Legal Question in Business Law in New York

Would this be considered an illegal business or fraud

I have a great idea to make money but am not sure if it is legal however. So I'll give the basic concept.

If I went to lets say an auction or car site and saw a car being sold way below market value could I then in turn without purchasing that car post it on another site giving all the factual information and sell the car on that site?

These sites do not say you have to be the actual owner or physical owner of the car when you sell it. I would have the person pay me 1st then pay off the other person and have it shipped direct to my buyer. My theory is as long as the person pays for the car and I pay for the car and they receive it no fraud or crime of any kind is being committed. Am I correct?

The worst case scenario would be the car would be sold already and in that case I wouldn't accept payment.


Asked on 3/02/05, 2:46 am

1 Answer from Attorneys
William Frenkel Frenkel Sukhman LLP

Re: Would this be considered an illegal business or fraud

Theoretically, if you act as your customers' buying agent, you can purchase and resell goods as you please. But this does not seem to be what you are suggesting. You are running all kinds of legal and business risks when you are reselling something you don't have ownership of (especially if you neglect to disclose the facts of where you are getting the product or otherwise mislead your customers).

On top of it, you may potentially be infringing on the auction websites' copyrights if you reproduce their materials on your site without permission (also needed for linking to or framing their sites). There are several legal theories auction sites might use to prevent you form using their auction data on your own site.

The bottom line is that you probably may not be able to use your business model the way you indicated without the permission of the auction operators. The analysis may differ somewhat depending on the terms of use of each individual website and how you advertise goods for sale on your own site (that come from third party sources) but the auction websites you plan to borrow information from are not likely to encourage this sort of enterprise (once they discover the existence of your site) and may well file a lawsuit (for which there are precedents).

This reply is in the nature of general information, is not legal advice and should not be relied on as such.

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Answered on 3/02/05, 2:43 pm


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