EU-wide sales law would exist as an option alongside existing national laws and is vigorously opposed by the UK
On 11 October 2011 the European Commission published its proposed “Common European Sales Law” regulation (the Law) - often referred to in the UK as the “European Contract Law”. The purpose of the Law is, in the words of the Commission’s press release, to “facilitate trade by offering a single set of rules for cross-border contracts in all 27 EU countries”. The proposed regulation can be read here (116 pages). There is much more information about the Law on the Justice Commission’s pages on Europa here.
The Law, if enacted, will exist as an option alongside the national contract law of the EU countries. Consumers and businesses using the Law will be using:
”…a set of rules that is identical in all 27 Member States. Those who do not want to use the Common European Sales Law can simply continue using their own national rules. Consumers will always be clearly informed, and will have to agree explicitly before using a contract based on the Common European Sales Law.”
Rationale for and application of the proposed Law
The rationale for the Law is that, by offering a single set of rules for cross-border contracts in all 27 EU countries, it will “help break down trade barriers and give consumers more choice and a high level of protection”. The Commission argues that divergent sales laws between EU Member States are a significant barrier to cross-border trade, making selling abroad complicated and costly, especially for small firms.
The Commission’s press release states that this Common European Sales Law will be applicable:
- “Only if both parties voluntarily and expressly agree to it;
- To cross-border contracts where most of the problems of additional transaction costs and legal complexity arise; Member States will have the choice to make the Common European Sales Law applicable to domestic contracts as well;
- To contracts for the sale of goods – the bulk of intra-EU trade – as well as digital content contracts, such as music, movies, software or smart-phone applications;
- For both business-to-consumer and business-to-business transactions; and
- If one party is established in a Member State of the EU. Traders could use the same set of contract terms when dealing with other traders from within and from outside the EU, giving the Common European Sales Law an international dimension.”
The proposed regulation will now pass to the European Parliament and the Council of the EU for adoption by qualified majority voting.
The UK’s views
The Commission’s proposal for a European Contract Law has been met with opposition and, to some extent, ridicule, in the UK. We discussed the Ministry of Justice’s and the Law Society of England and Wales’s criticisms of the proposal in this post of April 2011. The City of London Law Society set out a list of reasons as to why the Law was not needed and probably unworkable, as we discussed in this post of July 2011.
UPDATE December 2011: The House of Commons has objected to the Commission’s proposal, on the grounds that it does not respect the principle of subsidiarity.
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