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Commentary
What to Do if Something Goes WrongWhen can you get out of a bad deal? It happens - sometimes we get tricked. But can you get out of a contract you made if this happens to you? The good news is that yes, there are three situations where you can either get out of your contract or modify it: 1) breach of warranty, 2) fraud, and 3) duress. This section covers these situations in detail. It also lets you know your rights if the goods you buy turn out to be stolen or involved in any sort of illegal activity. Warranty You were the winning bidder on an online auction and when you received the item, it was not as you expected it to be. Before you drag the seller into court, read carefully through the terms of the deal. Although you might be disappointed, perhaps you did receive what you deserved from the deal. On the other hand, if the product was covered by a warranty, you might have a valid claim against the other person. There are four types of warranties that are usually associated with the sale of goods: 1) express warranties; 2) implied warranties of merchantability; 3) implied warranties of fitness for a particular purpose; and 4) warranties of title. Express warranty These are usually the easiest type of warranty to understand. Your purchase is covered by an express warranty when the seller made an actual promise about the qualities or features of the items that you were purchasing and this promise was part of the reason that you decided to make the purchase. So, in order to hold your seller to a warranty, you'll first have to be able to show that he actually made a promise. A seller can make an express warranty in three different ways: 1) By making a statement of fact or promise about the goods he is selling by saying something like “ I promise that the card I’m selling you is a Sammy Sosa rookie card. 2) By making a description of the goods he is selling, like describing a computer for sale as “a 1.4 gig Pentium 4 with a 40 gig hard drive.” 3) By showing the buyer a sample or a model that he claims is representative of the goods he is selling. For instance, by providing a picture of the goods for sale on an auction site. The more specific the statement, the more likely it can be considered a warranty. If the seller makes a statement of weight, grade or measure, or a statement of historical significance, it is likely a warranty. But, if the seller makes a prediction or a statement like "wonderful" or "terrific" it is likely a commendation, not a warranty. So, if a seller promises that "this scooter will go 25 mph", he is probably making a warranty. But, if the seller states that "this scooter is pretty fast" he is not making a warranty. Implied warranty of merchantability This warranty only protects you when you buy stuff from someone who is a "merchant." A merchant is someone who sells the item(s) you are buying from him or her for a living - so the guy that runs the comic book store is a merchant, while your next-door neighbor who just sold you his old comic books is not. A merchant breaks the implied warranty of merchantability when the stuff he sells to you is not of good quality and cannot be used in the way you would normally use it. So, if your mom just bought a new chair from the furniture store, and as soon as you sat in it, it broke, the seller just broke the implied warranty. Since the seller was a furniture store, it is considered a merchant. Since the chair could not be used for what a chair is normally used for, sitting, it is not merchantable. Implied warranty of fitness for a particular purpose This one is a bit more complicated because there are four parts to this warranty. First, the buyer must have some sort of unusual or particular purpose in mind for the item he is buying. Next, the seller must know about the buyer's unusual purpose. The seller also has to know that the buyer is counting on the seller's expertise to provide something that will work for the buyer's unusual needs. Last, the buyer must have actually relied on the seller's expertise in picking out stuff that will work. It sounds pretty complicated, so it's probably easier to understand with an example. Let's say that you are planning a downhill skiing trip in Breckenridge so you go to your local ski shop and tell the owner that you need a new set of skis for skiing the expert, double black diamond slopes. The owner then recommends a set of cross-country skis, and you rely on his recommendation and make the purchase. While skiing, you fall and break your leg, because it is nearly impossible to downhill ski with the skis that you bought. You probably have a good argument that the ski store owner who sold you the skis broke an implied warranty of fitness for a particular purpose. However, if you simply went to the ski store and bought the cross-country skis without talking to anyone at the store, the warranty would not apply, because the owner did not know about your particular purpose. Warranty of title This means that when a seller sells you goods, he warrants that what he sold to you was really his, that he had a right to sell it to you, and that no one else had any sort of claim to ownership of the goods. Whenever you purchase items, you are automatically covered by this warranty unless the seller lets you know that he does not claim