The Common European Sales Law should significantly increase cross-border EU-trade, and boost consumer choice.
Even though the single market of the European Union was created to facilitate business among its member states, neither consumers nor companies are using the full potential of that single European market of 500 million people. According to surveys of the European Commission, 44%1 of Europeans say they do not buy abroad because they are uncertain of their rights.
Today, if a consumer or company wants to purchase something within the European Union but outside his country, the agreement will be governed by national contract law. However, there are a lot of differences between those national contract laws, which make the buying and selling of goods in the EU very complicated and much more costly than domestic trade.
Companies are thus reluctant to enter into cross-border EU trade. Firstly, they do not know the other country’s applicable law, so they have to identify it, and negotiate the application of it with the contract party. Secondly, companies trading across borders accrue their costs of translation, legal advice and the drafting of the contract according to different national laws.
According to other surveys carried out by the European Commission2, today only 9.3% of businesses that trade in goods sell across EU borders. The reason is
that companies wishing to participate in cross-border trade, may have to adapt to
up to 26 different national contract laws, translate them and hire lawyers, costing them thousands of euros for each additional export market. Adapting their websites makes these costs even higher!
This problem is even bigger for small and medium-sized enterprises, since these considerable costs of cross-border transactions are too high compared with their turnover. However, the European economy is run by the EU’s small and medium sized enterprises: they make up more than 90% of all the companies in the EU! 3
For EU consumers, not having access to goods and services from other EU countries in their own country, often means they are confronted with less choice at higher prices, or denied delivery from the seller in the other EU country. Indeed, e-commerce makes the comparison of offers, prices and other conditions within the EU easier, but when it comes to placing the order that represent the best search result in another member state, consumers are far too often confronted with the refusal to sell. This is generally due to differences in contract laws of the member state where the offer is placed and the member state where the buyer is established.
In order to remedy this, the European Commission published, on 11 October 2011, a proposal for a regulation on a “Common European Sales Law” (Commission Communication on a Common European Sales Law to facilitate cross-border transactions in the single market ). It covers the sale of goods, the supply of digital content and some related services in cross-border contracts within the EU.
If enacted, this regulation would give traders the choice between a national contract law or this Common European Sales Law as an autonomous set of contract law rules, which would have to be chosen by express agreement between the parties.
These alternative European contract rules protect consumers in the first place, but also save traders from time consuming and expensive legal searches and contract negotiations.
Legal experts in all the member states are now discussing the content of the proposal, its legal basis (article 114 of the Treaty on the Functioning of the European Union on the internal market), the applicability in case of a contract with a party from a non-EU member State, etc.
The proposal has been passed to the European Parliament and the Council of the EU for adoption by the ordinary legislative procedure and by qualified majority. Once
adopted, the regulation will enter into force 20 days after its publication in the EU’s
1 Flash Eurobarometer 299a, “Attitudes towards cross-border trade and consumer
2 Eurostat database DS-056329-1: Trade by activity and enterprise size class, 2007
3 European Commission Memo 11/680, 11 October 2011