European Union: Sales Law is Coming
By M. Wendler; Wendler Tremml Rechtsanwälte
After more than 10 years of preparation, the European Commission presented the proposal for a Regulation on a Common European Sales Law (CESL) on October 11, 2011. This proposal is intended to harmonise European sales law. It is particularly commendable that unlike a previously favoured draft that provided for full harmonisation, it will not interfere with national contract laws but rather open up an additional European option.
Consumers and businesses do not tap the full potential of Europe's internal market of 500 million citizens. 44 % of all Europeans state they do not buy from abroad because of uncertainty about their rights. According to a recently published survey, differences in contract law pose the biggest obstacle to cross-border trading for 55 % of all European companies involved in the export business. The creation of the Common European Sales Law aims at encouraging the export trade to other European countries as the risks and costs of adjusting the terms and conditions of contracts to a multitude of different national laws do not apply anymore. It can be expected that especially the trade in all 27 EU member states will thus be made easier.
What is the Common European Sales Law all about?
The parties (businesses and consumers) can agree on the Common European Sales Law to govern their contract and thus to replace national law. The scope of the regulation includes sales contracts as well as agreements on the supply of digital content and related services. The proposal of the European Commission provides for the Common European Sales Law to be applied only to cross-border contracts. However, it is for the EU member states to decide whether to permit the application to domestic contracts, too. According to the proposal, the Common European Sales Law can be applied even if one party does not maintain its head office in a member state of the European Union.
The proposal's first part establishes the scope of the regulation. A second part contains the text of the Common European Sales Law. It determines the conclusion of contracts, the definition of the contract subject matter, compensation for damages and interest, restitution in cases of avoidance or withdrawal, and periods of prescription. Furthermore, the proposal contains model instructions on withdrawal as well as a model withdrawal form. Aspects left uncovered by the Common European Sales Law such as unlawfulness of contracts, issues of legal personality, the invalidity of contracts, but also issues of agency, the assignment of claims and property law must still be treated in accordance with the applicable conflict of laws provisions. The regulation proposal also includes an information sheet the seller or supplier has to deliver to the consumer before the Common European Sales Law is agreed on as the applicable law to govern the contract. Moreover, the European Commission intends to collect all decisions made by the national courts and the European Court of Justice (ECJ) that interpret the Common European Sales Law and to make them available to all interested parties on a publicly accessible website.
The final shape the regulation will assume at the end of this process is not determined yet. However, the great importance this project has for legal practice, the export business and law studies is already obvious. With this undertaking, large areas of contract law are being regulated comprehensively on a European level for the very first time.
Wendler Tremml Rechtsanwälte, Law Firm, Dusseldorf, Munich, Berlin, Brussels