EUROPEAN COMMISSION 
Brussels, 11.10.2011 
SEC(2011) 1165 final 
  
COMMISSION STAFF WORKING PAPER 
Impact Assessment  
Accompanying the document 
Proposal for a Re gulation of the European Parliament  and of the Council on a Common 
European Sales Law 
on a Common European Sales Law  
{COM(2011) 635 final} 
{SEC(2011) 1166 final}  
 
   1   
              
Disclaimer 
 
This impact assessment report commits only the Comm ission's services involved in its preparation 
and the text is prepared as a ba sis for comment and does not prejudge the final form of any decision 
to be taken by the Commission. 
 
 
 2TABLE OF CONTENTS 
1. PROCEDURAL ISSUES AND CONSULTATION OF IN TERESTED P ARTIES ........................................... 4  
1.1. POLICY BACKGROUND ............................................................................................................................... .............. 4  
1.2. ORGANISATION AND TIMING ............................................................................................................................... ..... 4 
1.3. CONSULTATION AND EXPERTISE .............................................................................................................................. 5  
1.3.1. Public consultation ............................................................................................................................... ....... 5  
1.3.2. Outside expertise ............................................................................................................................... ........... 6  
1.3.3. Consultation of the Impact Assessment Board ........................................................................................... 7  
2. PROBLEM DE FINITI ON............................................................................................................. .......................... 7  
2.1. INTRODUCTION ............................................................................................................................... .......................... 7  
2.2. CURRENT EU LEGAL FRAMEWORK IN THE AREA OF CONTRACT LAW ................................................................... 7  
2.3. PROBLEM 1: DIFFERENCES IN CONTRACT LAW HINDER BUSINE SSES FROM CROSS BORDER TRADE AND LIMIT 
THEIR CROSS -BORDER OPERATIONS ....................................................................................................................... 10  
2.3.1. Negative impact of cont ract law differences on cross-border trade ......................................................... 10  
2.3.2. Driver 1: Additional transaction costs stemming from  differences in contract law hinder cross-border 
trade  .............................................................................................................................. ...................................... 12  
2.3.3. Driver 2: Perceived increased legal co mplexity hinders cross-border trade ............................................ 17  
2.4. PROBLEM 2: CONSUMERS ARE HINDERED FROM CROSS -BORDER PURCHASES AND MISS OPPORTUNITIES ......... 17  
2.4.1. Driver: Contract law differences impact  negatively upon cross-border shopping .................................. 18  
2.5. NEED FOR ACTION AT EU LEVEL AND SUBSIDIARITY ............................................................................................ 22  
3. POLICY OB JECTIV ES .............................................................................................................. .......................... 22  
4. POLICY OPTIONS................................................................................................................. ............................... 23  
4.1. OPTIONS FOR TYPE OF INTERVENTION .................................................................................................................. 23  
4.2. OPTIONS FOR SCOPE AND CONTENT ....................................................................................................................... 25  
4.2.1. Sub-option 1 for scope: B2C / B2B contracts ........................................................................................... 25  
4.2.2. Sub-option 2 for scope: Cross- border / domestic contracts ...................................................................... 25  
4.2.3. Sub-option 3 for substantive content: areas of law covered ..................................................................... 26  
5. ANALYSIS OF IMPACTS ............................................................................................................ ........................ 27  
5.1. MAIN  IMPACTS  OF POLICY  OPTION  1: BASELINE  SCENARIO ............................................................. 27  
5.2. MAIN  IMPACTS  OF POLICY  OPTION  2......................................................................................................... 29  
5.2.1. 2a: Toolbox as a Commission Document ................................................................................................. 29  
5.2.2. Main Impacts of Policy Option 2b: Toolbox as an Inter-Institutional Agreement ................................. 31  
5.3. MAIN  IMPACTS  OF POLICY  OPTION  3: RECOMMENDATION  OF A COMMON  EUROPEAN  SALES  
LAW ............................................................................................................................... ........................................ 32  
5.4. MAIN  IMPACTS  OF POLICY  OPTION  4: REGULATION/DIRECTIVE  SETTING  UP AN OPTIONAL  
COMMON  EUROPEAN  SALES  LAW ............................................................................................................... 33  
5.5. MAIN  IMPACTS  OF POLICY  OPTION  5A AND  6.......................................................................................... 44  
5.5.1. Policy Option 5a: Directive on a mandatory CommonEuropean Sales Law (full harmonisation) and 
Policy Option 6: Regulation establishing a mandatory Common European Sales Law ....................................... 44  
5.5.2. Main Impacts Of Policy Option 5b: Directive on a  mandatory Common European Sales Law 
(minimum harmonisation) ............................................................................................................................... ....... 48  
6. COMPARATIVE ASSESSMENT OF OPTIONS ........................................................................................... ......... 49  
7. MONITORING AND EVAL UATION ARRANGEMENTS ................................................................................... 56  
ANNEX I: PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES................................ 58  
ANNEX II: THE CURRENT LEGAL FRAMEWORK.......................................................................................... ..... 62  
ANNEX III: CALCULATION OF OPPORTUNITY AND TRANSACTION COSTS............................................. 71  
ANNEX IV: ECONOMIC MODEL APPLIED TO THE ASSESSMENT OF POLICY OPTIONS ....................... 87  
ANNEX V: DETAILED ANALYSIS OF IMPACTS OF POLICY OPTIONS.......................................................... 95  
ANNEX VI: IMPACTS OF THE COMMON EUROPEAN SALES LAW ON FUNDAMENTAL RIGHTS ...... 127  
ANNEX VII: ADMINISTRATIVE COSTS ................................................................................................ ................ 130  
 
 3ANNEX VIII: ANALYSIS OF IM PACTS OF MAJOR SUBSTANTIVE PROVISIONS OF A COMMON 
EUROPEAN SALES LAW ............................................................................................................. ....................................
 144  
ANNEX IX: RANKING OF BARRIERS TO TRADE......................................................................................... ...... 208  
 
   4   
1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
 
1.1.  Policy Background 
 
The European Commission (Commission) has been working on European contract law since 2001 
(see Annex I). With its 2001 Communi cation on European contract law,1 the Commission launched a 
process of extensive public consultation on the pr oblems arising from differences between Member 
States' contract laws and on potential actions in this field. As a follow-up, the Commission issued an 
Action Plan in 2003,2 with a proposal among others to es tablish a Common Frame of Reference 
containing common principles, termi nology and model rules to be used by the Union legislator when 
making or amending legislation. Via a grant under the 6th Framework Programme for Research, the 
Commission financed the work of an interna tional academic network which carried out the 
preparatory legal research. This research work was finalised at  the end of 2008 and led to the 
publication of the Draft Co mmon Frame of Reference3 as an academic text.4  In parallel to this, 
analytical work was also carried out by the Asso ciation Henri Capitant de s Amis de la Culture 
Juridique Française and the Société de Legislation Comparée drafting the Principes Contractuels 
Communs .5 
In July 2010 the Commission launched a 'Green Paper on policy options on progress towards a 
European contract law for consumers and businesses' (Green Paper)6. The Commission's Work 
Programme for 20117 provides for a legal instrument of Eu ropean contract law as a strategic 
initiative to be proposed in  the last quarter of 2011.  
 
1.2.  Organisation and timing  
 
The Commission adopted a Decision8 on 26 April 2010 to establish an Expert Group (EG) to conduct 
a feasibility study on a draf t European contract law instrument covering the life-cycl e of a contract. 
The EG was composed of European legal scholar s, legal practitioners and representatives of 
consumer and business organisations (acting in th eir personal capacity). The backgrounds of the EG 
members also reflected the main legal system s and traditions within the EU. The EG study 
(completed in April 2011) served as a starting point for developing the Commission proposal on a 
possible legal instrument of  European contract law. 
An Impact Assessment Steering Group (IASG) was set up in May 2010 and was composed of the 
SG, the SJ, DG COMP, DG COMM, DG ECFIN, DG MARKT, DG ENTR, DG SANCO, DG INFSO, DG MOVE and DG TRADE. The IASG met 5 times and was consulte d on the draft Green 
Paper, on the impact assessment (IA) report as well as on the EG study.  
 
                                                
 
1 Communication from the Commission to the Council and the European Parliament on European Contract Law, COM(2001) 398, 11.7.20 01. 
2 Communication from the Commission to the European Parliament and the Council,  A more coherent European Contract Law: an Acti on Plan, COM(2003) 68, 12.2.2003. 
3 Von Bar, C., Clive, E. and Schulte Nölke, H. (eds.), Principl es, Definitions and Model Rules of  European Private Law. Draft C ommon Frame of Reference  
(DCFR), Munich, Sellier, 2009. 4 Although financed by the Commission, the text is not an official Commission document. 5 Bénédicte Fauvarque-Cosson and Denis Mazeaud (eds.), European Co ntract Law, Materials for a Common Frame of Reference: Termin ology, Guiding Principles, Model 
Rules. 
6 Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses, COM(2010) 348 final, 1.7.2010. 
7 Commission's Work Programme for 2011, COM(2010) 623 final of 27.10.2010. 8 Commission Decision 2010/233/EU, OJ 105 of 27.4.2010. 
 
 51.3.  Consultation and expertise  
 
1.3.1.  Public consultation  
 
The Commission organised the following public consultations throughout the IA process:  
 
• General consultations  
 
 - The  Green Paper  opened an EU wide public consultation on 7 policy options which closed on 31 
January 2011 and resulted in 320 responses from all categories of stakeholde rs from across the EU, 
demonstrating the high interest in the topic.9  
 Many respondents saw value in option 1 (the pub lication of the work of the EG) and supported 
option 2 (a 'toolbox' for the EU le gislator). There was little s upport for options 3 (a Commission 
Recommendation), 5 (a minimum harmonisation Dire ctive) and 7 (a Regulation establishing a 
European civil code).  On option 4 (an optional instrument of Europe an contract law) the responses 
were more varied. Several Member States (MS)  and a number of othe r respondents (business 
representatives, legal practitione rs and academics) said they could support an optional instrument, 
provided that it fulfille d certain conditions (e.g. a high level of consum er protection, user-friendly 
nature, clear link with the proposed Consumer Ri ghts Directive (CRD) and other EU-legislation). 
Many MS and business representatives did not want to  take a position at that time, because they did 
not know the details of the option and the work of the Expe rt Group. The European Economic and 
Social Committee adopted an opinion in which it  favoured a hybrid option by means of a 'toolbox' 
and an optional regulatory regime.
10 In a Resolution adopted on 8 June 2011 the European 
Parliament (EP) also took a position on the Green Paper options. The EP supported an optional instrument, which would make the internal market  more efficient without affecting MS’ national 
systems of contract law. This optional instrument could be comp lemented by a toolbox endorsed by 
means of an inter-institutional agreement.
 11 Some respondents expressed a preference for option 6 (a 
Regulation establishing a European  contract law that would repl ace MS' national contract laws). 
 Of those respondents who commented on the scope of  a potential European contract law instrument 
most only expressed opinions on a toolbox (option 2) and an opti onal instrument (option 4). The 
majority of those who explicitly commented on the toolbox scope (option 2) believed that it should be broad and comprehensive (i.e. not restricted to certain types of contract).  The majority of those 
who commented explicitly on the scope of option 4 seemed in favour of an instrument which 
focused on cross-border B2C sales contracts. The EP favoured an optional instrument for both B2C 
and B2B contracts, for cross-border  situations in the first instance.
12  
 Based on the responses of critical st akeholders several specific and general concerns relating to the 
creation of a European contract la w, in particular in the form of  an optional instrument could be 
identified. A number of MS we re concerned about businesses ta king advantage of the weaker 
position of the consumer/SME, the reduction of the consumer protection level and legal uncertainty. 
On one hand, a number of business representati ves were concerned about the increased legal 
uncertainty, safeguarding the freedom of contra ct and an unbalanced high level of consumer 
protection. On the other hand, cons umer representatives feared a reduction of consumer protection 
                                                
 
9 An overview of the responses can be found in Annex I on Procedural Issues and Consultation (Annex I). 
10 Opinion of the European Economic and Social Committee on the Green Paper from the Commission on policy options for progress towards a European contract law for 
consumers and businesses of 19 January 2011, OJ C 84/1, 17.3.2011 . 
11  European Parliament Resolution of 8 June 2011 on policy options for progress towards a European Contract Law for consumers and businesses (2 011/2013 (INI)). 
12  European Parliament Resolution of 8 June 2011 on policy options for progress towards a European Contract Law for consumers and businesses (2 011/2013 (INI)). 
 
