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Consumer's Right of Revocation in Internet Auctions by Traders (eBay)

Federal Supreme Court of Justice - Press Release No. 127/2004


 

The Eighth Civil Senate of the Federal Supreme Court of Justice, responsible amongst other things for the law on the sale of goods, today decided that, depending on the contractual arrangements, consumers who buy goods from traders on so-called internet auctions are entitled to a right of revocation.

The claimant, a trader dealing in gold and silver jewellery items, put up a "15.00 carat diamond bracelet, starting at 1 EUR" for auction on the website of the company eBay International AG (eBay). During the auction period, the defendant made the highest bid but then refused to accept the bracelet and pay for it. The trader's claim for payment of the purchase price remained unsuccessful in the lower courts. The Federal Supreme Court of Justice rejected the claimant's appeal, leave for which had been granted by the appeal court.

According to Article 312 d para 1 German Civil Code, a consumer obtaining goods or services from a business person on the basis of a distance contract is entitled to a right of revocation within a limited period as a matter of principle. The legal dispute focused on the question whether Art 312 d para 4 No 5 German Civil Code excludes this right of revocation in internet auctions. According to this provision, there is no right of revocation in distance contracts formed "by way of auction (Art 156)". The Federal Supreme Court of Justice held that this precondition is not met in respect to this internet auction on eBay, on the grounds that, because of the legal arrangement of the contract formation, it was not an auction as governed by Art 156 German Civil Code and therefore did not come within the scope of the exclusion provision in Art 312 para 4 No 5 German Civil Code.

According to Art 156 sentence 1 German Civil Code, in an auction no contract is formed until the auctioneer has accepted the bid. In the internet auction on eBay before this court, there is no such acceptance of the bid. Here, the contract was formed through the claimant's binding offer to sell and the acceptance thereof by the plaintiff's highest bid - and therefore not through acceptance of a bid according to Art 156 German Civil Code. As set out by the Federal Supreme Court of Justice, those types of contract formation which depart from Art 156 German Civil Code are not covered by the exclusion of the right of revocation contained in Art 312 d para 4 No 5 German Civil Code. According to the court, this is firstly supported by the express reference to Art 156 German Civil Code made in the wording of the provision and by its character - as an exemption clause it must be given a narrow interpretation as a matter of principle. In addition, the purpose of the right of revocation, which was established in the interest of consumer protection, also demands a narrow interpretation of the exclusion provision, as a consumer who buys an article from a trader on an internet auction is exposed to the same risks and in the same need of protection as he is when other distance selling methods are employed.

Federal Supreme Court of Justice, decision dated 3 November 2004 VIII ZR 375/03

Karlsruhe, 3 November 2004

Pressestelle des Bundesgerichtshofs
(Press Office of the Federal Supreme Court of Justice)
76125 Karlsruhe
Telephone: (0721) 159-422
Fax: (0721) 159-831


(Translated by Andrea Müller, London)