ownership of the goods. Fraud What's fraud? Basically, it's lying. I make an offer saying "I'll sell you this gold coin for only $19.95, even though its really worth much, much more!" - and you accept. You pay me, I give you the coin, and we both go home. But it's a hot day, and when you get home, you open up the little velvet box that you had sitting on the dash board of that orange Buick you bought, and its all gooey and brown inside. You take a closer look, and realize that what I sold you was a chocolate coin in gold foil. That's fraud because I knowingly misled you about what you were buying, and you now have a right to get your money back, though you may have a hard time finding me. Duress The other time you can get out of a contract is when you contracted because of duress. For example, if you grab my dog Daisy in one hand and have a pair of hair clippers in the other and tell me that unless I sell you my autographed Frank Sinatra record for 86¢, you'll give Daisy a mohawk, I might sell it to you, but it isn't voluntary. I didn't really agree to sell it to you because I wanted to sell it. I only agreed because of your threat. That's duress, and I can get out of a contract there as well. When can't you get out of contract, even though you might really want to? Well, if, for example, you were the person who agreed to buy a goldfish for $5,000,000,000, you might later find yourself saying "What was I thinking? I don't want a 5 billion dollar goldfish!" The problem there is, that's what you agreed to, and you're stuck, even though it may see like a bad deal. You made a deal and there was no fraud. You knew it was a goldfish, and no one threatened you into buying it. So…you’re stuck. Contracts for illegal goods/activities or stolen goods You're the winning bidder on a Milli Vanilli album on an online auction. However, the government has outlawed Milli Vanilli as cruel and unusual punishment to anyone forced to hear it and neither you nor the seller knew of the law. What can you do? Well, the deal is dead, but if you already paid for the album, the seller has to give you your money back. What happens if you find out that the buyer wants to use your item to do something illegal? Say, for instance, you're selling a pile of old, mismatched silverware, and one of the buyers writes to ask you some questions about it because she wants to use it to make wind chimes. Well, you know that wind chimes have been outlawed in your state, and that's where the buyer is from too. If this buyer is the highest bidder, you don't have to sell them to her. The fact that she wants to use the silverware to make illegal wind chimes voids your contract with her - it's dead. You can, instead, sell it to the next highest bidder who either wants to use it for something else (eating maybe?) or to a wind chime-maker in a state where that's not illegal. So what happens if you're the winning bidder on a used eight-track tape of Willie Nelson's greatest hits, but when you get it from the seller it turns out to have a label on the front that says "Nashville Public Library?" Well, unfortunately, you will probably have to give that eight-track back to the library. The library most likely didn’t want to sell it or give it away, and even though you paid for it, the library still owns the eight-track. OK, but what if you didn't know the thing you bought was stolen? Say you just turned 16, and you're out looking for some hot wheels, and one day when you're on the bus, you spot this totally cool orange 1983 Buick. The price is great - only $200 bucks - so you buy it. Happy that you don't have to take the bus all the way back across town, you're cruising along with the windows down, listening to the Willie Nelson eight-track the guy threw in with the car, when suddenly there's flashing lights behind you. You're a good citizen, you pull over, though you were only going 28 miles an hour in the 30 mile per hour zone, and the cop tells you the car you're driving is stolen. You show him the receipt that the other guy gave you, so he doesn't arrest you. But he does take the car, and you need to take the bus home anyway. What can you do? Well, unfortunately it doesn't matter that you couldn't tell it was stolen - the person who owned the car didn't want to have it stolen. So, you have to give it back. What you can do is sue the guy who sold you the car - if you can find him - and get your money back. OK, but what if you go to the local jeweler and see a really nice watch in the used case? You buy the watch, but it turns out that the jeweler wasn't supposed to sell it - the owner actually just left it for repair. Well, here's where it changes a little - if the jeweler sells watches, then there was no way for you to know that it wasn’t really for sale, so you get to keep the watch – the owner has to sue the jeweler. If, on the other hand, the jeweler normally doesn't sell watches, and just took this one in on repair, then you'll have to give the watch back and sue the jeweler yourself. Basically, if it's the kind of thing the shopkeeper normally sells, then the buyer gets to keep it, but if it isn't the kind of thing that the shopkeeper normally sells, the owner gets it back. One last thing: what about pawnshops? OK, we all know that the stuff in pawnshops isn't supposed to be stolen, but what if it turns out to be? Do you have to return what you bought to the original owner? Well, the answer turns out to be no, unless you had some reason to know it was stolen. So if, for example, you go into the pawnshop and see a really great leather jacket, but it still has a security ink tag on it from Bloomingdale's, you should know that it is stolen, and will have to give it back to Bloomingdale's if they or the police come looking for it. Between giving up and going to court: steps you can take to try to fix a bad situation Unfortunately, even the most cautious consumers and business persons may, at some point, find themselves victims of fraud. Perhaps, you are the winning bidder in an online auction and the item you spent your weekly allowance on never showed up. Or, as a seller, after shipping off your football card collection, the buyer is claiming that she never received it, even though you have proof of receipt. Depending on the situation, you might feel so angry you are ready to pick up the phone and get a lawyer in the hopes of suing the other person for all that he or she is worth, or perhaps you feel so frustrated by it all you would rather just give up and put it behind you, stop calling the seller from whom you never received your item, or refund the buyer her money for the football card collection, even though you are sure she received it. For persons who feel they have somehow been cheated in the auction process, there are steps that can be taken, besides instituting a lawsuit or just giving up. This section will detail some things you can do to try and remedy the situation without going to court. Communicate with the other person So now you have discovered that the seller really did break some sort of warranty. Or perhaps you are a seller and your buyer is not meeting the terms of the deal. What should you do? It sounds almost too simple, but one of the first steps, really, is to ensure you have exhausted all reasonable attempts to work things out with the seller or bidder who is giving you so much trouble. Through telephone calls, emails, and letters, make certain that the other person knows exactly what it is you are unhappy about and what you expect the other person to do in order to remedy the situation. Perhaps, the other person does not understand why you are upset or mistakenly sent you the wrong item or even forgot. If he or she is willing to make up the situation to you in a manner you find reasonable, this is much better than prolonging or worsening the situation, with the possibility of further disputes or a lawsuit arising. Keep a record of all your communication with the other party. Print out all emails, make copies of letters and faxes, and document all telephone calls. This information will be important if the other person refuses to be cooperative and you decide to enforce your rights through other measures, such as a lawsuit. Alternative dispute resolution Perhaps you have tried to work things out with the other person, but the person refuses to see things your way. There are still other means of trying to work out an agreement without filing a lawsuit. Alternative dispute resolution ("ADR") involves methods of securing your legal rights besides filing a lawsuit. Is ADR better than filing a lawsuit? It depends. People may want to avoid filing a lawsuit because lawsuits have the potential to be costly, because filing a lawsuit seems like it will take too long, or because going to court just seems kind of scary and intimidating. If there were no other means to resolve conflicts, people might consider factors like that, and decide not to fight back against wrongs such as auction fraud. To avoid these problems, ADR methods were created. There are several different types of ADR in the online auction setting including arbitration, mediation, credit card chargebacks, and escrow arrangements. Arbitration Arbitration uses a third-party to settle disputes, usually an unbiased decision maker. Many online auction sites have a binding arbitration clause that is part of the user agreement. So, you should look back at the user agreement of the online auction website you used and determine if there are arbitration procedures. Usually, the arbitration procedures are set up according to the rules established by the American Arbitration Association ("AAA"). The AAA was founded in 1926 and helps to resolve disputes through many types of out-of-court procedures, including arbitration. T he AAA keeps a roster of qualified arbitrators who have been screened to ensure that they are not biased. The arbitrator listens to cases like a judge and then decides on a solution to the problem. In addition, you can usually seek interim or preliminary relief from a court. Mediation Mediation is a less common form of third-party dispute resolution. Here, the independent mediator tries to promote reconciliation, settlement or compromise. Mediators facilitate the meeting between the parties. A mediator might try to accomplish resolution between the parties by gaining the rapport of the participants, finding out the facts and major issues of the dispute, and providing structure to the meeting by guiding the resolution process. The mediator will then help the parties write up the agreement between them, and perhaps be available for follow-up problems. Credit card chargebacks The most common dispute resolution method is the credit