 6levels in their MS and insisted th at any new instrument in the fiel d of consumer policy should have a 
clear added value for consumers. They also expr essed a specific concern relating to the optional 
instrument which they thought would lead to un certainty and confusion for consumers. Some 
associations of legal practitione rs were concerned about an incr ease of legal complexity and 
uncertainty, largely due to the lack of accessible case law.  In order to meet as much as possible the ab ovementioned concerns, the Commission created a 
special sub-group within the EG focusing on ensuri ng a high level of consum er protection. In order 
to discuss the balance of the level of consumer pr otection with the needs of business this parameter 
was given particular attention in  the discussion with both consumer  and business representatives as 
part of the key stakeholder experts group (see be low). In addition, the Commission made clear that 
they intended to minimise the legal uncertainty by es tablishing a European database of relevant case-
law accessible by legal practitioners from all MS.    - A key stakeholder experts group  was set up in July 2010 which represented businesses, 
consumers and legal practitioners. The first role of th e stakeholder group (which met 10 times) was 
to provide a practitioner's perspective on the work  of the EG, thereby en suring the instrument 
developed was user-friendly. In addition to this, the stakeholder group discussed IA related matters 
at half of its meetings, once the formal IA work began.   -  The Commission published the  feasibility study of the Expert Group on its web-site and invited 
stakeholders to provide feedback  between 3 May and 1 July 2011.
13 The Commission consulted 
stakeholders on the text in order to  decide if and to what extent it could serve as a starting point for 
the preparation of a political foll ow-up initiative. Most contributions  concerned precise questions of 
legal drafting. However, business stakeholders in particular also expre ssed concerns about the 
negative effects of a level of consumer prot ection, which according to them was too high.14 Reacting 
to these concerns, the Commission ensured that the level of consumer protect ion would be balanced. 
 
•  Specific consultations targeting main stakeholder groups  
 
- Workshops and meetings: A workshop on contract la w with business stakeholders was organised in 
November 2010. Commission officials also met repres entatives of BEUC and attended two meetings 
of the European Consumer Consultative Group (ECCG).  
- Surveys: Several surveys consulted businesses on their experiences with contract law related 
problems and the impacts of a European contra ct law instrument. They included two Flash 
Eurobarometers (EB 320/2011 and 321/2011),15 the SME Panel16 and the European Business Test 
Panel17 surveys of 2010.A consumer survey (Flash Eurobarometer 299a) enquired about consumer 
experiences with cross-border shopping a nd problems related to contract law.  
 
1.3.2.  Outside expertise 
  
In November 2010 the Commission awarded a public tender to IBF International Consulting for a 
study supporting the IA preparation. The draft report was submitted in spring 2011. 
                                                 
13 The Feasibility Study of the Expert Gr oup is available at: http://ec.europa.eu/justice/contract/files/feasibility-study_en.p df.  
14 Responses to the public consultation on the Expert Group feasibility study by  business stakeholders, such as: Business Euro pe, p.2-3; Eurochambres, p. 1; UEAPME, 
p.2, and legal practitioners stakeholders, such as: Council of Bars an d Law Societies of Europe (CCBE) , p.3. 
15 Eurobarometers 320 on European contract law in business-to-business transactions (EB 320) and Eurobarometer 321 on European contract law in consumer transactions 
(EB 321) of 2011. 
16 The SME Panel survey was conducted within the Enterprise Europe Network and gathered responses from 1,047 micro, small and m edium sized businesses. 
17 The European Business Test panel Survey (EBTP) attracted responses from 378 companies of all sizes. 
 
 7 
1.3.3.  Consultation of the Impact Assessment Board 
 
The IA report was examined by the Commission's Impact Assessment Board (IAB) on 19th July 
2011. The IAB evaluated the IA report positively, considered its  structure adequate and 
recommended several aspects to be improved, in part icular by including more detailed explanations 
from the annexes into the main report. All th ese recommendations have been addressed: For 
instance, the existing legal framework was presented in more detail in this report and Annex II and 
the technical assumptions of economic impacts were explained in the main text of the report, in 
addition to Annexes III and IV.   
2. PROBLEM DEFINITION 
 
2.1. Introduction 
 
Differences in contract law between MS create a ba rrier to trade within the internal market. This 
discourages some companies from trading cross-border and limits consumer choice. Analysis carried 
out in this IA suggests that each year those co mpanies that do export into new MS markets face 
unnecessary entry (transaction) cost s of about €1 billion (bn). The value of the trade foregone each 
year between MS due to differen ces in contract law amounts to some tens of billions of euros. 
 
2.2. Current EU legal framework in the area of contract law 
 
The current legal framework in the EU does not c ontain a single set of uniform and comprehensive 
contract law rules which could be used by c onsumers and businesses in  cross-border trade. 
Historically laws have been created each time to meet  the specific needs at the time.  This has led to 
the current patchwork of European legislation. Th ere are only  a limited number of uniform rules in 
only a few areas of contract law. As a result, s ubstantial differences between MS contract laws 
remain. These differences are seen as a barrier to cross-border trade
18 by business with a slightly 
higher impact on B2C transactions than in B2B transactions.19   
 
Conflict of law rules:  In order to  improve legal certainty, the Union put in place uniform conflict of 
law rules. The Rome I Regulation20 allows contracting parties to choose which law applies to their 
contract and to determine which la w applies in the absence of choice.21 For B2C contracts where a 
business directs its act ivity to the consumer's country of resi dence the business may either apply the 
consumer's national law in its enti rety or choose another law, in practice mostly the trader's law. 
However, in the latter case it needs to make sure it complies with the mandatory consumer protection provisions stemming from  the consumer's national law, whenever they provide a higher 
protection. Nevertheless, uniform conflict of law rules do not remove the differences between 
substantive contract law. They only lead to the application of a given s ubstantive national law in 
cross-border transactions when otherwise several different nationa l laws could potentially apply.  
 
                                                
 
18 See, for example, EB 320 and EB 321 of 2011, 32% in B2B (p. 16) and 36% in B2C, (p. 20) of exporting businesses said that co ntract law difficulti es were a barrier to 
cross border trade and were almost  equally cited as other practical barriers such as language and delivery. More data available  in SME Panel and EBTP surveys. 
19 EB 320, p. 16: 32% of companies engaged in cross-border B2B tr ansactions considered contract law as a barrier; and EB 321, p . 20: 36% of companies engaged in cross-
border B2C transactions considered contract law as a barrier.  
20 Regulation (EC) No 593/2008 of the European Parliament and of  the Council of 17 June 2008 on the law applicable to contractu al obligations. 
21 Regulations (EC) of the European Parliame nt and of the Council  No 593/2008 of 17 June 2008 on  the law applicable to contra ctual obligations (Rome I) and 864/2007 
on law applicable in non-cont ractual obligations (Rome II). 
 
 8This means that no matter what law has been chos en – for one of the parties to a contract the 
applicable law is always a foreign law.  This party is therefore disadvantaged by the need to 
familiarise itself with a different legal system. This situation particularly disadvantages consumers who are confronted with different laws when pro-actively shopping cross- border. Furthermore, 
businesses are disadvantaged by additional costs they  incur when they have to ensure compliance 
with the consumers' mandatory rules in B2C cro ss-border transactions. Bu sinesses which agree to 
apply a foreign law in B2B contracts also incur additional costs.  Substantive rules:  The EU has partially reduced the differe nces between the MS' substantive laws 
by setting substantive rules through harmonisation measures. Table 1 below illustrates key areas of 
contract law which cover the life-cycle of a contract.
22 It shows that the existing acquis  and 
international rules are limited in scope: out of the 13 key contract law areas they only cover six areas 
(one only partially) for B2C a nd eight areas for B2B contracts (one only partia lly). Thus, a 
comprehensive set of uniform rules is neither available in B2C nor B2B cross-border sales.  
  
Table 1: EU Legal Framework in the area of contract law 
Business-to consumer contracts Business-to-business contracts 
 
Contract law area Consumer 
rights 
Directive23 
 Other 
relevant EU 
consumer 
legislation  Directive 
on 
electronic 
commerce   Directive 
on 
electronic 
commerce  Directive 
on 
combating 
late 
payments Vienna 
Convention 
on the 
international 
sale of goods 
Pre-contractual information 
and negotiation YES YES YES YES NO NO with a 
few 
exceptions 
Conclusion of contract NO 
 NO 
 YES (partially) 
 NO 
 NO YES 
Rights to withdraw YES YES NO NO NO NO 
Defects in consent NO NO NO NO NO NO 
Interpretation 
 NO  NO (with one 
exception) NO NO NO YES 
Contents and effects  NO NO NO NO NO NO with a 
few 
exceptions 
Unfair contract terms NO YES NO NO YES 
(partially) NO 
Obligations and remedies of 
the parties to a sales 
contract NO YES NO NO NO YES 
Delivery and Passing of Risk YES NO NO NO NO YES 
Obligations and remedies of 
the parties to a related 
service contract NO NO NO NO NO NO 
Damages, Stipulated 
payments for non-performance and interest NO NO NO NO YES 
(partially) YES 
Restitution NO NO NO NO NO YES 
Prescription NO NO NO NO NO NO 
       
 
 For B2C related transactions,  the EU legal framework contains mainly minimum harmonisation 
rules in selected areas of consumer contract law.   These have been introduced among others by the 
                                                
 
22 The Expert Group created by the Commission  identified these areas as key areas of contract law fo r cross-border contracts.   
23 The table reflects the scope of the CRD based on the text, which was adopted at first reading. The scope is limited to dista nce and off-premises B2C contracts.  
 
 9Directives relating to doorstep selling,24 unfair contract terms,25 distance selling26 and sales 
remedies.27 Even though these Directives have subs tantially improved the level of consumer 
protection in the EU, they have not removed the di fferences between MS laws. While they establish 
minimum standards for certain core consumer rights,  such as unfair contract terms control and sales 
remedies, MS can build upon these to various degr ees and adopt legislati on which goes beyond the 
standards of these Directives. Furthermore, MS ca n legislate freely in area s where no harmonisation 
had taken place. As MS legislate in an un-coordinated manner the consumer contract laws across the EU have developed into a patchw ork of 27 sets of different rule s. Although this legal framework 
ensures an adequate level of pr otection for consumers who shop in  their own country, it creates 
increased complexity and confusi on for pro-active consumers who shop cross-border. It also creates 
increased complexity and costs for businesses inte rested in selling to consumers across border.  
 The Commission addressed the differences in the MS consumer contract laws by its 2008 proposal 
for a CRD. The aim was to facil itate cross-border shopping and sales. This would have been 
achieved by establishing a single se t of rules through full harmonisation of key regulatory aspects for 
consumer contracts. The 2008 proposal originally se t out to merge the four consumer contract law 
Directives on doorstep selling, unfair contract  terms, distance selling and sales remedies. 
 
