay’s online auctions, the highest bidder is considered as the winner, unless the seller has imposed any reserve price, which means that the acceptance of the seller is given for the sale. The offer made by the potential buyer through the online auction represents an offer which is accepted when the highest bid is made on the product. After making payment of the consideration which is referred to the bid amount of the potential buyer, a contract is formed between the parties based on which its terms are enforceable by the law. In Australia, the NSW Supreme Court provided in the case of Smythe v Thomas [2007] NSWSC 844 that the bids made on eBay are considered as legally binding. The terms and conditions of eBay provide that the seller must sell the listed item to the higher bidder at the end of the auction. Based on this judgement, a contractual obligation was imposed on Thomas to sell the plane for $150,000 to Smythe in this case. This case highlights the view of the courts in the United States regarding the legality of eBay’s online auctions (Riefa, 2016). A valid offer is made through the bid of the potential buyer, and a valid acceptance is received if the buyer has made highest bid on the item. The bid amount is referred as the consideration of the contract, based on which an eBay auction is a legally binding contract which is enforceable by the court.

References

Du, H. S., Yu, H., Fang, Y., & Wang, S. (2012). Empirical investigation of EachNet: the eBay model of C2C online auction in China. IEEE Transactions on Engineering Management, 59(1), 160-175.

Lin, T. C., Cheng, H. K., Wang, F. S., & Chang, K. J. (2012). A study of online auction sellers’ intention to switch platform: The case of Yahoo! Kimo versus Ruten_eBay. Decision Sciences, 43(2), 241-272.

Riefa, C. (2016). Consumer protection and online auction platforms: Towards a safer legal framework. Abingdon: Routledge.