Below is the abstract for “Amazon as a Seller of Marketplace Goods Under Article 2,” available for download on SSRN.
You have probably purchased goods on Amazon. Did you know that if the goods you purchased on Amazon turn out to be defective and cause serious personal injury, Amazon is probably not liable for them? Did you know that even though you placed an order on Amazon, gave payment to Amazon, and received the goods in an Amazon box, there is a good chance that the goods are not “sold by” Amazon—but are instead sold by a third party seller? Did you know that Amazon tries to avoid liability for goods sold on its platform on the technicality that it does not hold “title” to third party vendor goods, even though it promotes those goods online using Amazon branding, warehouses those goods in Amazon facilities, and delivers those goods in Amazon trucks? And did you know that the reason Amazon does not have title to those goods is because it unilaterally sets the title terms in its 68-page contract with third party sellers?
In this Article, I look at Amazon’s liability as a “seller” of unmerchantable goods under Article 2 of the Uniform Commercial Code. Thus far, litigants and courts have almost exclusively focused on Amazon’s liability in tort. I argue that there is a compelling argument that Amazon is liable for defective third party goods because it is a merchant seller under § 2-314 of the Uniform Commercial Code. The biggest stumbling block to recovery under Article 2 is Amazon’s title argument. I deconstruct the title argument in detail, positing that Article 2 may not require the seller to hold title to ground liability, and even if it does, it is not clear that Amazon does not have title to third party goods in its possession. I also look specifically at a completely under-the-radar provision that should have a huge impact on Amazon’s title defense: the commingling clause in its Amazon Services Business Solutions Agreement. I maintain that this clause seriously undermines Amazon’s title argument and opens the door to Article 2 liability. This could be a game-changer in terms of future litigation.
I also broaden the lens beyond title to argue that Amazon casts itself in the role of seller with respect to all transactions on its platform. It does everything it can to convince buyers that they are purchasing from Amazon, not through Amazon. This is deliberately designed to capitalize on the trust that buyers place in the Amazon brand. Based on its degree of control over sales transactions and its efforts to hide the identity of the supposed “true seller,” Amazon should be equitably estopped from arguing that it is not a seller of third party goods sold on its website.