Weather The Online Agreement is Enforceable in Contract Law

Parties:

• Charlie
• Howard

Introduction:

As per the provisions of contract law prevalent in Northern Territory, the buyer and seller are bound by the bids made in online auctions. A contract is formed between the highest bidder and the seller at the end of bidding period, provided such bidder has paid at least the reserve price. This contract is governed by the terms and conditions of the platform facilitating auction and it is legally binding on both the parties.

Issue:

• Whether Charlie can insist Howard to share the winnings of auction with him?
• Whether Charlie has to sell his comics?

Rule:

The very first Australian case regarding online auction was “Smythe v Thomas”. The underlying issue in this case was whether the parties are bound by the bids made through eBay. In this case, Vin Thomas listed his Wirraway Plane from World War II on eBay for $150,000; Peter Smythe was the only bidder with $150,000. In the meanwhile, Thomas got another buyer for $250,000 and so he argued that the there was no binding contract between the parties and so he can deny selling the plane to Smythe. The Supreme Court of NSW decided that a binding contract had been created between the parties by the terms and conditions of eBay stating that a seller is obliged to sell the listed item to the highest bidder at the end of auction period.

Application:

Usually, the agreements between friends are of social nature and hence are not enforceable but agreements to participate in a competition have been held to be enforceable. One member of the three members syndicate lodged a lottery coupon by using the funds pooled from all the members. The high court decided that such contract shall be considered as enforceable and all the parties will get their proportionate share from prize winnings.

In the present case, Charlie has listed his comics for $10 on eBay using Howard’s account with an auction period of five days. After the end of bid period, Howard has made $1000 and returned $50 to Charlie.

Conclusion:

Since, Charlie is a minor and so the contract between Howard and Charlie is invalid. Also, the parties are bound by online agreements and hence Charlie has to sell his comics to the highest bidder.
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