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Brussels, 12 April 2011
European Commission welcomes European Parliament committee vote in support of an optional European Contract Law
The European Parliament’s Legal Affairs Committee approved a report today that favours the elaboration of an optional European Contract Law. This is in response to several options put forward by the European Commission for a more coherent approach to contract law (see IP/10/872). Such a measure could be chosen freely by consumers and businesses in their contractual relations. This optional instrument would be an alternative to the existing national contract laws and would be available in all languages. It could apply in cross-border contracts only, or in both cross-border and domestic contracts. It would have to guarantee a high level of consumer protection and legal certainty throughout the life cycle of a contract. In today’s vote, the Legal Affairs Committee adopted an own-initiative report by Diana Wallis.
Vice-President Viviane Reding, the EU's Justice Commissioner, said: "It is good news for Europe's Single Market that the European Parliament’s Legal Affairs Committee favours work towards an optional European Contract Law to facilitate cross-border transactions, notably for small- and medium-sized enterprises and consumers. The Commission will take the European Parliament's views strongly into account in its further preparation of the European Contract Law initiative. We plan a first initiative on European Contract Law for the Polish Presidency."
Under the Europe 2020 strategy – launched by President José Manuel Barroso on 3 March 2010 (IP/10/225) – the Commission is currently tackling bottlenecks in the Single Market to drive economic recovery. This includes working on harmonised solutions for consumer contracts, EU model contract clauses and making progress towards an optional European Contract Law.
Contracts are essential for running businesses and making sales to consumers. They formalise an agreement between parties and can cover a broad range of matters, including the sale of goods and associated services such as repairs and maintenance. In a business-to-consumer contract, for example, an Irish consumer buys an MP3 player online from a French retailer. In this case, Irish contract law would apply if the French retailer has designed his website for Irish consumers
Companies use a wide variety of contracts that are governed by different national contract laws when operating in Europe’s Single Market. The co-existence of different rules can lead to additional transaction costs, increased legal uncertainty for businesses and lack of consumer confidence. Both consumers and businesses face significant barriers when they seek to take advantage of the EU’s Single Market. Transaction costs (like adapting contractual terms and commercial policies or obtaining translation of the rules) and legal uncertainty involved in dealing with foreign contract laws make it particularly hard for small and medium-sized enterprises, which make up 99% of all enterprises in the EU, to expand within the Single Market.
The Commission adopted a Green Paper on policy options for progress towards a European Contract Law for consumers and businesses in July 2010. It proposes different ways to make contract law more coherent across the EU.
The Commission then held a consultation period which ran until 31 January 2011. The results of the public consultation will help the Commission prepare proposals before the end of this year.
For more information
Justice Directorate General Newsroom:
Homepage of Vice-President Viviane Reding, EU Justice Commissioner: