In past years, individuals relied on brick and mortar stores for their shopping needs. The invention of the internet has changed this. Today, it is possible for people to visit online marketplaces where they can shop from the convenience of their mobile phones or computers. While these online marketplaces have presented many gains, they have also made shopping more complicated. One of the complications resulting from such marketplaces regards whether auctions carried out here are binding. An examination of contract law and the provisions that such sites as EBay have developed suggest that these auctions are binding and therefore enforceable.
For a contract to be considered legally binding and valid, it must possess a number of elements. Offer and acceptance are some of these elements (Blum, 2007). In the case of an EBay auction, offer refers to the seller’s decision to make available a certain product for sale. The seller needs to detail the specifications of the product. On the other hand, acceptance occurs when the buyer agrees to purchase the product as presented. Mere acceptance and offer are not sufficient to make an EBay auction legally binding. In addition to these elements, the parties must demonstrate an intention to create a contract that is legally binding (Blum, 2007). A typical auction on EBay sees the seller make an offer which the buyer then accepts through placing a bid. As they engage in this exchange, both the buyer and the seller understand what is expected of them. This means that they are willing to enter into a legally binding agreement. This far, an EBay auction is legally-binding.
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The examination of whether an EBay auction is legally binding goes beyond offer, acceptance and willingness to enter into a contract. It is also important to determine if the parties possess the legal capacity to enter into a contract. Contract law renders agreements that such people as those who are bankrupt and mentally impaired to be void (Blum, 2007). It also requires that there must be consideration. Consideration refers to some form of payment for the product being exchanged. In a typical auction on EBay, the parties possess legal capacity and there is usually an exchange of money. Consent is another vital element of contracts (Blum, 2007). For a contract to be considered valid, the parties must be allowed to exercise free will. Any coercion renders the contract void. It is unheard of for a user on EBay to be forced to offer or accept a product being auctioned. Therefore, EBay auctions involve consent, consideration and the parties possess legal capacity to enter into contracts. This makes these auctions valid and legally binding.
As far as contract law is concerned, EBay auctions are legally binding. However, to fully recognize the validity of these auctions, it is necessary to examine some of the provisions and conditions that EBay has laid out. EBay makes it clear that when a party fails to honor the terms of an auction, they will suffer consequences. For example, on its website, the firm states that “if you cancel a transaction, it may be considered a defect and count against your seller performance” (“Cancelling a Transaction”, n.d). The terms of the site further read that “when you list an item, you enter a legally binding contract to complete the transaction if the item is sold. If you cancel the transaction, there could be other negative ramifications” (“Cancelling a Transaction”, n.d). These conditions are clear evidence that EBay expects its users to honor contracts including auctions. The company even spells out that those who engage in transactions on the site enter “a legally binding contract.” Therefore, it can be said that EBay auctions are indeed binding.
An auction being legally binding is one thing while the same auction being enforceable is another. So far, it is clear that EBay auctions are legally binding. The question now becomes whether the same auctions can be enforced. To answer this question, it is helpful to consider the mechanisms that EBay has instituted to ensure that contracts are honored. The company makes it clear that “if you cancel a transaction, the buyer can still leave you negative or neutral feedback about the transaction” (“Cancelling a Transaction”, n.d). Negative feedback undoubtedly hurts a seller in an auction. Therefore, the threat of negative feedback incentivizes sellers to honor auctions. It is true that the auction system on EBay is not airtight. A buyer can easily refuse to pay for an item that they bid for and get away with this. While this raises questions regarding the enforceability of EBay auctions, it does not do much damage to the argument that these auctions are legally binding and can be enforced.
In conclusion, online marketplaces like EBay offer interesting avenues for exploring the application of contract law. These marketplaces are rather new and it would be expected that traditional law would not apply. However, as has been demonstrated above, contract law does indeed apply to these marketplaces. For the most part, EBay auctions are in line with the requirements spelt out in contract law. To make these auctions even tighter and more binding, there is need for EBay to set up measures to compel all parties to remain committed in auctions.
References
Blum, B. A. (2007). Contracts: Examples & Explanations. New York: Aspen Publishers.
Cancelling a Transaction. (n.d). Retrieved 14 th August 2017 from
http://pages.ebay.com/help/sell/cancel-transaction-process.html
