2009 Corvette Z06 GT1 Edition for sale at Lund CadillacEnlarge Photo
In what has become an all too common scenario, yet another eBay sports car buyer has met with a dealer's refusal to sell a car bought in a no-reserve auction. The matter is more complex than it might seem--or than some might make it out to be--and we have the inside story, from both the buyer and the dealership.
First, the situation, as related to Motor Authority by the buyer, John McKee: a 2009 Chevrolet Corvette Z06 (note: link is to closed eBay auction, which will disappear eventually) with the 3LZ package and the GT1 Championship package was offered for sale on eBay by Lund Cadillac, a Phoenix, Arizona dealership. The car was listed with no reserve price. When the auction's time was up, McKee was on top at a price of $56,600. But when McKee called to pay his winning price, the dealership refused.
Not just another case of buyer-done-wrong
After at least two phone calls, sales manager Matt Kinder told McKee the Corvette would cost him at least $69,500--they wouldn't let go of it for less. McKee, however, had done his homework, and knew the car had been purchased by the dealership at an auction in Orlando for just over $60,000, and refused to pay the inflated asking price.
So far, so well--just another case of an eBay buyer bilked by a dealership, right? Actually, it's not so simple. In fact, it's rather complex, thanks to the laws that govern such transactions.
Arizona, like many other states, has a statute that presumes all auctions for the sale of goods (i.e. cars) are with reserve unless explicitly stated to be without reserve. Though the eBay listing had no reserve price set, neither was there an explicit statement that the auction was without reserve, either in the title or the item description itself.
Score one for the dealership, then--as even eBay itself notes, bids for vehicles are non-binding, unlike other types of eBay auctions. A bid on a car essentially amounts to a buyer's statement of interest in purchasing a vehicle, rather than a legal commitment to do so. Why? As eBay puts it in its help pages, "Due to state laws and the complexities of real estate and vehicle transactions, bids in those categories are non-binding."
So McKee appears to be back at square one--the eBay listing and bidding process having served as nothing more than an elaborate classified ad so far. But there's another hitch in the law, brought about by the dealership's response to McKee's "winning" bid.
It's part of contract law, called "offer and acceptance." It sounds simple, and on its face, it is: a buyer makes an offer to buy something, the seller has the choice to accept the offer or not. If the offer is accepted, the contract is formed, and the seller is obligated to sell the item for the price agreed. In practice, it can be much more complicated than that, but that's the general idea.
Here, McKee's winning bid amounts to an offer to buy the Corvette for $56,600. But did the dealership accept that offer? Perhaps. In response to the close of the auction, the dealership sent an email to McKee, stating in part, "Congratulations on the purchase of your 2009 Chevrolet Corvette!"
That sure sounds a lot like an acceptance of the offer and the formation of an agreement, or contract, to sell the car. The law requires (depending on the circumstsances and jurisdiction, of course, but generally speaking) only objective manifestation of assent, i.e. the email in question, which congratulates McKee on his purchase and instructs him to fill out various forms and paperwork to complete the transaction.
So, on the face of things, we have a contract to sell this car to McKee for the price offered--$56,600. How does the dealership explain its insistence on an additional $12,900 on top of the agreed-upon price?