Brussels, 13 July 2001
European contract law: Commission sets the stage for a broad debate
The European Commission has adopted a Communication launching a broad debate on problems for the functioning of the Internal Market resulting from the divergence of national contract laws and on the need for further-reaching Community action in this area. It would in particular like to examine whether the existing approach of sectorial harmonisation is able to solve all problems which can arise. In addition the Commission is seeking information on potential practical problems for the uniform application of Community and national contract law across the European Union. Such problems can hinder business and consumers in fully exploiting the potential of the Internal Market and may mean that they do not have access to the same legal rights and economic chances across borders that Community legislation is intended to offer them. The Communication sets out four different options for improvement and is intended to form the basis for a broad consultation of business interests, legal practitioners, consumer groups and academics over the coming months. It is a joint initiative of Commissioners David Byrne, António Vitorino, Frits Bolkestein and Erkki Liikanen and follows requests for action from both the European Parliament and the European Council.
"Up to now we have successfully used an approach of harmonising specific contracts or marketing technics where a particular need for harmonisation was identified. I think the time might have come to change the approach in order to ensure that business as well as consumers are able to take full advantage of the Internal Market", said David Byrne, responsible for Health and Consumer Protection. "That is why we are launching this broad consultation exercise. The upcoming practical introduction of the euro and the surge of e-commerce make this discussion even more urgent as they will facilitate price comparison and the conclusion of cross-border contracts."
The Commission would like to find out if the divergences of national contract laws obstruct the functioning of the Internal Market and if so, to what extent. For example, lack of knowledge of other contract law regimes might be a disincentive against cross-border transactions for SMEs and consumers. Moreover, disparate national law rules may lead to higher transaction costs, especially information and possible litigation costs for enterprises in general and SMEs and consumers in particular. The Commission is interested in receiving information on practical problems resulting from possible inconsistencies between Community rules and from the way those rules are applied and implemented in Member States.
The Commission's Communication sets out four options for discussion:
- to let market forces deal with any problems that may exist;
- to identify the elements common to most national contract law rules and to use them as guidelines for national legislators when drawing up legislative initiatives, national courts and arbitrators in their decisions and contractual parties in drafting their contracts;
- to review and amend all relevant legislation in view of its simplification and of improving its quality;
- to create a new legal instrument at Community level which could, for example, be an optional model chosen by the contractual parties or a safety net of fallback provisions in case parties have not foreseen a solution for an eventual problem in the contract.
The public consultation on the Communication and the options for improvement presented therein lasts until 15 October 2001. The Communication will be discussed by the European Parliament in autumn. It will be also on the agenda of the Internal Market/Consumer affairs Council on 26 November and the Justice and Internal Affairs Council on 6-7 December. The European Council in Laeken is expected to take a decision as to the follow-up of the Communication.
The full text of the Communication is available at: http://europa.eu/comm/off/green/index_en.htm; contributions to the debate can be sent before 15 October 2001 to: European-Contract-Law@ec.europa.eu.