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Look at that pair of shoes. That is a nice pair of shoes. So nice, in fact, that while they retail for around $180, they end up reselling at twice that. There’s apparently a whole market for limited edition NBA All-Star sneakers like these on sites like eBay. Who would’ve thought?

In February of 2012, Montreal brothers Sandrin Thierry and Kevin Mofo Moko bought a pair of these glorious “Galaxy” Nike Air Foamposite Ones from a reseller and quickly set up an auction on eBay. They were looking to make a quick buck to ease the student life and help their parents out.

The auction rapidly gained interest, and a few hours before its end they received a bid of $98,000. Shortly after, eBay took down their auction with the vague explanation of problems with the post. There was no suspension or attempt to contact the brothers about the matter.

The brothers pursued damages, arguing that eBay had unilaterally ended their site-user agreement, an action that goes against language in both the Consumer Protection Act and the Civil Code of Québec. The latter requires adequate notice of unilateral termination to be given. A threshold for the appropriateness of unilateral termination is also given in s. 2126, where “the provider of services may not resiliate the contract unilaterally except for a serious reason, and never at an inopportune moment; otherwise, he is bound to make reparation for injury caused to the client as a result of the resiliation.”

eBay argued that the brothers had violated their site-user agreement, giving them reason to unilaterally terminate the auction.

The company put forward a number of violations, such as that the shoes were used (which they were not), or inaccurately represented in pictures (which they were also not).

The Mofos were found to have not violated any rules of the site-user agreement, and now eBay has to pay up $86,700 in damages.

The contractual implications here are clear: be sure the contract you are making is compliant with legal statute. Or, at the very least, be aware that despite the provisions you put into your contract, they might not be enforceable in court. Enforceability of unilateral termination is contingent upon two subjective factors:

  • “A serious reason” being present
  • “Never [occurring] at an inopportune moment”

In a site-user agreement, a company provides users with the ability to use a service, and here it is to sell their wares. While users have the responsibility to use the service fairly, companies like eBay have the responsibility to provide a fair and good service. Here, it can be seen that the onus is on the company to be conscientious.

Better luck next time, eBay. Nothing can sour such sweet kicks.

To see standard terms of use and site-user agreements, visit our Small Business Law Library!

This article was co-authored by: Alina Butt

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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