Last reviewed 23 February 2012

By Henrietta Clarke

Introduction

An optional Common European Sales Law has been proposed by the European Commission to make selling abroad less complicated and costly, especially for small firms. It would offer a single set of rules for cross-border contracts in all 27 EU countries. Consumers would gain from greater choice and lower prices but with a high level of protection.

Application

The Common European Sales Law would be applicable only if both parties voluntarily and expressly agree to it. It would apply to:

  • cross-border contracts, where most of the problems of additional transaction costs and legal complexity arise, but Member States can make it applicable to domestic contracts as well

  • contracts for the sale of goods, as well as to digital content contracts such as music, movies, software or smart phone applications

  • business-to-consumer and business-to-business transactions

  • transactions in which one party is established in an EU country — traders could use the same set of contract terms when dealing with other traders from within and outside the EU.

Provisions

The regulation sets out a single uniform set of fully harmonized contract law rules covering:

  • introductory provisions such as general principles and application

  • making a binding contract

  • assessing what is in the contract

  • obligations and remedies of the parties to a sales contract or a contract for the supply of digital content

  • obligations and remedies of the parties to a related service contract

  • damages and interest

  • restitution

  • prescription.

Benefits for companies

Traders would no longer have to deal with multiple national contract systems, transaction costs would be cut and small and medium-sized businesses would be helped to expand into new markets. The main difficulties that companies currently experience in selling outside their national market are finding out about foreign contract law, complying with different consumer protection rules abroad, obtaining legal advice on foreign contract law, solving cross-border contractual disputes and agreeing on which contract law should apply in business-to-business transactions.

Benefits for consumers

The Common European Sales Law would provide consumers with a high level of consumer protection in all Member States. It offers consumers a free choice of remedies in case they buy a defective product, even several months after a purchase: they could terminate the contract, ask for a replacement or repair or a price reduction. At the moment, such a choice of remedy only exists in five EU countries. There would be a wider choice of products at lower prices. At present, many products on offer are not available cross-border. Consumers would be clearly informed and an information notice would set out their rights in their language.

Next step

The proposal will now be discussed by the Council and the European Parliament, which has already signalled its support in a vote in June 2011.