According to reports, the case concerned an unnamed jeweller who sold a diamond bracelet through eBay's German store, only to find that his customer rejected the goods and refused to pay on the grounds that he was entitled to cancel the contract under EU consumer protection rules.
The EU's Distance Selling Directive gives consumers shopping for goods and services by telephone, mail order, fax, digital television, the internet and other types of distance communication, additional rights including rights to clear information, further protection against fraudulent use of a credit card and a cancellation period.
It is enforced in Germany in the form of the Fernabsatzrecht (Remote-Purchase Law), and includes a 14-day cancellation period and an exception to the rules in the case of auction houses. The UK's equivalent law provides a cancellation period of only seven working days.
The jeweller took the case to court, arguing that eBay was an auction house and therefore exempt from the rules. But on Wednesday the German Supreme Court rejected this claim, ruling that the jeweller was obliged to accept the return of the bracelet.
According to German news site Heise Online, the court explained that a contract is concluded at auction when the auctioneer "knocks down" the lot to the bidding party, but:
"In the case of eBay's internet auctions no such act by an auctioneer can be found. In the present case the contract came about through the binding offer to sell made by the plaintiff and the acceptance of said offer by means of the highest bid made by the defendant – hence not through an act of knocking down."
Accordingly the Remote Purchase Law did apply to sales by commercial sellers on eBay.
The ruling has been welcomed by eBay as removing some uncertainty. The company has always said it is only a venue where auctions take place. "We are not an auction house," it explains in its user agreements. But Heise Online reports that the internet giant also warned that small businesses would now find it more difficult to use eBay as a start up mechanism for on-line ventures.
The ruling does not apply to sales between businesses, or between private sellers and private purchasers.