However, the CRD did not achieve the objective of the ini tial proposal, as its sc ope was substantially 
reduced in the negotiations during the legislative proce ss. Two modules which were essential in 
practical terms, the rules on unfai r contract terms and sales reme dies, were excluded. Thus, key 
issues which posed serious concerns  to consumers in cross-border shopping, such as their rights and 
obligations with respect to def ective products, remained regulated at different levels across MS. 
Although successful, the outcome of the negotiations  on the CRD showed therefore that the full 
harmonisation approach in those areas of consumer  contract law had limits. The CRD succeeded in 
creating fully harmonised substant ive rules, but only for distance and off-premises contracts and 
even then these were limited to  the areas of pre-contractua l information, withdrawal and 
delivery/passing of risk. Placing this  in context, these are only 3 out of 13 key areas of contract law 
mentioned in Table 1. Thus, the rules for B2C c ontracts in the remaining 10 areas are harmonised 
either at a minimal level or not harmonised at all. 
 For B2B contracts  the existing EU rules are even more  limited: The Directive on Electronic 
Commerce
28 introduced some rules on pr e-contractual information fo r electronic contracts. The 
Directive on combating late payments29 harmonises the rules on the default interest rate which apply 
in cases of late payment, but a llows MS to go beyond th e standards of the Dire ctive in favour of the 
creditor. Thus, the EU acquis  exists only in 2 out of the 13 ke y contract law areas, mentioned in 
Table 1 and also contains rules partia lly harmonised only at a minimum level. 
 A set of rules of a broader scope was introd uced at an international level by the 1980 UN 
Convention on the International Sa les of Goods (The Vienna Conve ntion). However, the Vienna 
Convention was not ratified by all MS . It is not applicable  in the UK, Ireland, Po rtugal and Malta. In 
addition, it does not cover the whole life cycle of a contract comprehensively. For example, it hardly 
covers any general contract law,  while in practice le gal disputes about remedies for defective 
products are often intrinsically linke d to general contract law (e.g. interpretation of  contracts in order 
                                                
 
24 Council Directive 85/577/EEC of 20 December 1985 aims to protect the consumer in respect of contracts negotiated away from b usiness premises. 
25 Council Directive 1993/13/EEC of 5 April 1993  on unfair terms in consumer contracts. 
26 Directive 97/7/EC of the European Parliament and of the Council  of 20 May 1997 on the protection of consumers in respect of  distance contracts. 
27 Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer  goods and associated guarantees. 
28 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information so ciety services, in particular electronic 
commerce, in the Internal Market ('Directive on electronic commerce'). 
29 The Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in comme rcial transactions (recast).  
 
 10to determine conformity or the question whether a contract is validly concluded despite defects in 
consent). Finally, there is no mechanism ensuring its uniform application as di fferent national courts 
may interpret it differently. All these difficulties may contribute to the result that only a relatively 
small number of companies intent ionally use the Vienna Convention.30 
 Table 1 shows the contract law areas where minima lly harmonised or uniform rules exist, but also 
where gaps lead to differences of national contra ct law regimes. It demonstrates the lack of a 
uniform and comprehensive set of rules covering the whole life cycle of a cont ract both for B2C and 
B2B cross-border transactions. The remaining differences in contract  laws continue to generate 
obstacles to the smooth functioning of the internal  market affecting both c onsumers and businesses, 
as described further in sections 2.3 and 2.4.  
 
The European contract law as such  addresses all the problems that di fferences in contract laws pose 
to cross-border trade in the EU. As goods acco unt for the major share of intra-EU trade,
31 the focus 
of this initiative is on the sale of goods. The economic sectors involved in the sale of goods 
considered in this report are according to the categorisation of Eurostat mining, manufacturing, 
wholesale, retail and agriculture. These sectors also include trade in digital products, a sector of growing economic importance.   In addition, some services are intr insically linked to the cross-border sales of goods because they are 
provided in close connection to a contract of sale and are ag reed with the seller of goods, 
simultaneously with the sales transaction. These serv ices (e.g. installation, repa ir or maintenance) are 
therefore also covered by this initiative.   
2.3.  Problem 1: Differences in contract law hinder businesses from cross border trade and 
limit their cross-bo rder operations  
 
Currently on average only 9.3% of the EU companies involved in the sales of  goods export inside of 
the EU.
32 The majority of them (62% in B2B and 57% in B2C) export to no more than 3 other MS.33 
One of the reasons for this relatively low level of cross-border trade – besides a lack of interest in 
export – is that some companies are hindered by regulatory (e.g. differences in tax regulations, 
contract law, administrative requirements and co mpany law) and practica l barriers (e.g. language, 
transportation and after-sales maintenance). Recent business surveys show that the regulatory barriers are a greater hindrance to the expansi on of cross-border trade than the practical ones.
34 The 
Commission is tackling the regulatory barriers to  cross-border trade with several initiatives.35 This 
IA deals exclusively with c ontract law related barriers.36 
 
2.3.1.  Negative impact of contract law differences on cross-border trade  
                                                 
30 EB 320, p.57: Only 9% of respondents said they frequently applied international instruments, including the CISG and the UNID ROIT principles.   
31 According to Eurostat Statistics in Focus 37/2010 and the Euro stat External and Intra-EU Trad e Yearbook of 2009, the intra-E U trade volume in goods was 4 times the 
volume of trade in services in 2008.  
32 See Annex on calculations of transact ion and opportunity  costs (Annex III). 
33 EB 320, p. 55 and 321, p. 56. 34 EB 320 and EB 321, the SME Panel and EBTP surveys. Similarly, a survey by Eurochambres in 2010 found that the differences in  legislation were the main difficulty in 
cross-border trade for 36% of the respondents . It was conducted among 1,330 companies in 12 EU MS and Croatia. 83% of the respo ndents were involved in B2C 
transactions while 57% were deliv ering products cross-border.   
35 For instance, a  measure on tax barriers aims at improved coordination of the national tax policies by means of a Directive on a common consolidated corporate tax base.  
Administrative barriers are tackled by the application of the Se rvices Directive, the Small Busi ness Act and the review of acco unting Directives. Meas ures in the area of 
company law include a legislative proposal on linking of company registers. 
36 This report acknowledges the importance of all existing barriers to cross-border shopping.  
 
 11 
According to survey data37 contract law related barriers rank  amongst the top regulatory barriers, 
which influence the companies' decision to trad e cross-border: In B2B transactions 35% of 
companies involved or interested in cross-border trade and 51% of  companies with no cross-border 
experience were affected by contract law differences . In B2C transactions at least 40% of retailers 
interested or involved in sa les to consumers in other EU countries were affected.  
 Contract law related barriers hind er cross-border trade in two wa ys: Firstly, they dissuade some 
companies from trading cross-border. 61% of  companies involved in B2B and 55% in B2C 
transactions and affected by contr act law differences were often or at least occasionally deterred by 
contract law related barriers. A dditionally 3% of companies involve d in B2B and 2% in B2C always 
gave up exports for this reason.
38 Secondly, contract law related ba rriers lead companies to limit 
their cross-border operations. Above  80% (both in B2B and B2C tran sactions) of companies active 
or interested in cross-border trad e and affected by contract law ba rriers suggested that they exported 
to fewer EU countries for this reason.  This has impacts at a macroeconomic level, a lthough they are difficult to quantify precisely.
39 
Nevertheless, the value of failed intra-EU trade as  the result of companie s giving up cross-border 
trade due to contract law only, can be estimated40 at a range between €26 bn (equivalent to 
Lithuania's GDP) and €184 bn (slightly more than Portugal's GDP).41  
 These opportunity costs only relate to the lost value of cross-borde r trade for companies which were 
dissuaded from cross-border trade due to contract la w. While part of these costs will be reduced due 
to the domestic transactions which may take place instead of the failed cross-border ones,
42 it is 
hardly possible to quantify the value of the compensatory domes tic transactions. However, the 
domestic trade would most likely take place at a higher price and would therefore disadvantage 
consumers. 
 Companies which limit their cross-border activities due  to differences in contract law also miss the 
opportunities of cross-border demand by refusing orde rs from consumers. At least 23% of exporting 
European retailers
43 refused orders by consumers from other MS due to differences in contract law.44 
Out of these, 5% refused sales to consumers in other MS systematically and 18% did so 
occasionally. The overall percentage of EU retailers re fusing sales is likely to be much higher, as the 
majority of them do not export and are thus even more likely to refuse cross-border sales (discussed 
further in section 2.4.2).  
 
                                                 
37 Unless otherwise stated, the data in this section comes from EB 320, p. 15 and 321, p.19.  
38 These experiences were confirmed by the participants in the SME and EBTP surveys where 47% and 67% of the respondents respec tively said that barriers relating to 
contract law have dissuaded them from cross-border transactions to various degrees. See Annex III. 
39 For example, determining the impact of differences in contract law on trade flows requires knowledge about the number of com panies that are discouraged from trading 
cross-border due to these differences, the number of countries with which they would trade, and the amount they would trade. Th is data is not available.  
40 The estimate is based on the answers to Eurobarometer surveys, Eurostat data on intra-EU trad e and a number of assumptions. More details are in Annex III. 
41 Eurostat Statistical Books, External and Intra-EU trade – a statistical yearbook, 2009 edition, p. 82. The value of forgone intra-EU trade is calculat ed as a percentage of 
the actual trade that failed as companies were deterred from cr oss-border transactions. It is based on the value of total intra -EU trade estimated by Eu rostat at €2704 billion 
in 2008 (see Annex III for details). 
42 The estimate does not reflect cross-border trade which failed for other reasons than contract law. It also does not take int o account the domestic transactions which could 
compensate the failed cross-border trade.   
43The figure of 23% of retailers who refu sed cross-border sales only covers the companies which are currently trading cross-bor der or interested in doing so. 
44 EB 321, p. 29. 
 
 12Econometric research has shown that when two countries have legal systems based on a common 
origin, there is a positive effect on their bilateral trade.45 Assuming conservatively that the removal 
of differences in contract law would contribut e 1 percentage point to  this positive effect46, the 
increase in intra-EU trade could be  in the order of magnitude of €30 bn.47  
 
2.3.2.  Driver 1: Additional transaction costs st emming from differences in contract 
law hinder cross-border trade   
 
The need to apply different foreign contract laws is likely to generate additional transaction costs48 
compared to domestic trade. Moreover, these co sts usually grow proportiona tely to the number of 
EU countries a company trades w ith and thereby hinder trade expans ion within the internal market. 
Indeed, businesses exporting to more MS than aver age assign a greater importance to differences in 
contract laws. For instance, wher eas about 41% of companies trad ing with businesses in only one 
country considered contract law di fferences a barrier, this figure we nt up to 55% for those trading 
with more than 4 countries.49 Companies’ own estimates of their transaction costs for entering one 
MS range between less than €100050 to above €30,000.51 These are mostly one-off costs that vary 
depending on the company's business activity, its place of bus iness, distribution channels and type of 
transaction (B2C or B2B). The cumulative costs for all exporting EU comp anies are between €6 and 
€13 bn as explained in the secti on on cumulative transaction costs for the EU economy below.  
 Other types of costs in addition to the one-off costs are not take n into account, as comprehensive 
data on their scale is not available. These othe r types could include for instance ongoing compliance 
costs for periodical adaptations to changes in th e respective national laws. Business stakeholders 
have pointed out that these co sts could be of a considerab le scale and occur annually.
52 Furthermore, 
additional costs specific to litigation occur when courts have to apply a foreign contract law. These costs stem from the need for translation and expe rt legal opinions on fore ign contract laws in 
litigation cases.
53 
 
                                                 
45 A.Turrini and T. Van Ypersele, Traders, courts and the border effect puzzle, Reg ional Science and Urban Economics, 40, 2010,  p. 82: "Analysing international trade 
across OECD countries we show th at controlling for countries specific factors, distance, the presence of common border and comm on language […], similar legal systems 
have a significant impact on trade […]. If two countries share common origins for their legal sy stem, on average they exhibit t rade flows 40% larger."  
46 Based on the results of EB 320, p. 33, this effect is assumed to range between 0.76% and 1.53%, 1% being an average example that takes into account both extremes. 
This range is computed as  a weighted average of th e responses of the traders interviewed. They were asked about the impact of a  single European contract law on their cross-
border operations. Available replies ranged between a possible d ecrease to a possible significan t increase, and on each of thes e categories assumptions have been made on 
the attribution of a weight. For ex ample, "increase a lot" may mean 5% more trade to have a low estimate, or 10% to have a medi um one; "increase a little" may mean 1% 
more trade as a low estimate or 2% as a me dium one etc. See details in Annex IV.   
47 Intra-EU trade amounts to approximately € 2700 bn in 2008 (Eur ostat external and intra-EU tr ade – a statistical yearbook, 20 09 edition), an increase in trade of 0.76%-
1.53% would be by consequence equal to € 20.5 – 41.3 bn (€ 30 bn, based on 1%, on average). 
48 The references to 'transaction costs' in  this report are limited only to the transaction costs for cross-border trade which stem from differences in contract law i.e. for 
identifying the applicable law, becoming familiar, complying with it and adapting contracts accordingly.   
49 EB 320, p. 19. 
50 7% of the respondents to the EBTP survey expected costs savings of less than €1,000 per MS entry if a single European contra ct law was  introduced; the majority of 
20% expected cost savings between €1,000 and €5 000  and 17% - between €5,000 and €10,000.  
51 12% of the respondents to the EBTP survey and 3% of the SME Pa nel survey respondents expected costs savings of more than €30 ,000  per MS entry if a single 
European contract law was introduced.   
52 Deutscher Industrie-und Handelskammertag (DIHK), Position Pape r on the Feasibility Study carried out by the Expert Group on European contract law, p.2: the annual 
ongoing costs for compliance could amount to € 25 000.    
53 Dr. jur. Thomas U. Klink, LL.M. Judge at Regional Court of Stuttgart, speaker at an EP workshop on European contract law, Oc tober 2010 , 'EU contract law as a tool 
for facilitating cross-border transactions: a point of view from national courts', note, 2010: the litigation costs may result from the need to translate foreign documents in 
order to introduce them into the legal proceedings and to determine the rules of a foreign law, amongst others by expert opinio ns. 
 
