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Monday, May 5, 2014

Ninth Circuit Rejects Contract-Based Challenge to eBay's Automatic Bidding System

9th CircuitIn Block v. eBay, Inc., Marshall Block contended that eBay's automatic bidding system violates two provisions of its User Agreement as well as California's Unfair Competition Law.  The District Court dismissed the case and the Ninth Circuit affirmed.

eBay conducts online auctions through its automatic bidding system.  A bidder enters into the system the maximum amount she is willing to bid.  This amount is kept confidential, but the system automatically and at pre-determined increments enters the bidder's bids until the bid price exceeds the maximum that the bidder is willing to pay.  Block, an eBay seller, claimed that the system violates provisions of the User Agreement in which eBay represents that: 1) it is not  involved in the actual transaction between buyers and sellers; and 2) the Agreement creates no agency, partnership, joint-venture, employer/employee or franchisor/franchisee relationship.

The District Court found that neither of these provisions constituted enforceable promises, and the Ninth Circuit agreed.  The Court discerned no promissory language in the relevant provisions.  Rather, the Court opined that the language in the User Agreement served as a general introductin to eBay's marketplace.  While some of the language of the User Agreement are explicitly promissory; the language at issue here is informal and conversational in style.

While I agree with the Court's analysis here, I am a bit wary of its emphasis on the informal language used in the User Agreement.  I noticed recently that Google changed the tone (but not the substance) of its Terms of Service by adding contractions and generally making the corporation sound more like an unthreatening hipster.  Notwithstanding the verbal skinny jeans, companies engaged in e-commerce use these agreements to limit consumer rights and  their own exposure to legal action, often to the verge of rendering these documents illusory agreements.  I wish the Ninth Circuit had limited its opinion to a finding that there was no promise and had not equated informal language with a lack of intent to be bound.

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