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EU-wide sales law

Paul Barton
11/11/2011

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United Kingdom

EU-wide sales law

This alert was featured in Tech Bytes, our technology law newsletter.

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The European Commission has confirmed that it plans to introduce an “optional” EU-wide contract code for cross-border contracts for goods, digital content and related services. 

The Commission believes that differences between contract laws and levels of consumer protection across EU Member States is impeding cross border trade.  Its proposed “Common European Sales Law” (CESL) is targeted at EU-based B2C traders and SMEs (businesses with fewer than 250 employees and with an annual turnover no greater than 50 million EUR).  If the Commission’s proposals are adopted, these businesses will be able to agree with contract counterparties that the rules under the CESL, including consumer protection measures, will apply to their contract in place of national laws. 

The hope is that the CESL will create legal certainty by offering B2C traders, consumers and SMEs a fully harmonised, EU-wide sales code and consumer protection framework.  Most consumer protection laws across the EU are partly harmonised, in that the EU prescribes minimum levels of consumer protection, leaving Member States free to adopt more stringent protections if they wish. 

Recent attempts to bring about a more harmonised consumer protection framework through the Consumer Rights Directive have had limited success as Member States have fought hard to preserve their own domestic levels of consumer protection, rather than see them diluted to bring about a level playing field.

Even if a B2C trader’s terms and conditions are governed by the laws of that trader’s home state, the trader cannot avoid mandatory consumer protection laws applicable in the consumer’s Member State, as these apply whatever the governing law of the contract.

The draft CESL covers issues such as pre-contract information, contract formation, rules of interpretation, implied terms, the parties’ rights and obligations, remedies for breach, delivery, the passing of risk, termination, damages and recoverability of loss.  In order to use the CESL, at least one of the contracting parties must be based in an EU Member State. 

Concerns

The draft CESL has received a mixed response.  Consumer groups are concerned that the CESL will be bad for consumers, since B2C traders will only agree to use the CESL when it offers a lower level of consumer protection than the consumer’s home state. 

The Law Society points out that there is a lack of supporting jurisprudence.  Disputes will be dealt with by national courts and differences between the legal cultures and practices of different Member States could lead to a lack of uniformity.  National disparities in interpretation will ultimately have to be resolved by the Court of Justice of the European Union (CJEU), but the CJEU already takes well over a year to issue its preliminary rulings.

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