 13The additional transaction costs occur for companies when they have to deal with a foreign contract 
law. To what extent this is the case in practice  differs in B2C and B2B transactions as described 
below.    
• Costs in B2C transactions
  
 
As part of the transaction costs, in B2C transactions businesses need to bear specific costs to ensure 
compliance with the mandatory consumer protection rules of the consumer's country of residence. In B2C transactions it is in practice mostly the business which determines the applicable law and can therefore choose a law it is familiar with. Nevert heless, in cross-border B2C transactions which 
target consumers in other countries , businesses have, at the very leas t, to ensure compliance with the 
mandatory consumer protection rules of the consumer 's country of residence. The costs may vary in 
the below described two scenarios. Both these scen arios are derived from Article 6 of the Rome I 
Regulation.   In the first scenario when a business may choose to apply the consumer's nati onal law in its entirety, 
the business would bear the whole range of tran saction costs stemming from legal advice and 
adapting standard terms and conditi ons to a different contract law.  In the second scenario, when a 
business chooses to apply its preferred law, the tr ansaction costs are likely to be slightly lower 
compared to the first scenario,
54(as the preferred law is in all like lihood a law the business is familiar 
with). However a business will have, at least, to research whether the level of the mandatory 
consumer protection rules in the c onsumer's law is higher and adapt it s terms and conditions if this is 
the case. While there is no data on the preference of  choice between these two scenarios, it is more 
likely that in practice businesses would prefer to operate under th eir own law, as this would in 
general be less costly.  38% of companies with experience or  an interest in cross-border tr ade considered the need to adapt 
and comply with different consumer protection rules in foreign contract laws as a barrier.
55 
Businesses with no experience in cro ss-border trade see these costs as an even greater barrier. While 
50% of retailers engaged in cr oss-border trade considered the extra costs for compliance with 
consumer protection regulations, including contract law,56 as important or very important, for those 
who did not sell cross-border th is percentage went up to 66%.57  
 The costs for B2C transactions are estimated as an average for the two above-mentioned scenarios. 
The average transaction costs per company per MS range betw een €8,695 and €9,565.These costs 
are estimated based on companies' responses to a business survey and the range is verified by other sources.
58  
  Assuming that all exporting compan ies carefully examine th e applicable foreign law in advance, the 
cumulative sunk contract law-rela ted costs that must already ha ve been incurred by companies 
                                                
 
54 A business would need less legal support, when it applies its own law with possible adjustments. 
55 EB 321, p. 62: respectively for 7%, 13% and 18% of the respondents this barrier had a large, some or minimal impact on their  decision to trade cross-border.  
56 The area of consumer protection and contract law partially overl ap, but differ in scope. They overlap to the extent that con tract law regulates a number of  
consumer rights which are key for ensuring consumer protection. However, consumer protection rules also cover other regulatory areas beyond the scope of contract law, 
such as product safety. Contract law goes beyond the scope of cons umer protection, as it contains  rules of general contract law  and also regulates B2B relations.  
57 EB 224 on Business attitudes to cross-border sales and consumer protection, 2008, p. 22-23. 58 The average transaction costs per company per MS are calculated based on the SME Pa nel survey: See Annex III. The estimate b ased on the SME Panel is confirmed by 
other sources. The EBTP survey gives an interval between €11,132 and €14,704 of average transaction costs for both B2C and B2B.  According to the calculations of small 
business representatives (Federation of Small Businesses (FSB) in the UK, Response to the Green Paper on policy options for pro gress towards a possible European contract 
law for consumers and businesses; see for detailed explanation Federation of Small Businesses Position Paper on Rome I, p. 3) f or an SME engaged in cross-border B2C e-
commerce the transaction costs amount to €9,120 of legal and translation costs per MS. 
 
 14currently active in cross-border B2C trad e are between approximately €4 and €9 bn.59 However, 
surveys among exporting businesses suggest that in practice not all of them  consult a lawyer on 
foreign law and thus do not incur all transaction costs. Therefore, the cumulative costs are more 
likely to be lower. They are estimated at between €3.6 and €7.4 bn.60  
 
Furthermore, specific contract-law related IT  costs may occur for businesses selling online to 
consumers in other EU countries. These costs are on average €2,91661 and stem from the need to 
adapt the business' website to the legal require ments of each MS it di rects its activity to.62 This raises 
the cumulative contract -law related costs by a range between €0.4 and €0.8 bn.63 
 
Therefore, the cumulative contract-law related costs that have been incurred by companies currently 
active in cross-border B2C trade (l egal, IT and translation costs) and on which data is available 
range between approximately €4 and €8 bn . These are sunk costs that  cannot be recovered by the 
retailers who have begun exporting which could alternatively be inve sted in productive activities.  
 
• Costs in B2B transactions  
 
In B2B transactions companies also bear specific costs of negotiations on a pplicable law. They are 
seen as a barrier on average by 30% of companies engaged or interested in cross-border trade.64 In 
addition, 44% of companies who are interested, but not ye t actively exporting, are concerned about 
the difficulties relating to ne gotiations on applicable law.65  
 
Example: Difficulties in negotiating applicable law 
Mr. Kowalski, the owner of a small Polish company in Radom, develops a uniquely designed organic wooden bed for 
children. He takes part in a furniture fa ir in Cracow with a €2,500 participation fee. There his beds attract the attention 
of two well known German and Italian retailers. Mr. Kowalski's company has the capacity to sell to both retailers and he 
starts negotiations with both of them.  
 
A few days later, Mr Kowalski contacts Ms Janowska, his company's local lawyer. He sends her both sales contracts in 
English for legal advice for the agreed pr ice of €750. When examini ng the contracts, Ms Janows ka discovers that they 
are governed by German and Italian laws respectively. As she is not familiar with either of the two legal systems, she 
recommends to Mr. Kowalski to use his own standard contract which is governed by Polish law. However, both the 
German and Italian retailers explain that they are not familia r with Polish law and therefore prefer the contract to be 
covered by their national law. Ms Janowska advises Mr Kowals ki to hire an international law firm to assist him with 
these contracts. In view of their ongoing business relati onship she considerately does not bill him for this advice.  
Mr Kowalski contacts an international la w firm in Warsaw and learns that they would bill him €5,000 for checking each 
contract and helping negotiate the terms. This is a significant amount for Mr Kowalski. He has so far invested €2,500 for the participation in the fair and at least two days of his time in contacts with lawyers and his potential clients. He 
definitely does not want to lose these two deals, but he is frustrated that in order to be aware of his legal rights and 
obligations he needs to check, for every potential client from another MS another contract law regime. He now has a 
dilemma: spend an additional €10,000 to be sure of his legal rights and obligations under the contracts or take the risk, 
                                                 
59 The aggregate general one off-costs for B2C transactions can be estimated based on the formula: number of exporting retailer s who are likely to consult a lawyer * 
transaction costs of entering one additional MS * average numb er of EU countries a business  exports to. See Annex III. 
60 EB 321, p. 58 found that 18% of retailers currently involved in cross-border trade are not at all informed about the consume r protection provisions in the contract laws of 
the EU countries where they target consumer s.  I t is r e a s o na b l e  to a ss um e  tha t t he s e exporters have not consulted a lawyer on fo reign law at all.; the range of costs is 
therefore reduced accordingly. 
61 Estimates based on the SME Panel survey show that the transact ion costs are higher for businesses selling online, compared t o face-to-face. While the average transaction 
costs in B2C are estimated between €8,695 and €9,565, for companies selling online th e average costs are €1 1,875- €13,541. Ther efore, both in the high and low estimate the 
additional costs for e-commerce amount to approximately  €2,900. The costs are estimated based on the formula: additional contr act law related IT costs * % of retailers 
exporting through e-commerce * aver age number of EU countries e xported to. See Annex III for deta iled methodology of calculatio ns. 
62 The costs include adapting the web-site so that it can recognis e the consumer's country of residence and retrieve the correc t set of pages. See FSB, Response to the Green 
Paper on policy options for progress towards a possible European contract law for consumers and businesses , p. 3; see FSB  Pos ition Paper on Rome I, p. 3. 
63 See also Annex III.  
64 According to EB 320, p. 61: respectively 5%, 10% and 15% of the respondents considered this was a barrier which impacts thei r decision to sell cross-border.  
65 EB 320, p. 61. 
 
 15sign the contracts as they stand and hope that no legal problems will arise in future.  
 
For B2B transactions the averag e transaction costs per compa ny per MS range from €9,000 to 
€10,658.66 These costs are estimated based on companie s' responses to a business survey and the 
range is verified by another source.67  
 These transactions costs occur when a business agr ees to apply a foreign law to the contract. This 
usually affects the party with  the weaker negotiating power,
68 which is often an SME. In their 
relations with companies with more bargaining power  SMEs may have to agree to apply the law of 
their business partner. Thus, they  bear the transaction costs of finding out about the content and 
consequences of the foreign law applicable to  the contract. In cont racts between SMEs of 
comparable bargaining power the need to negotiate the applicable law may be a significant obstacle 
for both parties, as none of them may be familiar and willing to accept the law of the other partner.69 
Practically, the most frequently chosen foreign laws are the law of the business partner (14.6%), 
international legal instruments, including the Vienna Convention (9%),  or the law of a third country 
(0.6%).70 According to a conservative estimate of B2 B transaction costs on the basis of only the 
14.6% of companies which most frequently apply the law of th eir business partner,71 the cumulative 
sunk contract-law related costs incurred fo r B2B trade range between approximately €2 and €5 bn.72 
These estimates are used throughout th is report. However, if one would also consider the costs of the 
9.6% of companies applying the laws  of a third country or internat ional instruments the cumulative 
B2B costs would increase to about €3 to €6 bn.73  
 
• Cumulative transaction costs for the EU economy (B2C and B2B costs combined) 
 
The estimate of overall cumulative transaction cost s for currently exporting companies in B2C and 
B2B stemming from fragmentatio n in national contra ct law is therefore in the range of €6-€13 bn .74 
This estimate is conservative, for the following r easons: Firstly, it is base d on the assumption that 
some companies do not investigate foreign law in a dvance of exports.75 For instance, assuming that 
all B2C exporters would consult a lawyer on the a pplicable foreign law, the costs would be even 
higher in the range of about €7 bn and €15 bn.  Secondly, the estimate only considers the sunk one-
off costs (incurred by the 9.3% of EU businesses which are currently invol ved in EU cross-border 
trade in goods) whose scale can be estimated with  reasonable certainty and does not include ongoing 
compliance costs and litigation costs.  
 
