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European sales law proposal: an opportunity for sme´s companies

European sales law proposal: an opportunity for sme´s companies

The current legal framework in the EU is characterised by differences within the national legal systems and contract laws of the 27 Member States. Although there are some common rules (Directive 2011/83/EU on consumer rights, Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the internal market, Directive 2011/7/EU on combating late payment in commercial transactions, Directive 93/13/EEC on unfair terms in consumer contracts, etc.), the truth is that they do not cover all areas of contract law.

The European Commission has committed to resolve this problem. On October 11th 2011, an optional Common European Sales Law (hereinafter, CESL) was proposed, offering a single set of rules for cross-border contracts in all 27 EU countries. The Commission’s proposal now needs approval from the EU Member States and the European Parliament, that will pass the CESL at the end of 2012 or the beginning of 2013.

The CESL should help to break down the current barriers, and give consumers more choice and a higher level of protection. Why? Because companies will have a unique legal framework to rule their relations all around the EU, providing them with an easier and cheaper instrument to sell their products in the EU Market. Consumers will also have the option of choosing a user-friendly European contract with a high level of protection, as long as the traders offer their products on the basis of the CESL.

The CESL will be applicable:

● only if both parties voluntarily and expressly agreeto it;

● to cross-border contracts, where most of the problems of additional transaction costs and legal complexity arise; (but Member States will have the choice to make the Common European Sales Law applicable to domestic contracts as well).

● to goods selling contracts, digital content contracts (such as music, movies, software or smart-phone applications) and services contracts related to the latter.

● for both business-to-consumer and business-to-business transactions if at least one party is established in a EU Member State (traders could use the same set of contract terms when dealing with other traders both from inside and outside of the EU.

The main legal aspects of the Common European Sales Law are:

a)   it is an optionalframework, chosen by the parties. The consumer must explicitly declare whether he/she agrees to apply the CESL;

b)   As a Regulation, the Common European Sales Law will be generally and directly applicable;

c)   in terms of content:
The CESL includes a comprehensive (183 articles) but non-exhaustive set of contract law rules, covering:

– the general principles of contract law;
– the pre-contractual obligation (information) and its content, rules on how agreements are concluded, consumers’ right to withdraw and the avoidance of contracts;
– rules to interpret the contract terms, rules on the content and effects of contracts as well as contract terms presumed to be unfair; risk and delivery; payment conditions, etc.
– obligations and remedies of the parties to a sales contract or a related services contract;
– supplementary common rules on damages for loss and on interest for late payment;
– restitution; and
– statute of limitations.

Certain aspects continue to be governed by applicable national legislation, on the basis of the Rome I Regulation.

The CESL will suppose benefits for consumers and businesses

1. Advantages for Companies:

● Providing 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: According to a recent survey (Eurobarometer), 73% of European companies stated that if able to choose, they would use one single European contract law for all cross-border sales to consumers from other EU countries.

● Helping small and medium-sized companies (SMEs) to expand into new markets thank to the cut of transaction costs for those companies that wish to trade cross-border.

2. Advantages for Consumers:

● Providing the same high level of consumer protection in all Member States, transparency and a good knowledge of consumer rights in cross-border transactions.

● Providing a wider choice of products at lower prices thanks to the increase of the competition.

Once it enters into force, a few European model contracts will be drawn up, designed for specific trade areas or fields of activity, containing comprehensive standard terms and conditions, and available in all the official languages of the EU. These will be very useful tools for both B2B and B2C relationships.

Summarizing, we welcome the Commission’s initiative that will promote cross-border trade for businesses (especially SMEs), encourage cross-border purchases by consumers, and consolidate the advantages of the internal EU market.

The CESL will be a win-win solution after the current legal diversity for cross-border trade in the EU single market. It will allow SMEs to expand their business to new markets in Europe as well as help consumers get better deals.

Álvaro Marco

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