## Facts

- Homeowners Michael W. Freeman and Cindy L. Hazen listed their historic Memphis residence (formerly owned by Elvis Presley) for sale on eBay’s real-estate platform, using agent Stephen Shutts.
- Before bidding, bidders assented to eBay real-estate terms stating auction-style real-estate listings are advertisements and “do not involve legally binding offers to buy and sell.”
- The listing page also contained language added by the agent stating that bidding was a “legally binding contract” and that the winner committed to completing the purchase; the agent described this language as intended to deter frivolous bidding.
- Peter J. Gleason, Uri Geller, and Lisbeth Silvandersson formed a partnership to bid, using Gleason’s eBay account, and submitted the winning bid.
- After the auction, the sellers’ attorney sent a proposed written real-estate sales contract to the bidders; the bidders returned a version with changes, including alterations to at least one term.
- The sellers did not complete a sale to the bidders and ultimately sold to another party.
- The bidders sued in diversity for breach of contract, fraud, and negligent misrepresentation.

## Issues

1. Whether an eBay real-estate auction and post-auction communications created an enforceable contract to sell the property under Tennessee law.
2. Whether listing language stating bidding was “legally binding” could override eBay’s terms characterizing the auction as a nonbinding advertisement.
3. Whether the bidders presented sufficient evidence of actionable misrepresentation and justifiable reliance to support fraud or negligent misrepresentation.

## Decision

- Defendants’ motion for summary judgment was granted, and plaintiffs’ motion for partial summary judgment on breach of contract was denied.
- The court held no enforceable real-estate contract was formed by the winning eBay bid and subsequent communications.
- The court rejected fraud and negligent misrepresentation claims because plaintiffs could not show an actionable misstatement or justifiable reliance in light of the controlling platform terms and clarifying communications.

## Legal Principles

- Where platform terms expressly provide that online real-estate auction listings are advertisements and not legally binding offers, those terms govern contract formation for transactions conducted on the platform.
- A winning bid in a nonbinding, advertisement-style real-estate listing does not, by itself, constitute acceptance of a legally operative offer to sell real property.
- Post-auction negotiations requiring a written real-estate agreement are not a completed contract when the buyer materially alters the proposed written contract; a materially altered return is treated as a counteroffer, not an acceptance.
- Fraud and negligent misrepresentation require justifiable reliance; reliance is not justifiable when the claimant has assented to clear, contradictory governing terms and has been informed that the disputed listing language does not create a binding sale.

## Conclusion

The court entered judgment for the sellers because eBay’s real-estate terms made the auction an invitation to negotiate rather than a binding offer, the parties never reached a finalized written agreement under Tennessee contract principles, and the bidders could not establish actionable misrepresentation or justifiable reliance.


Gleason v. Freeman, No. 2:06-cv-02443, 2008 WL 2485607 (W.D. Tenn. June 16, 2008)