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Parliament Backs EU Sales Contract Law

by Ulrika Lomas,, Brussels

16 October 2012

European Commission (EC) Vice-President Viviane Reding, the Justice Commissioner, has welcomed a vote by the Economic Affairs Committee (ECON) of the European Parliament (EP) to support the proposal for an optional Common European Sales Law to facilitate cross-border trade in the European Union (EU).

The EC's proposal, made in October last year, aims to help break down barriers to trade resulting from divergent national sales laws that make selling abroad complicated and costly, especially for small firms, by offering a single set of rules for cross-border contracts in all 27 EU countries.

It has been calculated that traders who are dissuaded from cross-border transactions due to contract law obstacles forgo at least EUR26bn (USD36bn) in intra-EU trade every year, and that 500m consumers in Europe lose out on greater choice and lower prices because fewer firms make cross-border offers, particularly in smaller national markets.

If traders offer their products on the basis of the Common European Sales law, consumers would have the option of choosing a user-friendly European contract with a high level of protection.

The EC has pointed out that the proposal would provide, for companies, one common (yet optional) regime of contract law that is identical for all 27 member states so that traders no longer need to wrestle with the uncertainties that arise from having to deal with multiple national contract systems.

It would also cut transaction costs for companies, particularly small and medium-sized enterprises, that wish to trade cross-border: Currently, businesses wishing to carry out cross-border transactions must adapt to up to 26 different national contract laws, translate them and hire lawyers, costing an average EUR10,000 for each additional export market.

For consumers, a common EU contract could provide the same 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 cases where 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.

Furthermore, if one party to a transaction is established in a member state of the EU, traders could use the same set of contract terms when dealing with other traders from outside the EU, giving the Common European Sales Law an international dimension.

TAGS: business | European Commission | commerce | law | e-commerce | legislation | standards | European Union (EU) | Europe

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