EU Common Sales Law: Law Society responds to proposals
The Law Society has responded to a call for evidence by the Ministry of Justice and Department of Business, Innovation & Skills concerning the proposal for a Regulation on a Common Sales Law for the European Union. This covers business-to-consumer and business-to-business contracts for the sale of goods (including digital content) and related services (with some exclusions, including for financial services).
This follows publication in 2010 of the Commission's green paper on policy options building towards a European contract law for consumers and businesses. A feasibility study (PDF, 325 KB) on European contract law, containing initial drafting, was then released on 3 May 2011.
Read our briefing to MPs (PDF, 160KB)
Read our response to the feasibility study (PDF, 390KB)
Read our response to the green paper (PDF, 150KB)
The Commission argues that the current system of national contract laws creates unnecessary complexity, leading to additional transaction costs, legal uncertainty, and a lack of consumer confidence.
The recent work follows previous initiatives to develop a set of proposed European legal principles, known as the Common Frame of Reference and the Principles of European Contract Law.
Summary of position
The Law Society has considered carefully and in depth the Commission's proposal. In the current debate, the Law Society will endeavour to provide technical comments and will try to engage positively.
Nevertheless, while the Law Society supports efforts to improve the functioning of the Single Market and to increase cross-border trade, it is not yet convinced that the proposal will achieve this. The Law Society notes that there are a range of issues that determine whether or not businesses and consumers wish to engage in cross-border dealings, including differences in language, VAT rates, and whether it will be possible to obtain practical redress if something goes wrong. The Law Society's core comments are as follows:
From a practical perspective, the CESL would have no underlying jurisprudence and practitioners are concerned that this would lead to uncertainty for businesses and consumers as to how it would be interpreted and applied. Even once such a body of case-law had been developed (requiring much litigation on the part of private parties), it would be difficult to ensure the uniform application of the new system across the 27 EU Member States with their different legal cultures.
In cross-border dealings, while there will be an agreement between the parties, the laws in relation to a range of issues, such as advertising, packaging requirements, product liability and non-contractual representations, as well as tort law and property law, may be equally relevant and important. It is also unlikely that the instrument itself would be self-standing from a contract law perspective. Businesses would therefore still need to consider national laws when entering into cross-border contracts and the Society is concerned that the new instrument as drafted may, in fact, increase complexity.
A range of statistics have been provided by the Commission. The Law Society believes that far greater analysis is required before it can be credibly claimed that they provide evidence of a clear ‘need' for the CESL.
The Law Society supports freedom of contract, but is concerned to ensure that any new instrument would not impact on the certainty available under existing national systems of law or the integrity of those systems for those who wish to use them.
The proposals would have considerable cost implications that need to be considered further.
Call for evidence
In December 2010, the Law Society responded to an earlier call for evidence by the Ministry of Justice.
Read our response (PDF, 150KB)
Read our report 'firms cross-border work' (PDF, 220KB)
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