                                                 
66 See Annex III for detailed explanations. 
67 The estimate is based on the aggregated data from the SME Panel survey. It is verified by the results of the EBTP panel surv ey, which give the range of €11,132 – 
€14,704. 
68 EB 320, p. 27: While 24% of respondents said they frequently a pplied another than their national  law, this percentage is lik ely to be higher as 17% of the respondents 
were not able to (or did not want to) answer the question: "Which  contract law most often govern s your business-to-business cro ss-border transactions in the EU?" 
69 See response to the Green Paper by the Scottish Law Commission, p. 5. 70 EB 320, p. 27. 
71 It is assumed that the companies which frequently apply the law of their business partner would bear additional transaction costs for each MS they enter 
72 The costs are estimated based on the formula: number of exporting businesses * % of companies usually applying the law of th eir business partner in cross-border 
transactions * transaction costs of entering one additional MS * average number of EU countries a business exports to. See also  Annex III. 
73 These 9.6% of companies are likely to pay the transaction costs once, while trading with multiple MS based on the same law, e.g. Common law or Swiss law or the 
Vienna Convention.  
74 See Annex III for detailed explan ations on transa ction costs.  
75 EB 320, p. 57, suggests that 15% of exporting businesses do not know what law applies to their contract and EB 321, p. 58, f ound that 18% of exporting retailers are not 
informed at all about consumer protection provisions in the contr act laws of the EU countries where they sell to final consumer s.  
 
 16However, more transaction costs for the EU eco nomy occur annually, as new EU exporters (14.6%76 
yearly)77 pay transaction costs for en tering cross-border trade. Thus , the annual transaction costs 
amount to approximately €0.9-€1.9  bn, considering that not all exporters consult a lawyer.78 In the 
absence of action, by the year 2020 they would accumulate to €9-€19 bn  if the same level of export 
entry persists. The annual costs would be substa ntially higher if the ongoing annual compliance costs 
were indeed significant, as some business representatives pointed out.79 However, they are not 
included in this estimate, due to la ck of more representative data.  
  The impact of transaction costs is likely to va ry depending on the size of the company and would 
affect mostly micro and small enterprises. The sm aller a company turnover the greater the share of 
the transaction costs, as shown by Table 2. No tably, the impact on micro-enterprises is 
disproportionately high: for a micro enterprise e xporting to 3 MS the trans action costs could amount 
to 1/5
th of the annual turnover. Moreover, the costs fo r a micro retailer wish ing to export to the 
whole of the EU, for instance through e-commerce, could exceed its annual turnover. This situation 
is detrimental to intra-EU trade on the whole, as micro enterprises account for more than 90% of all 
EU companies.80  
 Indeed, survey data indicates that the overwhelm ing majority of companies interested, but not 
involved in cross-border tr ade are micro enterprises.
81 This could be an indication that the costs may 
dissuade many micro companies with no cross-border experience from even starting cross-border 
activities. This situation is cont rary to the Europe 2020 objective to achieve an inclusive growth in 
the internal market, reiterated in the Single Ma rket Act, which highlights the importance of 
facilitating the development of  small and micro enterprises.82   
 
Table 2: Transaction costs as a percentage of annual turnover  
  Manufacturing Wholesale and retail trade 
  Average 
annual 
turnover per 
firm1 Number of MS entered (with transaction costs per MS 
= €9 000)  
 Average 
annual 
turnover per 
firm1 Number of MS entered (with transaction costs per MS 
= €9,000) 
    1 MS 2 MS 3 MS 4 MS 26 (whole 
EU)    1 MS 2 MS 3 MS  4 MS 26 
(whole 
EU)  
Micro 214 791 4.19% 8.38% 12.57% 16.76% 108.94% 138,110 6.52% 13.03% 19.55% 26.07% 169.43% 
Small 2 703 212 0.33% 0.67% 1.00% 1.33% 8.66%  3,658,098 0.25% 0.49% 0.74% 0.98% 6.40% 
Medium 18 344 866 0.05% 0.10% 0.15% 0.20% 1. 28% 10,524,563 0.09% 0.17% 0.26% 0.34% 2.22% 
Large 237 342 066 0.00% 0.01% 0.01% 0.02% 0.10% 397,210,535 0.00% 0.00% 0.01% 0.01% 0.06% 
1.Source: Eurostat structural business statistics 
 
Example: A small business limits its cross-bord er trade because of high transaction costs  
A British company of 6 people producing designer hats becomes fa mous after a celebrity wears one of its hats on Ladies' Day 
at Royal Ascot. Now that its products ar e popular, the company receive s enquiries from all over Europe. It decides to set up an  
online shop which would be accessible by clients in the whole of the EU. For this purpose, the company contacts a lawyer and a 
software developer.  
                                                 
76 Eurostat database DS-056329-1: Trade by activity and enterprise size class. 
77 The estimate of 14.6% does not reflect that some of the new exporters may have alread y exported in the past and incurred the  transaction costs. However, this is partly 
balanced, as this estimate does not include companies which already export and want to expand their operations to more EU count ries. See Annex III for explanations. 
78 Simplified estimate: approximately 6 bn*14.6%= €0.88 bns; 13 bn*14.6%= €1.90 bn. For more precise explanations, see Annex II I.  
79  Deutscher Industrie-und Handelwkammertag (DIHK), Position Pa per on the Feasibility Study carried out by the Expert Group on  European contract law, p.2. 
80 According to the figures underlying the Small Business Act, micro enterprises account for 91.8% of all EU enterprises.  
81 The sample of respondents to the EB 320 and EB 321 show that 86% of the surveyed companies that were interested, but not inv olved in cross-border trade were micro 
enterprises.  
82 Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committ ee of the Regions, Single Market 
Act, Twelve levers to boost growth and strengthen confidence, Wo rking together to create new growth, COM(2011) 206 final of 13. 4.2011, p.5. 
 
 17 
The lawyer advises to hire an expert in contract  law from each relevant country as it wo uld be necessary to check the relevant 
national consumer contract laws and possibly draft an amended set of country specific terms and conditions. This could cost 
around €8,850 per country (5 days work billed at €295 per hour). The market entry cost for all the other 26 MS would therefore 
be €230,100. The software developer  explains that the current website needs to be  adapted to reflect the legal requirements for 
each country they sell to: it needs to determine the consumer 's country of residence, locate and retrieve the correct set of pa ges 
and display them in a correct language. This adaptation would take  between 2-6 weeks at a cost €1,550 per week. Thus, the cost 
per country would be at least €3,100 and upon entering the other 26 MS this would rise to €80,600.  
 
The transaction costs for offering products in the whole of the EU would be about €310,000. This would be 50% more than the company's complete turnover of the previo us year. Upon seeing the amounts, the co mpany decides that the maximum it can 
afford would be €25,000 - the approximate costs of entering two additional MS. It decides to offe r products only in the larger 
markets of Germany and Fr ance instead of selling it to all the other countries.
 
 
2.3.3.  Driver 2: Perceived increased legal complexity hinders cross-border trade  
 
The perception of legal complexity is an additional factor affecting the decision to start cross-border 
trade. Out of 11 obstacles to cross-border trade th e difficulty in finding out a bout the foreign contract 
law affected the highest percenta ge of export oriented  businesses (40% of respondents experienced 
an impact) for B2C83 and a slightly lower percentage (35% of respondents) for B2B transactions84 
(see Annex IX). Out of the companie s with an interest, but no cro ss-border experience 44% involved 
in B2C and 51% in B2B transactions regarded this as a barrier.85   
In B2B transactions the complexity results from th e frequent need to adapt to the national laws of 
business partners, as is the case for at least 14.6% of companies involved in cross-border trade.86 In 
B2C transactions the companies need to be aware of applicable mandatory provisions of the national 
law of the consumers towards whom they direct their activities. 61% of businesses with no cross-
border experience are not at  all or not well inform ed about such provisions.87 Thus, a legal 
environment characterised by complexity and hi gh costs for overcoming is likely to dissuade 
companies from commencing cross-border trade.   
2.4.  Problem 2: Consumers are hindered fr om cross-border purchases and miss 
opportunities 
 
The level of cross-border shopping in the EU re mains relatively low with 26% of consumers 
purchasing from another EU country when they travel88 and 9% from a distance.89 Barriers on the 
supply and demand side appear to hinder its growth. On the supply side, businesses limit their cross-
border operations and may refuse sales to consumers in other MS (e.g. because of costs related to the 
mandatory provisions of the consumer's national la w). On the demand side, mo st consumers are still 
reluctant to shop cross-border, as the low level of  cross-border e-commerce il lustrates: while 33% of 
consumers purchased products onlin e in their own country, only 7%  made purchases cross-border.90 
The barriers reinforcing this reluctance are regulatory barriers (mostly related to contract law provisions protecting the consumer e .g. remedies for faulty goods, delivery
91 and availability of 
redress)92 and practical barriers (e.g. language, geogra phical location, access to  the internet).  
                                                 
83 EB 321, p. 19.  
84 EB 320, p. 15. 
85 EB 320, p. 63; EB 321, p. 64. 86 EB 320, p. 57: 14.6% of respondents said they frequently applied the law of their business partner in their cross-border B2B  transactions.  
87 EB 321, p. 58, on awareness of consumer protection provisions in the contract law of other MS by respondents who are interes ted, but not yet trading cross-border. 
88 EB 299 Cross-border trade and consumer protection, 2010, p. 23. 89 EB 299, p. 23. 
90 EB 299, p. 13. 
91 Problems of delivery may be of a regulatory (different cont ractual rights, availability of re dress to enforce these rights) or practical (transport and logistics) nature.  
92 This report acknowledges the importance of all existing barriers to cross-border shopping.    
 
 18While the impact of practical ba rriers is gradually decreasing,93 the importance of the regulatory 
ones remains high. They are key factors for consumer confidence in  cross-border shopping.94 The 
Commission is tackling the regulatory barriers with several initiatives.95 This IA addresses the 
contract law related barriers.  
 
2.4.1.  Driver: Contract law differences im pact negatively upon cross-border 
shopping 
 
Contract law includes rules protecting consumers en tering into economic transactions. The certainty 
about the content of thes e rules is a major factor determining consumer confidence in cross-border 
shopping. Certainty decreases when consumers are confronted with the complexity of different 
foreign laws and the subsequent un certainty about their rights in a cross-border context. As a result, 
many consumers are dissuaded from purchasing cro ss-border: 44% of Europ ean consumers say that 
uncertainty about their consumer rights in general discouraged them from purchasing from other EU 
countries.96 When asked about specific problems, a significant percentage of EU consumers 
expressed concerns related to right s regulated in contract law in particular. For instance, 57% were 
dissuaded by the uncertainty abou t their rights in case of faulty  products and 47% in case of non-
delivery.97 For instance, in a study on online shopping 26%  out of the participants who had problems 
in online cross-border shopping said that delivery took t oo long; 20% were not delivered the product 
at all and for 18% the delivered product di d not match the description on the web-site.98  
 When such problems arise consumers have to rely on their contractual rights. Based on these rights 
consumers can use remedies for non-performance. However, in a cross-bor der context they may 
need to deal with increased legal complexity. De pending on the law which applies to the contract, 
the level of consumer rights the selle r is obliged to respect may differ. 
 