card chargeback. Credit card chargebacks are considered intermediary-provided resolutions because the credit card company provides the first service and the online auction site provides the latter service. Paying by credit card offers a consumer security in many types of situations. As a credit card holder you may be eligible for a chargeback if 1) there are unauthorized charges on your credit card statement; 2) the goods you paid for with your credit card never arrived; 3) the goods you paid for with your credit card were misrepresented or were of the wrong quantity, or 4) the goods you paid for with your credit card did not arrive in a reasonable amount of time. If you paid by credit card, you might be eligible for a chargeback. You should call your credit card company and explain the situation, for instance, that the goods were misrepresented and that the seller refuses to return your money. Most likely, the credit card company will credit the money back into your account and investigate your claim, seeking ultimate resolution of the issue. Escrow arrangements Escrow arrangements are another form of intermediary provided resolution. An escrow service allows the consumer to place money into a special account that will be delivered to the seller upon acceptance of the merchandise. Many sites will also include in the arrangement a method of rating both buyers and sellers so that people will know how trustworthy the buyers and sellers are. Keep in mind that there is an extra charge for using escrow. There are different costs and benefits to each of the alternative dispute resolution methods. In comparison to filing a lawsuit, these alternative methods are generally cheaper and less time consuming. A comparison of the different methods is difficult because they all fit different needs. However, escrow arrangements are extremely beneficial because they stop the problem before it even begins. Consumer and public protection: the search for a fair & safe marketplace Perhaps the dispute is over such a small amount of money, you feel it is not worth any more of your time pursuing, but you worry that this person might act fraudulently toward someone else. Or maybe you do plan to go after the person that cheated you, but wish there was more that you could do to protect others from this person. In these types of situations, you should consider filing complaints with some form of consumer or public protection organization or agency, such as the ones listed below. The Federal Trade Commission (FTC) It is an important goal in this nation that our marketplace be fair and free of practices that are deceptive or inhibit competition. The FTC enforces laws to protect consumers and educate them on a wide variety of issues, including fraudulent transactions. In order to better enforce consumer protection laws, the FTC developed the Consumer Sentinel database, which stores over 20,000 consumer complaints and is accessible by over 200 law enforcement agencies in the United States and Canada. This database allows law enforcement agents to track complaints on a large scale. The FTC cannot act in a means that would resolve disputes between a buyer and seller on an individual level, but it can take action when a pattern or practice of fraud is evident on the part of a buyer or seller. It is important to file a complaint if you feel you have been the victim of a fraudulent transaction so that the FTC can find individuals or businesses that have been defrauding the public. When the FTC notices what seems to be a pattern or practice of fraudulent activity by a person or business, the FTC will first try to obtain a consent order with the person or business. With a consent order, the person need not admit that she acted fraudulently; rather, she need only consent that she will not do the activity in question again. For instance, she need not admit she has been failing to deliver goods on online auctions; she need only consent that she will not participate as a seller in online auctions again. Thus, the public is hopefully protected against future harm. If a person does not wish to consent to refrain from certain activity, the FTC may then decide to issue a complaint and initiate a formal administrative proceeding. This proceeding is much like a typical court trial except that an administrative law judge will issue the decision. A person can challenge this decision through a process called appeal, to the full Commission. The decision of the full Commission may also be appealed to our nation's judicial system, all the way up to the United States Supreme Court! The FTC has the authority to pursue other options as well. It may go directly to our nation's judiciary and ask for an injunction (an order which requires a person or business to stop or start doing something), penalties, or consumer redress. The FTC might do this if the person or business in question has been penalized for consumer fraud in the past. In order to file a complaint or read more about consumer protection, visit the FTC online at http://www.ftc.gov/ or call their toll free number 1-877-FTC-HELP. The United States Postal Inspection Service If any part of your transaction involved the use of the United States Postal Service (for example, the payment was made by mail), consider filing a claim with the United States Postal Inspection Service. The Postal