Auctions conducted via the internet are amongst the widespread forms of offering goods through the internet, regardless of the fact that the “acts” of participants in such an auction do not have the required effect from a legal point of view (transfer of ownership rights to the “successful bidder”). Although not all operators of internet auctions have identical terms and conditions and individual auction models differ from one another, it is possible from a general perspective to assess the legal character of contracts concluded on the basis of auction results.

Despite the occasional designation as “dražby” (public auctions), the regime of the Act on Public Auctions (Act No. 26/2000 Coll., as amended) will not apply to internet auctions, neither the regime governing involuntary public auctions nor voluntary auctions. This conclusion follows from several reasons. Already from the introductory provision of the Act on Public Auctions, which defines basic concepts, certain requirements of an auction emerge which are not (and by their nature cannot be) fulfilled in internet sales. For example, pursuant to Section 2(a) of the Act, the auctioneer addresses a previously undetermined circle of persons present (simultaneously) at a previously determined place. Moreover, there is an entirely different construction of the passing/transfer of ownership rights to the auctioned item. In a public auction, ownership of the auction object passes to the successful bidder at the moment of the knock-down (provided the successful bidder has paid the price achieved by the auction within the stipulated period). Conversely, in an internet auction, the transfer of ownership is to occur on the basis of a contract concluded between the participants.

It is therefore necessary to apply to internet auctions the general regulation of the Civil Code or the Commercial Code respectively, and to assess according to their provisions the legal character of the offer made in the auction and the subsequent legal acts of the participants. An internet auction begins with its so-called opening. Thereby the “proposer” invites a more closely undetermined circle of persons to submit price offers (bids). In view of this fact of non-addressability (and further often also in view of the fact that the proposal need not be sufficiently definite upon opening of the auction), this does not constitute a proposal for conclusion of a contract. It may thus be an invitation to submit proposals for conclusion of a contract; further consideration may be given to other special legal acts pursuant to the Civil Code or Commercial Code, such as public competition, public promise, public proposal for conclusion of a contract, and commercial public competition.

The application of the regulation of public competition in the Civil Code to internet auctions will not be possible in the majority of cases, having regard to the object of public competition permitted by law. This may only be a specific work or performance. “A work represents a specific tangible result of activity… or an intangible result of activity recorded in a specific tangible medium… Performance includes the result of activity which is not recorded in this tangible medium”. In an internet auction, however, the objective of the auction organiser will most frequently be to obtain the highest monetary performance from the counterparty and not to obtain a work or performance.

The application of the regulation of public promise in the Civil Code to internet auctions is indeed conceivable, but will not be practical in most cases. As stated above, the reward is received by the person who first fulfils the conditions of the public promise, provided that the conditions of the promise do not provide otherwise. In view of the dispositive nature of the said provision, it is possible to set the conditions of the promise (auction) such that the reward (i.e. the auction object) is obtained by the person who fulfils the condition of the promise to make the highest bid within the given period for which the auction is open. This condition (including any further conditions – for example payment of the price determined by the highest bid, etc.) must be stated already upon announcement of the promise. Given that this legal construction places extraordinary demands on the formulation of the conditions stipulated in the public promise upon opening of the auction, the said possibility is not usually utilised in practice.

When considering the use of a public proposal for conclusion of a contract pursuant to the Commercial Code, we must proceed from the fact that, as stated above, a public proposal must contain the essential requirements (essential parts) of the proposed contract – most frequently a purchase contract and a contract for work. However, these necessary details will not be known upon opening of the auction, since the very determination of the price only at the end of the process is the purpose of the auction. The use of a public proposal in the majority of internet auctions thus also does not appear to be possible.

In contrast to the previous special methods of concluding contracts, the legal regulation of commercial public competition pursuant to the Commercial Code will be relatively easily applicable to internet auctions. The entity which opens the auction (announcer of the competition) will only need to observe the written form of announcement and state the requirements demanded by law (see above). The disadvantage, however, remains the possible use only for obligations which are governed by the Commercial Code. In view of the above, it is possible to state that in practice in the overwhelming majority of cases the course of an internet auction does not have the required result from a legal point of view; the “successful bidder” does not become the owner of the “auctioned” item on the basis of the “acts” performed in the internet auction.

This text was translated from Czech to English using an AI translator.