 
Moreover, the conflict of law rules which determin e which law applies in cross-border transactions 
do not protect the pro-active consumers who shop cr oss-border. The Rome I Regulation only grants 
the consumer the protection of the mandatory rules of his own national law in case the trader directs 
its activities99 to the MS where the consumer is domic iled. If the trader does not envisage doing 
business with consumers from another MS, but agrees  to contract with them at the consumers' own 
initiative, the consumers do not benefit from the pr otection rules of their national law. In the latter 
situation, consumers who are used to  certain rights in their own count ry may not have the same level 
of protection if they  contract with a foreign trader. For in stance, as regards remedies for faulty 
goods, when consumers shop cross-border, under the laws  of some countries they have to notify the 
trader if the goods they bought are de fective. If they do not do this they will lose their rights to a 
remedy. In other countries this notif ication duty is not required. This  can lead to a situation where 
the consumer does not notify the business because he does not know about this duty from his own law and therefore inadvert ently loses his right to a remedy. Furthermore there may be differences in 
the way consumers can exercise a given right. For in stance, in the case of faulty products, only in a 
handful of the 27 MS can consumers choose between  the remedies of repair, replacement, reduction 
                                                
 
93 EB 299, p. 6: A higher number of consumers (39%) are prepared  to purchase products using another EU language (compared to 33 % in 2006) and fewer consumers 
(25%) are not interested in cross-border  shopping because of lack of internet access (compared to 39% in 2006). 
94 EB 299: While 47% - 57% of EU consumers did not shop cross-border due to various regulatory barriers, only 25% did not do it  due to lack of internet access. 
95 The Commission is also preparing a legislative initiative on ODR aimed at giving consumers the possibility to have easier ac cess to online dispute resolution. If it is 
necessary to resort to court procedure the EU has adopted the small claims procedure. The Commission will adopt guidelines for the effective application of provisions of 
the Services Directive to combat the disc rimination against recipients of services. 
96 EB 299a, p. 5. 97 EB 299, p. 30: Problems of delivery may be of a regulatory (d ifferent contractual rights and redress to enforce them) or a p ractical (transport and logistics) nature.   
98 Preliminary data, forthcoming Consumer Market Study on the func tioning of the e-commerce in goods, Civic Consulting: 16% out  of the respondents who had problems 
in online cross-border shopping were delivered a damaged product , 13% received the wrong product, 5% could not return a product  they did not like and get reimbursed and 
4% were refused replacements or repair of a faulty product by the business. 
99 This concept has been clarified by the ECJ in the Pammer and Alpenhof Judgments (C-585/08 and C-144/09).  
 
 19in price or reimbursement. However, in most MS th ey would initially be enti tled only to repair and 
replacement.     
Example: a consumer uncertain ab out his rights is dissuaded from cro ss-border shopping  
 
Manuel is Portuguese and he lives in Lisbon. His partner Jo ana is a student, who receive d an Erasmus scholarship and 
is spending a semester in Berlin. On her birthday she will have to study in Berlin for an exam. Manuel wants to surprise her with a present. He decides to give Joana a watch and finds a beautiful watch for €1 50 in a French online shop. 
Luckily they deliver to Germany. However, Manuel has doubts: What if the watch gets damaged on the way and does 
not work? Would Joana have the right to return the watch, like they do in Portugal? Would she herself have to pay the 
additional delivery costs for retu rning the watch? Or if she r eally wanted to keep the watc h, could she replace it? If so, 
who would bear the costs for th e replacement? With all those questions in mi nd, Manuel thinks it is better to be safe 
than sorry. He decides to buy Joana a present in Lisbon and to give it to her in person when they see each other in two 
months. 
 
 
Furthermore, at least a third of consumers have wr ongful expectations about the applicable law in a 
cross-border context.100 While it is usually indi cated in the terms of the contract, the majority of 
consumers do not always check this clause. 101 Moreover, most consumer s either do not read the 
terms and conditions (27%) or do not read  them carefully and completely (30%).102 Thus, the 
majority of consumers may not be fully aware of their rights.   With a relatively high uncertainty ab out their rights, most consumers do not feel as conf ident to shop 
cross-border, as they do domestically. Almost half of EU cons umers (48%) are more confident when 
ordering products online from traders based in thei r own country than from those in other parts of 
the EU.
103 Moreover, a clear majority  (56%) of Europeans thought that suppliers from other EU 
countries are less likely to respect consumer pr otection laws than those from their home country.104 
Notably, concerns relating to co ntract law have a greater impact  upon consumers with no cross-
border shopping experience - currently the majority.105 These concerns will not entirely be removed 
even after the adoption of the CRD, which will not regulate some of the key problematic areas, such as remedies for faulty goods. Therefore, pro-activ e consumers interested in  cross-border shopping to 
a large extent will still have to deal with a hi ghly complex legal environment, which discourages 
many from taking advantage of the internal market.  
2.4.2.   Consumers miss out opportuni ties of the single market  
Consumers who are deterred from cross-border shopping may be disadvantaged within their 
domestic market. Due to substantial differences in price and choice across the EU, the best offers can 
often be found in another EU country.   
• Higher prices and restricted choice : The average differences in price for consumer goods  
across MS, as shown in table 3, amount to approximately 24%.
106 The high price differences in the 
EU are particularly visible online: A basket of 124 consumer goods could be bought online much 
cheaper in the UK, followed by Germany and Italy, while Denmark and the Netherlands had the 
                                                 
100 EB 342 Consumer empowerment survey, p. 122-125. 
101 Allen and Overy, On line consumer research, 2011: 54% of  consumers in the 6 largest EU MS  never or only o ccasionally check w hich country's laws govern the sellers 
terms and conditions. 102 EB 342, p. 122-125; Allen and Overy, Online consumer research, 2011: 52% of the consumers in the 6 largest EU MS never (5%) or only occasionally (47%) read the 
terms and conditions when purchasing online.  103 EB 299, p. 25. 104 EB 252, Consumer protection in the internal market, 2006, p. 55. 
105 EB 299a, p. 10: uncertainty about their contractual rights wh ich 45% of consumer with no cross-border experience perceived,  dissuaded from purchasing cross-border. 
Out of the consumers who had cross-border shopping experience, 26% were uncertain about their rights. 106 Eurostat, Statistics in focus 50/2009. 
 
 20highest average prices.107 Further evidence suggests that consum ers in smaller MS , notably Malta, 
Cyprus, the Czech Republic, Slovakia and Slovenia,108 are particularly di sadvantaged by higher 
prices.   
Table 3: Price differences of consumer goods across the EU  
 
 
Source: Eurostat 2009, Statistics in focus 50/2009 
 
A recent mystery shopper study109 testing the availability of online offers also demonstrated the price 
discrepancies across EU countries. In 50% or more  of the cases consumer s in 13 MS could have 
bought products at least 10% cheaper ab road than in the domestic market.110 Likewise, there were 
discrepancies in choice: in over 50% of the pr oduct searches for 100 popular consumer product, 
products were not available domes tically online in 13 MS. Indeed, a better price is  the decisive 
factor for purchasing cross-border for 65% of consumers shopping online,  while the unavailability of 
a product in the consumer's c ountry is decisive for 56%.111 
 Nevertheless, a substantial numbe r of consumers prefer to shop domestically, due to uncertainty 
about their rights in cross-border shopping. They do not  even try to access better offers elsewhere in 
the EU and are often disadvantag ed by the limited choice and high er prices in their domestic 
markets. If the 44% who are uncertain about their rights in cross-border shopping
112 out of the group 
of consumers who shop online only domestically would make at least one online cross-border 
purchase, these consumers could save €380 million.113 
 
Example: a consumer who does  not shop cross-border fa ces higher prices at home 
 
Mrs Korhonen lives in Turku, Finland. Her daughter Taru works in Paris. When returning to Finland, Taru is always 
shocked by the prices she has to pay for the same products in Turku compared to Paris. For example, clothing and 
footwear are about 30% more expensive in Finland than in  France. Taru tries to enco urage her mother to start 
shopping online and buy products like shoes of her favourite brand from France online. She could pay €110 
(including the delivery costs) compared to €150 she pays in Turku. Her mother , however, is sceptical and asks "what 
if the delivered shoes are of a different size than I ordered? Can I send them back? What if the so le wears out only 
after a week – can I ask for a replacement?" Mrs Korhonen is uncertain whether she would have the same rights she 
enjoys in Finland and is confident about than, if she shops cross-border, and decides that it is safer to buy the shoes 
at a much higher price from the high street shop she goes to in Turku. 
 
                                                 
107 Kelkoo European Online Price Index , conducted among 10 European countries and the USA, March 2011. The study is based on a n average price index comparing over 
a thousand prices for a basket of consumer goods. 108 Eurostat report (Borchert 2009), comparison of price levels of 2,500 consumer goods.  109 YouGov Psychonomics, Mystery Shopping Evaluation of Cross-border E-commerce in the EU, October 2009, p. 38 (YouGov Psychono mics). 
110 Portugal (70%), Italy (54%), Slovenia (72%), Spain (52%), Denmark (53%), Romania (54%), Latvia (50%), Greece (63%), Estonia  (59%), Finland (55%),  
Hungary (50%), Cyprus (50%) and Malta (50%). 
111 Civic Consulting, Consumer Market Study on the functioning of the e-commerce in goods, expected date of publication: Septem ber 2011.  
112 EB 299a, p. 5. 
113 Currently 33% of consumers above 15 years of age (this age group represents 84% of 500 million of EU citizens) shop online,  but only domestically. Assuming that 
44% out of this group would make at least one cross-border purchase on average of €52 (i.e. the average amount per credit card transaction, ECB, Value of credit card 
transactions divided by volume of credit  card transactions, ht tp://www.ecb.i nt/stats/payments/paym/ht ml/index.en.html), and tha t at least half of these consumers would find 
the product on average 24% cheaper than in their own country (Eurostat 2009, Statistics in focus 50/2009), these consumers woul d save around €380 million. Formula: 
44%*50%*33%*84%*500 000 000*52*24%= €380 540 160; Data sources: Euro stat Population database, ECB, Value of credit card transac tions divided by volume of 
credit card transactions: http://www.ecb.int/stats/payments/paym/html/index.en.html (last visited: June 2011).  Clothing (prices vis-a vis EU 27  
average= 100) Footwear (prices  
vis-a vis EU 27  
average = 100) Consumer electronics 
(prices vis-a vis  
EU 27 average= 100) Household appliances 
(prices vis-a vis EU 27  
average=100) 
Most costly country Finland = 123 Finland=121 Cyprus=120 Malta=141 
Cheapest country UK= 83 Bulgaria=80 UK=86 UK/ Bulgaria=84 
Difference in % 48% 51% 39% 68% 
 
 21• Refusal to sell due to contract law related  barriers hinders consumers from purchasing 
cross-border  
 
Survey data shows that almost a quarter of export- oriented European retail ers refused sales due to 
contract law.114 Scaling up the data to EU level imp lies that 9,000 companies refused often or 
always, while 33,000 did so occasionally.115 It is difficult to identif y though how many consumers 
were affected by the refused sales due to contract law. One company may refuse orders of multiple consumers and contract law may be only one reason.
116 However, the number of consumers who 
were affected by the refusal of sale s for whatever reason is  established. Survey data suggest that at 
least 3 million consumers117 said that they experienced the refusal of a sale or delivery from another 
EU country within one year.118 This percentage ranged widely be tween 4% of consumers affected in 
Belgium to 22% in Ireland and 28% in Malta.119 A person who engages in multiple transactions may 
experience the refusal of sale many times. A study where mystery shoppers tried to perform 10,964 
cross-border test transac tions showed that 61% of the attempts  to purchase cross-border products 
would have failed.120 In 50% of the cases121 traders refused to serve the consumer's country. Contract 
law accounts for a proportion of these cases; howev er for the reasons mentioned above, the exact 
proportion is difficult to identify.    The refusal of sales may dissuade proactive consumers from shoppi ng cross-border and may 
disadvantage them economicall y. European consumers spend 
€42.3 bn annually on cross-border 
purchases. Assuming that within a year the 3 million consumers w ho experienced a refusal to sell122 
were refused an order of a product of an average value of €52 ,123 the value of failed transactions 
would be €157 million.124  
 
Example: a Cypriot consumer is refused a better cross-border offer  
 
Eleni is a 20 year old Cypriot. She loves photography and would love to buy a new camera with an advanced zoom lens 
to take pictures of butterflies. The pr ice of such a camera in Nicosia is aro und €1,540. Eleni work s the whole summer 
as a lifeguard at a hotel swimming pool to save this money. There she meets Ben, a young Briton, who is spending his 
summer holidays in Cyprus. Ben mentions that the average pri ces for cameras he has seen in the UK were considerably 
lower. Eleni starts searching online and indeed finds offers fo r the same camera sold in th e UK about €500 cheaper than 
in Cyprus. She thinks that the delivery costs to Cyprus could not be more than €50. This means that she would need to 
spend only €1,100 instead of €1,540 to buy the camera of he r dreams. She contacts the shop, but they reply that they do 
not accept international orders. Eleni find s another shop the website of which is available in French and German. There, 
the camera cost €1,110, a bit more than in the first shop but it is still a good deal. She contacts the shop and gets the 
similar answer "we deliver only to France, Belgium, Luxembourg and Germany". After a third unsuccessful attempt, 
                                                 