Inspection Service can take measures against an individual or a company when there is sufficient evidence of activity that suggests a scheme to defraud. The Postal Inspection Service cannot guarantee that those who have been victimized will be made whole again, such as through refunding the victim's loss. However, Postal Inspectors can help to bring perpetrators to justice, thereby preventing future harm. The Postal Inspection Service is one of the nation's oldest federal law enforcement agencies. Postal Inspectors aim to find those who misuse the nation's postal system to defraud or otherwise harm society. Postal Inspectors get their power to investigate postal offenses and postal civil matters from Congress. Postal Inspectors investigate and find facts, serve federal search warrants, make arrests, and work together with other federal officers such as prosecutors to help bring suspects into court. They enforce approximately 200 federal laws in order to maintain a postal system that is free from fraud and other harmful practices. Some of the laws that Postal Inspectors enforce, which are pertinent to auction fraud include those that cover counterfeit money orders, electronic crimes, identity fraud, and mail fraud. Counterfeit money orders Postal Inspectors pursue those who forge, alter or counterfeit postal money orders. In addition, Postal Inspectors train other postal employees to recognize counterfeit or forged postal money orders. Electronic crimes Postal Inspectors are committed to protecting the public from people that engage in schemes to defraud involving misuse of online services and misuse of the Postal Service. This includes those who use or sell stolen or counterfeit credit card numbers; use online communications in schemes to defraud; and attempt to access stored, unauthorized communications. Identity fraud Postal Inspectors enforce identity fraud laws, protecting the public against individuals that attempt to defraud by using stolen or fraudulent personal information. The Postal Inspection Service is among the leading federal law enforcement agencies in the investigation of identity fraud perpetrators. Mail fraud The Postal Inspection Service pursues those that misuse the mail service with intent to defraud. Inspectors place special emphasis on mail fraud schemes that target the elderly or other susceptible groups. In order to file a claim or learn more about the Postal Inspection Service, visit the United States Postal Service website at http://www.usps.com/postalinspectors. Other consumer and public protection groups or agencies In addition, consider contacting local law enforcement agencies, local consumer
protection agencies, and/or your State Attorney General. Filing a lawsuit: what you need to consider before going to court Of course you can always sue people, but unfortunately this isn't necessarily such a great deal for either buyers or sellers. It's much better to avoid the problem in the first place. Why isn't suing people so great? For one thing, the person you feel is at fault might be hard to track down. If someone cheated you, they're not going to stick around and wait for you to chase them down. Even if you find the person, it takes time and money to sue people. If you decide to represent yourself (many people in small claims court represent themselves), there are a lot of costs involved in paying court fees, you have to take the time to do it, and you might not even win. If you do win, it could happen that the person you're suing doesn't have any money and you are no better off! Unfortunately, just because you're right, it doesn't necessarily mean you will get what you deserve. That's why it's much better to just avoid the problem if you can by protecting yourself up front. Sometimes, no matter how cautious you are, problems arise. No matter how hard you try to work things out with the other person, your only true recourse may be through our nation's judiciary. There are lots of things to consider when you make the decision to sue, such as whether to hire an attorney, how to find the right one, and deciding what evidence will best convinced a judge you should win. There are also some other important issues that you might not even be aware of, such as in which court you are allowed to sue the other person, and which laws you can use to best prove your case. This next section will take you through some of these tricky issues. Where can you sue? If you decide to sue the seller, where can you sue? This can sometimes be more complicated than it originally seems. Within our nation there is a national federal court system. In addition, each state has its own court system. So, you really have 51 different court systems to consider. If you decide to sue in a state court, and you and the seller reside in different states, which state are you allowed to sue in? The state that you live in or the state that the seller lives in? As the one initiating the lawsuit, the plaintiff, you can't simply pick and choose where to sue based upon convenience. You must look to federal and or state court rules and decide where it is proper to sue. Unfortunately, Internet auctions (and other online transactions, for that matter) are so new that there aren't many foolproof, clear-cut standards on where you can sue. Based on the law as it currently stands, there are a few things that