My legal memo

MEMORANDUM OF LAW

TO:       eBay's general counsel               

FROM:     Kim Parrish

DATE:     February 23, 2008

RE:       Issues facing eBay France with regards to the Council of Sales' claim that eBay France is in violation of the Auctions laws in France. 

 

Question Presented

Does ebay fall under the restictions oF an online auctioneer house or should they be classified as an online auction broker? If they are cosidered an online auction broker, does the auction act of 2000 still apply?

 

Brief Answer

     Because eBay does not take possession of the items being sold on its website and makes no guarantee for those items they are only acting as an auction broker, not an "Auctioneer" or "Agent." EBay is, therefore, not in violation of the French Auction Act of 2000, which requires the company obtain permits, provide quality assurances, and arrange shipping services, among other guarantees to their French citizens (Sayer,2007).

 

Statement of Facts

     In December 2007, the French government, specifically the Council of Sales, pursued legal action against eBay, suggesting that eBay France was not in compliance with France's auction laws. They argued that eBay had not properly applied for auction permits and is not providing the proper customer safeguards, which are required by the Council's 2000 Auction Act.

 

 

Discussion

Does ebay fall under the restictions of an online auctioneer house or should they be classified as an online auction broker? If they are cosidered an online auction broker, does the auction act of 2000 still apply?

 

     In France, traditional auction houses and online auctions are strictly regulated by the Council of Sales and the Auction Act of July 10, 2000, which is a modernization of the Auction Act of 1841. The Act specifically regulates traditional auction Houses and online auctioneers, but does not regulate online auction brokers. The main subject for consideration then, is whether or not eBay falls under the title of online auction broker or online auctioneer. The main difference between to the two classifications is the level of involvement that the agent or broker plays in the transaction. According to Article 3 of the Auction Act of 2000, an auction regulated by an auctioneer is "the offer for sale of movable property over the internet by a person acting as the 'agent' of the owner of this property for adjudication to the highest bidder constitutes a public action sale," which can be regulated by the Council of Sales (Misse & Belin,2007). The Auction Act goes on to define an agent as someone who temporarily takes over the property of the seller and acts on their behalf to negotiate the highest bid from among the buyers. In France, the auctioneer is a "public official, registered under the regulatory authority of the Minister of Justice, and authorized to conduct auction sales, [and is]in charge of defending the seller with payment guaranty and of protecting the buyer with authenticity guaranty" (www.auction.fr, 2005).

     The French government believes that eBay is an auctioneer, and acting in that capacity eBay has not obtained the proper permits and is not providing the necessary guarantees to their customers, which violates the Auction Act of 2000. eBay's top management, in contrast, has been quoted saying that they are only "facilitators" or brokers of auctions, and that "eBay has invented a new way of buying and selling, which has been adopted by 10 million French people," where they are merely brokers of the transaction, not agents (qted in Out-Law.com). In other words, eBay's official position is that they are an online auction broker and not an online auctioneer.

     For the French government's claim to be true they would need to prove eBay is an auctioneer: according to French law, eBay would need to be an agent of the items being sold. To act as an "Agent" under the Auction Act eBay would need to take possession of the item being sold and sell them on behalf of their owner (auction.fr, 2005). EBay would also need to regulate the shipment and money transfer of the items being sold. EBay purposely does neither of these actions. They do not regulate shipping, because the items are all over the world and some do not need to be shipped, nor do they claim ownership over the items, because this would hinder the speed and openness of the transitions on their site. Their goal is to provide an online forum where online buyers and sellers can meet to exchange goods. EBay has a commitment to be a"venue to allow anyone to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of pricing formats" (eBay user agreement, 2008). This open policy allows for a much greater diversity of items being sold and gives a lot more flexibility to their customers. EBay's website does keep tract of bids, but that is the only service they provide, they never claim to act on behalf of the seller. Thus, eBay is best defined as an online auction broker, not auctioneer, and aims to give their buyers and sellers the most freedom possible.

     This does not mean that eBay does not want to protect its clients; in fact they take great measures to do so. One example is their use of seller ratings where buyers can rate the sellers, making sure any dishonest sellers are not used again. Furthermore, even though eBay does not regulate the payment of their goods they do suggest users use companies like paypal^TM which provide some liability protection that eBay does not. EBay takes these steps because they are committed to their customers, not because they are auctioneers or forced to do so by law.

 

Conclusion

     EBay has a commitment to its users to provide the greatest access to products available. They are committed to letting sellers commune directly with buyers, and therefore take on the role of broker, not agent, and are not bound by France's Auction Act of 2000 which regulates Auctioneers and Auction houses, but does not regulate brokers.

Bibliography

 

auction.fr. (2005). "auctioneer."   Retrieved February 22, 2008, from http://www.auction.fr/uk/divers/savoir.html.

Brigitte Misse, J.-L. B., Murielle Cahen. (2007). "ARE INTERNET AUCTION SALES LEGAL UNDER FRENCH LAW?"   Retrieved February 23, 2008, from http://www.ibls.com/members/docview.aspx?doc=755

ebay.com. (2008). "Your User Agreement."   Retrieved February 24, 2008, from http://pages.ebay.com/help/policies/user-agreement.html.

OUT-LAW.COM. (December 5, 2007). "Auction watchdog says eBay is illegal in France."   Retrieved February 24, 2008, from http://www.channelregister.co.uk/2007/12/05/france_says_non_to_ebay_broker_claims/.

Sayer, P. (2007). "French auction regulator sues to close down eBay France."   Retrieved February 23, 2008, from http://www.infoworld.com/article/07/12/03/French-auction-regulator-sues-to-close-down-eBay-France_1.html.

           

 

 

 

 

 

--
Kimberly Parrish
Global Partners MBA
Kimberly.Parrish@gmail.com
770-366-3936