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Parliament Supports EU Common European Sales Law

by Ulrika Lomas, LawAndTax-News.com, Brussels

22 February 2013


The European Commission (EC) has welcomed a draft report from the Legal Affairs Committee (JURI) of the European Parliament (EP) that backs optional European Union (EU)-wide rules for businesses and consumers who conclude contracts in the Single Market.

The draft report to the JURI has backed the EC’s proposal, originally introduced in October 2011, for a Common European Sales Law that would promote growth by making it cheaper for businesses to access new markets and offering consumers a greater choice of products. The JURI Committee is due to vote on the report in the coming months.

Currently, it is noted, companies use a wide variety of contracts that are governed by different national contract laws when operating in the EU’s Single Market. The different sets of national rules can lead to additional transaction costs, increased legal uncertainty for businesses and lack of consumer confidence. It has been calculated that traders who are dissuaded from cross-border transactions due to contract law obstacles forgo at least EUR26bn (USD35bn) in intra-EU trade every year.

Small and medium-sized enterprises (SMEs) are particularly affected by higher transaction costs. 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.

Consumers, in turn, often lack the confidence to take advantage of the full potential of Europe's Digital Single Market or are not given the opportunity to do so, and the availability of this optional instrument for consumers should boost cross-border online shopping. 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.

In fact, the report to the JURI suggests that the scope of the Common European Sales Law should be limited to distance contracts, notably online contracts. Given the need to complete the Digital Single Market, this restriction of scope suggests that the core added value of this optional instrument could well lie online.

An optional Common European Sales Law, said EC Vice-President Viviane Reding, the Justice Commissioner, “would cut transaction costs for SMEs while giving Europe's 500m consumers more opportunities to shop across borders. I will continue to work closely with the EP and all Member States to make sure that the optional European sales law is adopted swiftly so we can help kick-start the Single Market, Europe's engine for economic growth."

TAGS: business | European Commission | commerce | law | internet | e-commerce | small and medium-sized enterprises (SME) | legislation | trade | European Union (EU) | Europe

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