A contract is an agreement that is spoken or written between two parties who create a legal obligation to perform specific actions. Each party has a specified duty, for example, delivering products or making payment for a job done (MacLeod, 2007). For a contract to be enforced, each party is obligated to give something of an absolute value. eBay is one of the most prosperous online auction platforms where users willing to purchase goods make bids and the sellers have the upper hand in making the decisions on which buyers to sell to, based on the terms indicated on the specific products. Then payments are made electronically, and the product shipped to the buyer.
There are different elements required to demonstrate the construction of a legally binding contract which includes an offer, acceptance, consideration, mutuality of obligation, competency, and written instrument. Concerning the proposal, a promise is given, and in exchange, a sign from the other party has to do the same. Acceptance of a specific offer is a commitment towards the terms. Consideration involves the provision of something valuable from both parties which prompt the other to get into the agreement. In mutuality of obligation, both parties are required to perform their duties or else the law will not consider the contract as viable. Competency illustrates that any party entering a deal is held accountable for the task they agree to undertake.
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The Uniform Commercial Code (U.C.C.) is a body that provides legal rules and regulations that governs commercial or business dealings; a contract can be made in any manner as long as it shows agreement. The agreement must include the offer and acceptance conduct which plays a significant role in proving the existence of a contract. In the year 2003, the U.C.C. also validated electronic agents which involve computer programs to initiate a transaction without any human review.
In most categories on eBay, when an individual places a bid in an auction, it is considered binding. When the buyer wins a sale, they agree to complete the purchase and this is an indication that both the buyer and seller are legally bound (MacLeod, 2007). This approach makes the buyer and seller more comfortable to make any trade because they both have a sense of security. According to the elements of contract analysis, eBay bids are considered as legally binding because U.C.C. approves of contracts made on electronic means which involves any computer programs. Valid acceptance and consideration are evident on eBay since the seller has to accept a specific bid and then consider selling it to the best buyer. eBay operates only on exemption clauses which enable the online company to avoid liability of any transaction that goes wrong. The contract formed is only between the buyer and seller, and due to the approval of the U.C.C., these contracts are enforceable in a court of law (Bajari and Hortacsu, 2002).
In conclusion, eBay’s online auctions operate solely at the risk of both the buyer and seller and even if the chances are high eBay has marked an increase in transactions over the recent years. For example in the year 2004, eBay conducted transactions over 34.2 billion dollars and a total of 56.1 million users (MacLeod, 2007). It is a clear indication that both the sellers and buyers are comfortable with contract terms and therefore prompting them to keep doing more transactions.
References
Bajari, P., & Hortacsu, A. (2002). Cyberspace auctions and pricing issues: A review of empirical findings. preprint, Chicago GSB .
MacLeod, W. B. (2007). Reputations, relationships, and contract enforcement. Journal of Economic Literature , 45 (3), 595-628.
