Although written in 2008 ie. pre consumer law amendments the precedents and judges edicts still stand.
The excerpts are from this paper
The Contractual Legalities of Buying and Selling on eBay: Online Auctions and the Protection of Consumers
KANCHANA KARIYAWASAM AND SCOTT GUY
http://www.austlii.edu.au/au/journals/JlLawInfoSci/2008/4.html
This is how well ebay's user agreement stands up in court
Evagora v eBay Australia & New Zealand Pty Ltd[93] was the first judicial decision in Australia in relation to an internet auction dispute.
Mr Evagora was the eBay buyer to whom eBay was held liable to pay damages for a computer that failed to arrive, which he purchased in an on-line auction.
EBay sought to limit its liability by disclaimers or exclusion provisions in its User Agreement.
However, it was pointed out in the case that Mr Evagora did not read the (quite lengthy) User Agreement before clicking the ‘I accept’ button.
The tribunal found that eBay’s disclaimers in their User Agreement did not override their prominently placed representations concerning the safety of dealing on eBay and the statement that goods purchased on eBay were insured.
The court held against eBay.[94]
This case clearly shows that eBay’s User Agreements must be brought into line with Australian consumer protection laws, and that eBay must carefully review the manner in which it interacts with and protects its users.
The above decisions produced a variety of results for consumers. However, the legal uncertainty pertaining to eBay auction processes in Australia has been resolved by the recent well known case of Peter Smythe v Thomas,[95] the ‘1946 World War II Wirraway Plane’ decision in which the plaintiff, Peter Smythe, sued the defendant, Vin Thomas, for failing to deliver the item for which the buyer had bid. The buyer, Adelaide ‘warbird’ enthusiast Peter Smythe, sued the seller, Albury radiographer Vin Thomas, for allegedly breaking the rules of eBay by refusing to hand over the plane, a 1946 Wirraway.[96] The plane — one of only five in the world still flying — was put up for sale on eBay by Dr Thomas in August. Dr Thomas listed the aircraft on eBay with an auction period of ten days and a reserve of $150 000. At the end of the auction period, eBay informed both Smythe and Thomas that Mr Smythe had ‘won’ the aircraft. There were no other bidders. But unknown to Mr Smythe, Dr Thomas had already agreed to sell the plane to a Queensland buyer for almost $250 000.[97] Mr Smythe was the only person to bid, matching the reserve price with just 20 seconds to go before the auction closed on 25 August 2007.
The court ordered Thomas to complete the sale even though he had changed his mind about selling the 1946 World War II Wirraway plane under the terms on which he had placed it on the internet auction site.
This time, the seller had apparently worked out a separate deal to sell the plane outside of eBay for a more profitable price. The plaintiff purchaser, who eventually succeeded in the action, demanded specific performance of the contract and that the court order the vendor to transfer the plane to him, as he had offered the highest bid and was therefore entitled to the plane.[98]
Crucially, the court examined the eBay Rules, especially Clause 5.2, which stated that ‘if you receive at least one bid at or above your stated minimum price (or in the case of reserve auctions, at or above the reserve price), you are obligated to complete the transaction to the highest bidder upon the item’s completion’.[99]
This case clearly demonstrates that an online auction is completed when a nominated deadline has passed.
If the reserve price has been reached at this deadline, the highest bidder ‘wins’ the item and is deemed to be the buyer. Even though the court ruled that the offer was accepted by Dr Thomas when Mr Smythe made the highest bid, certain important elements of the conventional agreement, regarding payment terms, had not yet been concluded. However, the court concluded that the parties had,
in fact, entered into a binding contract for sale according to the eBay rules.[100]
This case removed some of the uncertainty relating to applicable law in Australia and ruled that an eBay sale essentially constitutes an auction and, therefore, a sale of goods. Specifically, the Wirraway Plane case has clarified the law relating to online auctions — via the process of eBay — in Australia and confirms that transactions thus made via eBay constitute legally binding and enforceable contracts.
Hence, the decision in this case reinforces the point that the ordinary laws of contract and, more specifically, those relating to auctions, do govern transactions for the sale of goods on eBay.
The case is undoubtedly a welcome one since it will enhance consumer confidence in the sales processes underpinning eBay and ensure henceforth that vendors and purchasers will be legally bound by their respective offers and acceptances. The court upheld this reasoning.
It noted that the eBay sale is a sale and a bid on eBay is binding and legally enforceable: ‘It follows that, in my view, a binding contract was formed between the plaintiff and the defendant and that it should be specifically enforced.
’[101] The judge concluded that ‘an online auction created a contract in the same way as a traditional auction
— the auctioneer is the agent of the seller and the agent can accept a bid on behalf of the seller — which is what occurs in an eBay auction’
(Conclusion)
At the same time, clearly, it is not satisfactory for online auction houses such as eBay to argue that they are simply providing a marketplace or ‘neutral’ forum in which vendors and purchasers undertake transactions at their own risk.
This essential advocacy of ‘caveat emptor’ may have been appropriate in the nineteenth century but it is not good enough in a contemporary context where a multitude of consumer protection legislation exists and where there is a recognition that consumers are at a significant disadvantage to retailers and service providers.
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