Offer and Acceptance For this discussion forum, please read about the case Lim v. The.TV Corporation International below and respond to the following: Should the UCC rules governing auctions apply to items sold on online auctions such as e-Bay? Why or why not? Lim v. The.TV Corp. International, 99 Cal.App.4th 684, 121 Cal.Rptr.2d 333 (2d Dist. 2002). Under the Uniform Commercial Code, or UCC (see Chapter 18), a bid at an auction constitutes an offer. The offer (the highest bid) is accepted when the auctioneer’s hammer falls. The UCC also states that auctions are “with reserve” unless the seller specifies otherwise. As noted elsewhere, in an auction with reserve, the seller reserves the right not to sell the goods to the highest bidder. Hence, even after the hammer falls, the contract for sale remains conditioned on the seller’s approval. The question of how these rules should be applied to an online auction of a domain name, in which no hammer falls, came before a California court. The Bid (Or Offer?) The case involved an online auction conducted by The.TV Corporation International (DotTV) on its Web site. DotTV posted an announcement on its Web site asking for bids for rights to the “Golf.tv” domain name and stating that the name would go to the highest bidder. Je Ho Lim submitted a bid for $1,010 and authorized DotTV to charge that amount to his credit card if his bid was the highest. Later, DotTV sent Lim an e-mail message stating that he had “won the auction” and charged the bid price of $1,010 to Lim’s credit card. When DotTV subsequently refused to transfer the name, Lim sued DotTV for, among other things, breach of contract. Lim argued that his bid constituted an ac¬ceptance of DotTV’s offer to sell the name. DotTV contended that Lim’s bid was an offer, which it had not accepted. Furthermore, even if it had accepted Lim’s offer, because the auction was “with re¬serve,” DotTV could withdraw the domain name from the auction even after acceptance. The trial court held for DotTV, and Lim appealed. The Courts Analysis The appellate court first looked at the UCC’s provisions concerning auctions, but noted that the UCC did not apply in this case because the UCC applies only to “goods,” and domain names are not goods. The court then looked at common law principles as codified in the Restatement (Second) of Contracts. The rules under the Restatement are similar to those of the UCC: a bid in an auction is an offer that is accepted when the “hammer falls,” and an auction is with reserve unless otherwise speci-fied by the seller. The court also pointed out, however, that DotTV’s charging of the bid price to Lim’s credit card was inconsistent with DotTV’s claim that it could withdraw the domain name from the bidding be¬cause the auction was with reserve. Furthermore, stated the court, even if it concluded that Lim’s bid was an offer and not an acceptance, DotTV had accepted the offer by its e-mail to Lim stating that he had won the auction. In all, held the court, there was no evidence that a contract between DotTV and Lim had not been formed, and Lim had stated a valid claim against DotTV for breach of contract. The court thus reversed the lower court’s decision and remanded the case for further delib¬eration consistent with the appellate court’s opinion.
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