Reding Pushes EU Optional Contract

by Ulrika Lomas, LawAndTax-News.com, Brussels

14 November 2011

During her speech at a conference on European contract law in Warsaw, the Vice-President of the European Commission (EC), and European Union (EU) Justice Commissioner, Viviane Reding, pointed to the proposed optional Common European Sales Law as a means of energizing cross-border trade and contributing to economic growth.

She confirmed that, to make the internal market run smoothly, the EC “is committed to tackle the outstanding barriers – those that prevent traders who want to offer their products and services to customers in other EU member states, or consumers who want to shop across borders in the EU.

"Each year Europe loses out on cross-border trade by an estimated EUR26bn (USD35.4bn) because of legal differences in national sales laws,” Reding said.

“Businesses have to investigate the various national consumer laws, hire specialized lawyers, and amend their contracts accordingly,” she added. “It costs traders on average EUR10,000 to expand into the market of just one other member state. When you look at this from the perspective of a micro enterprise – that means from the perspective of 92% of all SMEs in the EU – these costs could amount to up to 7% of its annual turnover.”

“Consumers are also losing out: consumers who try to take advantage of better deals in other countries are often refused sale or delivery by the trader,” she continued. “Furthermore, 44% of consumers say that uncertainty about their rights discourages them from buying from other EU countries. The result: only 7% of consumers buy from another member state on the internet although many would like to do so if the conditions were changed.”

Following the European Parliament’s support in June this year for an optional European contract law, the EC has now proposed the optional Common European Sales Law, which is designed to offer a single set of uniform contract law rules in all 27 EU countries, which can be freely chosen by traders and consumers selling and buying across borders.

For consumers, a common EU contract could provide the same high level of consumer protection in all member states, as well as certainty about consumer rights in cross-border transactions. For example, it would offer consumers a free choice of remedies in the case that they buy a defective product. This means that consumers could terminate the contract, ask for a replacement or repair, or a price reduction.

The Common European Sales Law would be applicable only if both parties voluntarily and expressly agree to it, for both business-to-consumer and business-to-business cross-border contracts. However, member states would have the choice to make it applicable to domestic contracts as well. It would apply to contracts for the sale of goods – the bulk of intra-EU trade – as well as to digital content contracts, such as music, movies, software or smart-phone applications.

Reding stressed that the proposal for an optional instrument in contract law is thus a key initiative in the effort of the European Union to boost e-commerce. "The optional Common European Sales Law will provide traders with a uniform set of contract law rules which they could use in all internet transactions," she noted. "It will also allow traders to use the same internet platform for all member states, without having to customize it to comply with the legal requirements in each member state where they wish to sell their products.”

“The optional Common European Sales Law will provide companies with an easy and cheap way to expand their business to new markets,” she concluded. “It will bring more choice, security and a better deal to consumers. In the EC's analysis, it's a win-win situation for businesses and consumers who want to take advantage of our Single Market.”

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