114 EB 321, p.29: 1% of export-oriented retailers said that they always refused sales due to differences in consumer contract l aws; 4% did so often and 18% did not very 
often.  The overall number of retailers whic h refused cross-border orders is likely to  be significantly higher, as the survey d ata does not cover businesses which do  
not export. This is the overwhelm ing majority of retailers (4,420,563 out of 4, 605,233 according to data  from Eurostat's Struct ural Business Statistics, 2007).  
115 EB 321, p. 29: 5% of retailers with experience or an interes t in exports refused sales to consumers in other MS often or al ways and 18% occasionally. Considering that 
the number of exporting retailers is 184,670 the number of them  which refused sales equals 5%*184,670 – always or often and 18% *184,670 – occasionally.  
116 Matrix Insight Business practices applying different condition of access based on the nationality or the place of residence  of the service recipients, 2009, p. 35: the study 
found that companies may refuse sales for a range of reasons, inc luding legal and regulatory considerations, as well as supply and demand related drivers.  
117 EB 299a, p. 6: 8% of the consumers who had made cross-bord er distance purchases over the internet, postal service or by pho ne (9% of consumers above the age of 15 
years) were refused cross-border offers. Formula: 8%*9%*84%*500,000,000= 3,024,000. 
118 EB 299a, p. 9. 119 EB 299a, p. 9. 120 YouGov Psychonomics, p. 24. 121 YouGov Psychonomics, p. 24. 122 EB 298, p. 16. 
123 The average amount per credit card transaction (ECB, Value of credit card transactions divided by volume of credit card tra nsactions, 
http://www.ecb.int/sta ts/payments/paym/h tml/index.en.html). 
124 8%*9%*84%*500,000, 000= 3,024, 000 * €52 =157,248,000. 
 
 22Eleni gives up and buys a camera in a shop in Nicosia paying €1,540. She still cannot understand why the UK shops 
refused to sell the camera to her. She could have saved €500 and bought with that money an extra zoom lens to take 
even better pictures of butterflies. 
2.5. Need for action at EU level and subsidiarity  
 
• Right to act 
The Union's right to act in this field is set out  in Article 114 TFEU, which provides that the Union 
shall adopt the measures for the approximation of the provisions la id down by law, regulation or 
administrative action in MS which have as thei r object the establishmen t and functioning of the 
internal market.125  
 
• Subsidiarity 
This initiative complies with the principle of subs idiarity for a number of reasons. The objectives of 
facilitating the expansion of cr oss-border trade for business and purchases by consumers in the 
internal market cannot be fully achieved as long as bus inesses and consumers cannot use a uniform 
set of contract law rules for th eir cross-border transactions. Th e current legal framework is not 
sufficient, as it lacks single set of uniform su bstantive rules which cover comprehensively the 
lifecycle of a cross-border contract . Furthermore, as market trends evolve and prompt MS to take 
action independently (e.g. in regulating digital cont ent products) regulatory divergences grow. They 
lead to increased transaction costs and legal complexity for business, as well as uncertainty, affecting businesses and consumers involved in  cross-border transactions.  
 A number of stakeholders acknowledge  that the existence of differences  in contract laws have led to 
legal fragmentation which can affect the functio ning of the internal market; this may entail 
additional transaction costs and le gal uncertainty for business and a lack of consumer confidence.
126 
The Union is best placed to address obstacles to  the functioning of the internal market as these 
obstacles have a clear cross-border dimension. More sp ecifically, it is best pl aced to address contract 
law related obstacles by developing a single set of uniform substantive contract law rules. It will add 
value to the existing legal framework by creating such rules for consumers and businesses that 
engage in cross-border transactions.  
 
3. POLICY OBJECTIVES  
 
The overall objective is to support the economic ac tivity in the internal market by improving the 
conditions for cross-border trade for the benefit of businesses and consumers. The improvement should be achieved by reducing the barriers cause d by differences in contract law between MS. 
 
General objective 1 – Businesses 
 
Facilitate the expansion of cross-border trade in the 
internal market General Objective 2 – Consumers 
 
Facilitate cross-border purchases by consumers in the internal market 
Specific objectives 
• Increase number of comp anies starting cross-border 
activities  
• Increase number of companies expanding their 
activities to more MS  Specific objectives 
• Increase in consumer confidence in 
shopping cross-border 
• Decrease number of consumers who 
experience refusal to sell  
• Improve access to offers from across 
                                                 
125 Furthermore, according to Article 114(3) TFEU, when submitting proposals, the Commission must take as a base a high level o f consumer protection.  
126 Response to the Green Paper by Member States, such as the Government of Luxembourg, p.2-3,  or the Netherlands, p. 1;  busi ness stakeholders, such as 
BusinessEurope, p.2, British Retail Consortium, p.2, Federation of Small Businesses in the UK, p.3,  Association des Banques et  Banquiers, Luxembourg, p. 1-2, CEA, 
Insurers of Europe, p. 1, LVMH, p. 2, or Nokia Corporation, p.2; or others like the Scottish Law Commission, p.4 and the CEP, C entrum für Europäische Politik, p. 3. 
 
 23 the EU 
Operational objectives  
• Reduce additional transaction costs when trading 
with more than 1 MS 
• Reduce legal complexity in cross-border trade   Operational objectives 
• Ensure high level of consumer 
protection 
• Reduce uncertainty about 
consumer rights in cross-border 
shopping 
 
Compliance with horizontal EU policies  
The above objectives are in complia nce with the horizontal policies of  the EU. The need to tackle 
barriers posed by differences in contract law is rec ognised in a number of st rategic documents for the 
EU, such as the Commission's Europe 2020 Strategy ,127 the Digital Agenda for Europe ,128 the 
Review of the Small Business Act ,129 the Single Market Act130 and the Action Plan for Implementing 
the Stockholm Programme .131 
 Moreover, the objectives of this initiative contribut e to the achievement of the strategic objectives 
for the development of the Single Market, highli ghted in the Europe 2 020 strategy. Europe 2020 
states that often, businesses and ci tizens still need to deal with 27 different legal systems for the 
same transaction in the context of the bottlenecks to the Single Market. It is noted that the access for 
SMEs to the Single Market must be improved and th at citizens must be empow ered to play a full 
part in it. This requires streng thening their ability and confidence to buy goods and services cross-
border, in particular on-line.  Making it easier and less costly for businesses and consumers to 
conclude contracts with partners in other EU c ountries is foreseen as one of the actions the 
Commission will propose in order to tackle the remaining bottlenecks in the Single Market.   
 
4. POLICY OPTIONS  
This initiative focuses on the obstacles that differences in contract law pose to cross-border trade in 
goods as demonstrated in Section 2 on the Problem  Definition. The policy options examined focus 
on the areas of contract law that ar e most relevant for addressing the problems identified, i.e. sales of 
goods and digital content.
132 These contract law areas will be referred to as a Common European 
Sales Law . The notion of a Common Europ ean Sales Law is introduced for the purpose of accuracy, 
as the concept of European contract law  is very broad and it also includes a number of other contract 
law areas that were not addressed by this initiative.  
4.1. Options for type of intervention 
• Option 1: Baseline scenario (No policy change) 
                                                 
127 Communication from the Commissi on, Europe 2020, A strategy fo r smart,  sustainable and incl usive growth, COM(2010) 2020 fin al, p. 21, 3.3.2010; See also Annual 
Growth Survey, Annex 1, progress report on Europe 2020 (COM(2011) 11 - A1/2) p. 5. 128 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and t he Committee of the Regions, A 
Digital Agenda for Europe, COM(2010) 245 final ,26.8.2010, p. 13 and p. 37. 
129 Communication from the Commi ssion to the European Parliame nt, the Council, the European Economic and Social Committee and t he Committee of the Regions, 
Review of the "Small Business Act" for Europe, COM(2011) 78 final, 23.2.2011, p. 11 and p. 13. 
130 Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Commit tee of the Regions, Single Market 
Act, Twelve levers to boost growth and strengthen confidence, Working together to create new growth, COM(2011) 206 final, 13.4. 2011, p. 14 and p. 19.  
131 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and t he Committee of the Regions, 
Delivering an area of freedom, security an d justice for Europe's citizens, Action Plan Implementing the Stockholm Programme, CO M(2010) 171 final, p. 5 and p. 24, 
20.4.2010. 132 These are discussed in detail in section 4.2.3 on the Substantive Content and illustrated in Table 2 in Annex II. 
 
 24The current legal framework133 (including the CRD) could be main tained without further EU action. 
This option would also take into acc ount the text developed by the EG.134 Although not politically 
endorsed, it could be used by Eur opean and national legislators as  a source of inspiration when 
drafting legislation. In addition, c ontractual parties could agree to integrate the rules developed by 
the EG in their contracts.   
• Option 2: A toolbox for the EU legislator 
The toolbox could set out definitions , principles and model rules on t opics related to contract law 
that are likely to be subject to EU legisl ation. Two toolbox forms could be envisaged:  
a) Toolbox as a Commission document: The Commi ssion could adopt for instance a communication 
on a toolbox and commit itself to use the concepts  set out in the toolbox when preparing relevant 
legislative proposals. However the Counc il and EP would not be bound to do so.  
b) Inter-institutional agreement on a toolbox: An inter-institutional agreement between the 
Commission, EP and Council would bind the three in stitutions to use the toolbox concepts when 
drafting and negotiating legislativ e proposals related, except when ove rriding sector-specific reasons 
would lead to another result.  
 
• Option 3: Recommendation on a Common European Sales Law 
A Common European Sales Law instrument could be attached to a Recommendation addressed to 
MS encouraging them to incorporate it into their national laws voluntarily, al lowing them discretion 
on time, method and extent of implementation. Two possibilities can be envisaged for the 
Recommendation, which could encourage MS to: 
a) Replace
 their respective national contract law rules with a Common European Sales Law 
instrument. A similar approach has been impl emented in USA: the Un iform Commercial Code 
(UCC) was agreed by experts in commercia l law and endorsed by ne utral, quasi-public 
organisations. The UCC has been adopted in the United States, ev en though with changes in some 
states.  
b) Incorporate  a Common European Sales La w instrument as an optiona l regime, which contractual 
parties from different MS could choose as an alternative to national law.  
 
• Option 4: Regulation/Directive setting up an optional Common European Sales Law 
An optional Common European Sales Law could be set up and used as  a 'second regime', co-existing 
in the national legal regimes with the relevant specific national laws as an alternative particularly suitable for cross-border trade. It would be a comp rehensive, self-standing set of contract law rules 
with a high level of consumer protection, which coul d be chosen by the parties as the law applicable 
to their cross-border contracts. Th is self-standing legal regime would allow businesses to use one set 
of rules irrespective of where in the EU they wi sh to sell their products. In B2C transactions, 
business would have the choice of proposing to apply the optiona l Common European Sales Law, 
while the consumer will be free to reject this offer and purchase the product from another provider under its domestic law. 
 
• Option 5: Directive on a mandato ry Common European Sales Law 
A mandatory Directive on Common European Sales La w could harmonise the na tional contract laws 
of the 27 MS. It would complement the consumer acquis  and would be base d on a high level of 
consumer protection, as required by the Treat y. It could take one of two forms:  
                                                
 
133 See section 2.2 and Annex II for further explanations.  
134 The publication of the work of the  EG was foreseen as option 1 in the Green Pa per. As it was published on 3 May 2011 on th e website of the Commission, at the time 
of the submission of this report this option is part of the baseline scenario.  
 
 25a) Full harmonisation Directive:  This would ensure that the same EU  contract law concepts apply in 
all MS and, for B2C contracts, would allow busine sses to apply the same c onsumer contractual rules 
in all countries towards which they direct their activities.  
b) Minimum harmonisation Directive: MS would be able to maintain or introduce more protective 
rules for B2C contracts, subject to compliance with  the Treaty. They would also have the freedom to 
choose the means necessary to implement the provi sions of the Directive.  However, businesses 
would still need to ensure comp liance with the different consumer  contract law rules where they 
have gone beyond the Directive in all those countries  towards which they direct their activities.  
 
