eBay Liable for Breach of Contract in Violation of Terms and Conditions

General Caselaw: A recent federal court decision from the Northern District of California in found that eBay violated its contract with a vendor based on the timing of making products searchable. In Missing Link, Inc. v. eBay Inc., 2008 WL 1994886 (N.D. Cal. 2008), the plaintiff-vendor alleged that eBay failed to make the posted products searchable for more than four hours after the vendor had posted the items for purchase.

The Court held that the delay constituted a breach of contract because it was contrary to the provisions of the website’s terms and conditions which specifically stated that any item listed would be posted immediately. Accordingly, the Court held eBay to that timetable and held it liable for breach in that four hours was not “immediate.”

The Court refused to accept eBay’s argument that the four hour lag was excusable. It noted that the merchandise could not be found by using the search function in eBay. The Court noted that since eBay is so vast it is extremely unlikely that any potential customer would be able to go directly to the posting without using eBay’s search function

This case emphasizes the importance of carefully crafting terms and conditions for an Internet website. Terms and conditions should not be merely “borrowed” from a competitor’s website, even if the competitor operates in the same industry or provides the same or similar products or services. Every website has unique aspects that need to be accounted for. It is critical that a website’s terms and conditions match the precise intent of the parties, because those terms and conditions are meant to create a contract with the visitor to the website.

The fact that the website’s terms and conditions form a binding contract is a double-edged sword. It greatly enhances a company’s rights and protections against its users. In fact, it provides an opportunity to bind a customer to a contract and business model where no other contract may exist. However, by the same token, the company will be also bound; and its failure to adhere to its own terms would make the company liable for breach. Finally, website terms and conditions should not be considered a static agreement. It should be reviewed periodically to be sure to account for changing technologies and any changes in the website’s business procedures.

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