you can almost always rely on. For example, you can always sue a seller in the state that she lives in. However, more often than not, if you and the seller live in different states, you cannot sue the seller in the state that you live in. What if you want to sue the seller in federal court? Can you do that? Under current laws, it depends. If you are suing the seller under a federal law (such as "E-Sign") then you can sue the seller in a federal district court. However, if you are suing under a state law, the only way to have your case heard in federal court is if both you and the seller are from different states AND your claim exceeds $75,000 (i.e. you paid $75,100 for the online auction item). Before we move on, here are some of the basic ideas you should keep in mind when reading this section. In choosing which court to sue in, you will need to determine which courts have personal jurisdiction over the defendant, the person you want to sue. Personal Jurisdiction Personal jurisdiction generally refers to whether a court has power over the defendant. In other words, without personal jurisdiction, a court cannot force someone to pay what he owes another person, or tell someone how to act. Many of the questions about where you can sue someone revolve around the issue of whether or not a court will have control over the defendant so that you can sue him or her in that court. Once you have established which courts have proper personal jurisdiction over the defendant, you need to determine which court is the proper forum. Choice of forum This refers to your choice between different courts that have personal jurisdiction over the defendant. Often, choice of forum is important because it can play a large role in the costs of bringing a suit. For example, if you can bring a lawsuit in a court near your home, it will certainly cost less for you than having to bring a suit in a court that is across the country. Additionally, it might be more convenient, because your lawyer probably will know the law of your own state better than that of another state. Suing the seller in the buyer’s home state Suppose you purchased a guitar in an online auction from a seller who lives in Texas. However, the seller never sent you the guitar. Because of the distance, it will be much more convenient for you to sue the seller in Illinois than in Texas. Is there a way to sue the seller in an Illinois court? In situations similar to online auctions (such as making other purchases through the Internet), courts have found that the mere act of selling something to someone in another state does not place the seller within the jurisdiction of that state. Thus, the lone act of a sale of a guitar from someone in Texas to you in Illinois does not make that seller answerable to an Illinois court. Courts say that the seller hasn't established minimum contacts in the forum state. Minimum contacts is a legal standard devised by the United States Supreme Court and is really a standard that is based upon fairness. Imagine again, that you live in Illinois and you sell your car to your neighbor. Two days later, the car breaks down. Do you think it would be fair for your neighbor to sue you in New York because of the car? But, what if you had made a phone call to your aunt in New York? Would that make it more fair for you to be sued there? If it still seems unfair, it's probably because your contact with New York is completely unrelated to selling your car to your neighbor. The Supreme Court says that for you to be sued in New York you need some sort of minimum contacts with New York. Courts will look to see if you have made "purposeful contacts" in the forum state, the state in which the court sits, and whether these contacts are related to the lawsuit at hand. However, jurisdiction by the court of the forum state will not be supported because of random or fortuitous contacts. In the context of online auctions, if you choose to purchase a guitar from someone who lives in Texas, you are choosing to make a contact with that state; however, if someone from Missouri chooses to purchase a flute from you, you are not choosing to make a contact with the state that he or she lives in. In addition, merely because you chose to purchase a guitar from Texas, does not mean that someone else, who also lives in Texas, can sue you for something unrelated to the purchase of the guitar. The contact you have with the state must be related somehow to the lawsuit. Suing the buyer in the buyer’s home state For a seller, it appears as though it will be much easier to attain "minimum contacts." If you choose to make a purchase from someone who lives in Alaska, you would have established the necessary minimum contacts with that state so that the Alaskan resident could sue you in Alaska. Similarly, while one phone call to Illinois to New York will not create personal jurisdiction in New York; a series of phone calls to New York might. See the following Real Life Story: Parke-Bernet Galleries v. Franklyn When an individual who lived in California decided that he wanted to participate in an auction occurring in New York, he called the auction house in order to tell them how much they could bid for him and in what increments. During the course of the auction, the individual placed several phone calls to the auction house to check on the status of the auction, and