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16/01/08
Online auctions such as eBay are becoming more and more popular for conducting selling and buying activities. The anonymity of the parties can result in purchasers making rash bids for items only to regret their actions when they win the auction. Similarly, sellers may list their items at a low price (and frequently at no reserve price) in an attempt to attract bids only to make a loss when the item sells at the first and only bid.
While there may have been doubt as to whether or not online auctions are binding on the parties, a recent case Peter Smythe v Vincent Thomas [2007] NSWSC 844 has put this issue to rest. In this case, the seller listed a rare World War II Australian aircraft for sale on eBay with a reserve price of $150,000. The buyer made a bid of $150,000 and won the auction.
Subsequently, the seller advised the buyer that he did not consider the online sale binding and that he had received an offer from a third party to purchase the aircraft for $220,000.
The buyer issued legal proceedings against the seller. The Supreme Court of New South Wales relied on the terms and conditions of eBay governing the buyer and seller and held that the bid by the buyer, which was the highest bid, was an irrevocable offer that was accepted by the seller when the auction concluded and as such, there was a binding contract between the seller and the buyer.
As a result of this case, parties should approach any transactions they conduct on online auctions with the same degree of caution as they would at an auction in the traditional sense, especially when the item is of significant value.
For further information regarding this issue, please contact Peter Bazzani on 9670 0722 or pbazzani@bsblawyers.com.au.