§ 145 ff. BGB: On the Formation and Validity of Sales on the Internet

X ran a website under the title "X...private auctions" on which sales could be concluded online by persons who had previously registered with X and had accepted X's general conditions of business. Those conditions included the following:

Preamble:
...(3) §156 BGB does not apply to private auctions...

§3. Description of the Item Sold: offer to sell in private auctions:
On displaying an offer on X.'s website a participant gives X the guarantees and undertakings listed in §3(4) and §5(4). X thereby acts as the authorised recipient of declarations made by any participant (§164(3) BGB).

§4 Offers to Contract...
(4) Bids below the lowest price stated as acceptable by the person offering to sell are ineffective... (7) X acts as the recipient of offers made by participants in private auctions (§164(3) BGB).

§5. Acceptance of Offers...
(4) By displaying their offer to sell on X's private auctions website in accordance with §3(5) participants declare their acceptance of the highest bid which is valid under §4(4) and 5...

-x-x-x-x-

The defendant, a part-time dealer in motor vehicles reimported into the European Union, advertised under his userID a new Volkswagen Passat for sale as described. The starting price he gave was 10 DM; in addition to laying down the increments for bids and the duration of the auction he stated "As of now I declare my acceptance of the highest valid bid."...

Eight seconds before the auction closed the claimant, under his UserID, sent an offer of DM 26,350. This was the last and highest offer. X sent an e-mail to the claimant stating that the item has been knocked down to him, and advising him to contact the seller, whose name he gave, regarding delivery and payment. The defendant refused to deliver the vehicle when the claimant demanded it on the ground that no contract had been concluded, but said he was ready to sell the vehicle for about DM 39,000. As a precaution he said he was rescinding his declaration on the ground that he had made a mistake in stating the starting price.

The claimant sued the defendant for delivery of the vehicle against payment of DM 26,350. The Landgericht dismissed the claim, but the claimant's appeal was allowed by the Oberlandegericht. With leave from the Oberlandesgericht, the defendant now seeks the reinstatement of the decision of the Landgericht.

Grounds:

...

II. The appeal must be dismissed. The parties have concluded a valid contract of sale of the vehicle offered by the defendant on X's website.

1. Contracts come into being by means of expressions of intention directed to their conclusion. This is normally done by offer and acceptance under §§145 ff. BGB, but in auctions it is done by bid and hammer-fall (Zuschlag, §156 BGB). Such expressions of intention, as the court below was right to explain, are validly made by electronic means through the communication of data on the internet.

2. In the present case no Zuschlag took place, so the contract was not concluded under §156 BGB. X's statement to the claimant that he had received the Zuschlag was not a relevant expression of intention and was not designed to be. We can therefore leave aside the question whether the online-auction in this case meets the requirements of an auction in the sense of §156 BGB and if so, whether its provision, which is in any case not mandatory, could be effectively excluded as between the parties by the Preamble to X's general conditions of business.

3. A contract did, however, come into being in accordance with the general provisions of §§145 ff. BGB.

a) It is certain that the bid made online by the claimant, being the highest, was a declaration of intention designed to conclude a contract of sale with the defendant.

It is not correct, however, as the appellant argues, that the defendant uttered no appropriate expression of intention: as the court below explained, in his offer for sale of the vehicle the defendant expressly declared that as of that moment he accepted the highest offer validly made.

b) The court below was right to hold that the declaration displayed by the defendant on the offer page constituted a declaration of intention directed to the sale of the vehicle on offer and was not merely a non-binding invitation to make offers (invitatio ad offerendum).

aa) A declaration of intention is an utterance which is directed towards the conclusion of a legal relationship. .. Whether an utterance, be it express or inferred from conduct, is to be so understood is a matter for interpretation.

The court below was right on this point to take into account not only what actually appeared on the offer page but also the declaration which the defendant had to give in order to have his offer displayed at all (§§3(5), 5(4) of X's general conditions of business) and which the defendant in fact made when he first logged on and brought up the preformulated declaration. This express declaration admittedly did not appear on the webpage containing the offer, but it did reach X who was the claimant's authorised recipient and did so in connection with the offer on the web-page, which referred to it. It accordingly constituted a declaration of intention directed to the conclusion of a sale contract with the highest bidder.

...

bb) The defendant's declaration of intention was also sufficiently definite. It is true that it was not directed to a specific individual, but it met the requirement of definiteness because it made it indubitably clear which participant in the auction the defendant intended to contract with, namely (and only) the person who made the highest bid while the auction was still open. ...

dd) It is irrelevant whether or not the defendant was aware of the binding nature of his declaration of intention and the display of his offer-page. Even if the person making a declaration is unaware of its binding nature or has no actual intention to contract, a declaration of intention exists in law if he should, had he used the care called for in normal business, have realised that it could properly and normally be so regarded, and prevented this happening. An undisclosed intention not to be bound falls to be disregarded only if the recipient could not be aware of it (§116 BGB). The sole remedy for the person making the declaration is therefore to impugn it under §§119 ff. BGB if he can meet the requirements of those provisions.

4. In this case there is no basis for invalidating the defendant's declaration of intention or the consequent contract of sale. ...

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This page last updated Thursday, 01-Dec-2005 11:04:42 CST. Copyright 2007. All rights reserved.