to place additional bids on artwork. As such, the court found that the individual had transacted business in New York, and therefore, had established sufficient minimum contacts to be held under New York jurisdiction. What laws can you use in your lawsuit? So now that you have an idea about where you can bring this no-good online auction user to court, what law applies? Unfortunately, that's the toughest question out there. Many courts have not yet decided the issue of "choice of law" when it comes to Internet transactions. Choice of law refers to whether state law or federal law applies; and if state law applies, which state's law. Suppose you bring your lawsuit in federal court. Naturally you might think that federal law applies. However, just because you have a right to be heard in federal court does not mean that federal laws apply. You might sue in a federal court over issues that do not necessarily warrant federal law. For instance, you can sue in federal court if your claim exceeds $75,000 (i.e. you paid $75,550 for Monet's Water Lilies or a buyer offered you $800,000 for a 4 carat diamond necklace once owned by Marilyn Monroe) and you and the person you are attempting to sue live in different states. This type of suit is heard in federal court under what is known as diversity jurisdiction. However, in this situation, the laws of the state in which the court is located usually apply. You may be in federal court because your lawsuit involves a federal question. For instance, there is a federal statute called Electronic Signatures in Global and National Commerce ("E-Sign") (15 U.S.C. 7001 et. seq. and Section 7021) which governs Internet transactions, including online auction transactions. The statute generally covers the validity of online transactions, and says that electronic transactions do constitute a contract. Therefore, while contract law is generally left to the states, in this particular situation, you may have a means to sue under federal law. As such, it is possible to sue under federal law, and in the federal court without the requirements of diversity jurisdiction, i.e., the $75,000 requirement. When you are able to sue under a federal law, this is called federal question jurisdiction. Another issue arises with preemption. Preemption issues arise when both a federal law and a state law apply to the same case. Usually, federal law will be the law that is followed, as opposed to the state law. However, it is possible, in regards to Internet transactions, for the state law to apply instead, when certain conditions are met. These conditions require that the states either adopt the Uniform Electronic Transactions Act (http://www.law.upenn.edu/bll/ulc/fnact99/1990s/ueta99.pdf), or specify the alternative procedures or requirements so that the use and/or the acceptance of electronic records or signatures to establish legal validity of contracts or other transactions. Therefore, in situations where there is a state law that meets the requirements laid out in E-Sign regarding the adoption of a similar law, state law applies. However, where the state has not adopted such a law, or where the state's law does not follow the requirements set out by the federal law, federal law applies. What about international laws? Under most standards, rules similar to those discussed in the sections on personal jurisdiction apply when considering the ability to sue international citizens in a United States court. However, minimum contacts and relatedness are determined much more closely. A higher test must be met by the plaintiff to prove to the court that it has power over the international defendant. Usually, it will be very difficult for you to show that a person from a foreign country who has purchased something from you, or from whom you have purchased something, has the sufficient minimum contacts within your state for you to be able to sue them there. What can I do if the auction site malfunctions? What can you do if it is not the buyer or the seller that you feel has wronged you, but really the auction website itself? Imagine that you are selling your toy robot collection in an online auction. As the final hour of the auction approaches, the bidding is very competitive and you happily watch the price for your collection increase rapidly. Just as you start to dream about all the things you will buy with the money you expect to make, the site experiences difficulty and you lose twenty minutes of bidding. When the site is available again, the bidding continues, but you suspect that you would have made more money if the bidding were continuous for the last hour. What type of legal actions can you take against the web site? Unfortunately, the answer is usually nothing. Most auctions sites have a release of liability that states that the site is not responsible for anything that may have caused a seller to lose a sale or a buyer to lose a purchase. Since, these are found in the user agreement and people still choose to use the service, the user is generally bound by the agreement and thus cannot try to hold the auction site liable in court. If the loss is extraordinary it may be possible to engage in arbitration. Keep in mind; the auction site can always sue you in court to collect fees and damages that you have caused to the site. |
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