• Option 6: Regulation establishing a ma ndatory Common European Sales Law 
A mandatory Regulation establishi ng a Common European Sales Law could replace all EU national 
contract laws with a uniform set of rules. This solution would remove legal differences in contract 
laws and lead to a uniform applic ation and interpretation of the provisions of  the Regulation. As 
regards the intended result, the outcome of this option is close to a full harmonisation Directive. 
Thus, the two options will be analysed jointly. 
 
• Option 7: Regulation establishing a European Civil Code 
A Regulation establishing a European Civil Code would create a uniform set of European civil law 
rules which would replace national laws. It would go a step further than the Regulation establishing 
a Common European Sales Law, as it would regulat e additional matters, for example tort law. Due 
to its broad scope such an instrument would minimi se the need to fall back on national provisions in 
related areas of law. 
 
• Discarded options  
• Option 3a: Recommendation encouragi ng MS to replace national laws 
• Option 7: Regulation establishing a European Civil Code 
Option 3a received hardly any support from the MS who responded to the Green Paper.135 Thus, it is 
practically not plausible, since MS would ha ve to implement the recommendation voluntarily. 
Similarly, the European Civil Code received hardly any support from MS at this stage. Moreover, it 
would go beyond what is necessary a nd would be disproportionate. It also raises serious issues of 
subsidiarity.  
 
4.2. Options for scope and content  
4.2.1.  Sub-option 1 for scope: B2C / B2B contracts  
• An instrument applicable to B2C contracts: It would contain provisions typical for consumer 
contracts, such as mandatory provisions ensuring a high level of consumer protection, but also rules 
of general contract law whic h would apply by default.  
• An instrument applicable to B2C and B2B contracts : In this sub-option, a distinction between 
provisions specific to consumer a nd business contracts would be n ecessary. Contrary to these B2C 
rules with specific consumer protection contents, almost all B2B rules would be default provisions 
which apply when parties have not  agreed on different terms.  
4.2.2.  Sub-option 2 for scope: Cross-border / domestic contracts 
• An instrument applicable to cross-border transactions : The instrument could be chosen only 
in a contractual relationship betw een parties across borders. In B2C contracts (in addition to their 
                                                 
135 Only the Czec h government said that it could accept option 3a in its response to the Green Paper,  due to its voluntary natu re. The Finnish, Hungarian and French 
governments also considered option 3 acceptable, without specify ing explicitly a preference for option 3a. However, considering  that these governments  particularly liked 
the voluntary nature of this option and rejected the binding op tions which require replacing their national laws, it would seem  unlikely that they would be willing to 
implement option 3a at this stage.  
 
 26national law which would apply to domestic transact ions with consumers) businesses would be able 
to sell to 26 other MS on the basis of  a single Common European Sales Law.  
• An instrument applicable to cro ss-border and domestic transactions: It would further 
simplify the regulatory environment, as business c ould operate domestically a nd in all other EU MS 
based on the same single Common European Sa les Law for both B2B and B2C contracts.  
4.2.3.  Sub-option 3 for substantive content: areas of law covered  
The Green Paper consulted on a narrow and a broad interpretation of the s ubstantive content.  
• A narrow substantive content : An instrument with a narrow content would be limited to rules 
on: definition of contract, pre-co ntractual duties, formation, right of withdrawal, representation, 
grounds of invalidity, interpretation, contents and effects of contracts, performance, remedies for 
non-performance, plurality of debtors and creditors , change of parties, set-off and merger, and 
prescription.  
• A broad substantive content : An instrument with a broad cont ent would cover a ll the areas of 
contract law mentioned above. In addition, it woul d cover areas, such as restitution, non-contractual 
liability, acquisition and loss of ownership of goods and proprie tary security in movable assets. 
Moreover, it could contain rules on specific services contracts. 
For the purpose of the current IA  a combination of the narrow an d broad content possibilities 
will be analysed.  This combination has been chosen, as it covers  the vast majority of usual practical 
problems within a life cycle of cros s-border contractual relationships.  
The contract law areas included  are those where most problems occur, namely pre-contractual 
duties, right of withdrawal, performance and non-pe rformance, which are currently largely regulated 
on a minimum level in the existing acquis. As repeated in many res ponses to the Green Paper, the 
instrument should in any case cover mandatory cons umer contract law rules, taking the Union acquis 
as a starting point. However, as these areas are intr insically linked to several areas considered in the 
narrow content (i.e. contract formation, grounds of invalidity, interpre tation, contents and effects of 
contracts, and prescription), it is reasonable to in clude them too. Furthermore, the area of restitution 
(mentioned in the broad content) should also be included, as it deals with the consequences of 
withdrawal from, termination or avoidance of the contract.   Including digital products
136 is justified to ensure consistency with the CRD which includes rules on 
digital products in its scope and contains rules on pre-contr actual information and right of 
withdrawal for them. The Common European Sales Law instrument will take over the respective 
rules from CRD. As the Common European Sales Law instrument would al so include the added 
value of complementing them by uniform rule s on remedies, these rules would also (with 
appropriate adaptations) apply to digital products. A uniform and comp rehensive set of contract law 
rules applicable to digital products  would facilitate the cr oss-border trade in this  sector, by reducing 
transaction costs and incr easing legal certainty.  
 Other contract law areas were excluded . They include representatio n, plurality of debtors and 
creditors, change of parties, se t-off and merger (under sub-option 3.1 ). Discussions in the EG and the 
stakeholders expert group led to the conclusion that they do not generate many problems in cross-
border contractual relationships. Furthermore, services contracts  in general were excluded from the 
scope for two main reasons: services are very heterogeneous (e.g. they include many different 
categories like contracts for transport and hairdre ssers) and therefore are co mplicated to regulate. 
Furthermore, there was minimal support for their in clusion by the respondent s to the Green Paper. 
While financial services received some support, it was considered th at they are tota lly unrelated to 
sales. It is therefore practically impossible to deal  with them in the same instrument. On the other 
hand, specific services contracts (e .g. maintenance and repair) which are directly related to sales, 
                                                
 
136 Digital product are currently not regulated under EU law: they are excluded from the scope of the Sale of Consumer Goods Di rective. The Directive only applies to 
tangible goods. They were also not included in the scope of the Pr oposal on Consumer Rights Directive, but negotiations have ch anged this. 
 
 27provided by the seller and concluded at the same time as the sa les contract are intrinsically linked to 
sales contracts. Therefore, th ey could not be left out.  
 Other areas of law excluded were non-contractual liability, acquisiti on and loss of ownership of 
goods and proprietary security in movable assets. A study conducted during at an earlier stage of the 
work on European contract law found that no seri ous problems existed in these areas in a cross-
border context.
137 In the field of property law the only probl ems concerned the issue of retention of 
title clauses, but this is d ealt with to a large extent in the Late Payments Directive.  Other areas of 
property law are not envisaged for regulatio n at EU level, considering also that  Article 345 TFEU 
states that the EU shall not prejudice the rules in the MS governing the system of property 
ownership.  
 
This scope has largely been determ ined based on the advice of the EG and the stakeholders expert 
group. The feasibility study of the EG  reflects this approach and contai ns a self-standi ng set of rules, 
developed within 19 chapters (see Annex on Lega l Framework for details). In determining the 
appropriate substantive content th e Commission took into account the stakeholder concerns that the 
instrument should be user-friendly, practical and that it should have  a balanced level of consumer 
protection.  
 
• Key substantive provisions  (See Annex VIII on Substantive provisions for details) 
The key provisions analysed in detail in An nex VIII would produce significant impacts upon 
stakeholders. They include consumer protection provisions (e.g. pre-contractual information, 
remedies for non-performance, burden of proof, damages) and SMEs protection provisions (pre-
contractual information, surprise cl auses, unfair terms, penalty clau ses control). While there may be 
numerous variants for each individu al provision what matters most is that the instrument as a whole 
strikes a reasonable balance, so that it suits the in terests of business and gain s the trust of consumers 
in line with the objectives in section 3. While most of  the provisions lead to an increase in the level 
of protection compared to the ex isting acquis and the national laws of a representative selection of 
MS, the analysis found that they strike a reasonable balance.  
 
5. ANALYSIS OF IMPACTS138 
  For further description of the assumpti ons underlying the an alysis, see Annex IV
139 of this IA; for 
detailed description of the policy options' (POs) impacts, see Annex V. 
 
5.1. MAIN IMPACTS OF POLICY OPTION 1: BASELINE SCENARIO  
 Economic impacts   
Transaction costs:
 The current legal framework in the EU does not contain a single set of uniform 
and comprehensive contract law rules which coul d be used by consumers and businesses in cross-
                                                 
137 C. von Bar, U. Drobnig, The Interaction of Contract Law and Tort and Property Law in Europe, A Comparative Study, European Law Publishers, May 2004. 
138 Unless otherwise stated the analysis in this section applies to both B2B and B2C transact ions in a cross border only contex t. In addition, unless otherwise stated, all data 
in this section comes from EB 320 and 321. (EB surveys 320 and 321 provide data on the attitudes of export oriented companies, in particular, on their willingness to use the 
European contract law and the impacts it could have on the level of their cross-border trade. More specifically, the respondent s indicated to what extent they would use 
European contract law if it was made available and whether they would expand their trade to more  Member States. The impacts on all considered macro-economic variables 
are computed based on the companies' exp ectations for cross-border expansion of their trade if European contract law existed).   
139 The economic impacts in this section have  been calculated using the Global Trade Analysis Project (GTAP) model. (See www.gt ap.agecon,purdue.edu and Hertel et al. 
(1997),  Global trade analysis; Modelling and applications, Cambr idge University Press.)  GTAP is a static general equilibrium model analysing changes in production, trade 
and consumption as a consequence of changes in such exogenous variables as costs. The model has an Input-Output structure for a ll the economies included. Trade is 
identified at the bilateral level. The model includes all countries in the EU27 and 57 products among which 24 are manufactured  goods. GTAP is able to calculate the impact 
of a new policy on GDP, trade, employme nt, intra-EU trade, consumer prices, expenditure and consumer welfare.  
 
 28border trade. The existing patchwork of European a nd international legislation has led to a limited 
number of uniform rules only in a few areas of c ontract law. As a result, substantial differences 
between MS contract laws remain. The ba seline scenario (BS) transaction costs140 (one off) for 
trading with one other MS amount to on average: in B2C transactions €9,100 (€8,695- €9,565, plus 
€2,900 for e-commerce oriented enterprises selling to consumers that face additional contract law related IT costs) and in B2 B transactions €9,800 (€9,000-€10,658).  
 For a micro trader the cost of trading in one additional MS amounts to 6.5% of its average annual turnover and for trading in the whole of the EU ex ceeds its average annual tu rnover by almost twice. 
For a small enterprise in the same sector the cost  of trading in one additional MS would amount to 
0.25% of its annual turnover. For tr ading in the whole of the EU th is would be 6.4% of its annual 
turnover, for a medium enterprise  this cost would be 2.22% of its annual turnover for a large 
enterprise it would cost 0.06% of its annual turnover. There is an annual aggregate transaction cost 
for the EU economy as new traders enter the market  which is approximately €1-2 billion. If these 
costs continued by the year 2020, exporting firms would face transaction costs of €9-19 billion  due 
to the differences in contract laws.     
Administrative costs (included in the overall figure of transaction costs): 
With no EU action, the 
average administrative costs141 per company per MS with which it trades would amount to: in B2C 
€2,500, in B2B €1,500. These are mostly one-off cost s but accumulate as the number of MS a 
company trades with increases.142 For example, for trade with 5 MS these figures would be €7,500 
for B2B and €12,500 for B2C.     
Competition in internal market and impact on consumer prices : With no EU action, competition in 
the internal market would remain limited. Due to the remaining legal differences and related costs, many businesses would not be encouraged to trade cross-border and therefore create a competitive 
environment which would drive down prices.
143 Without an increase in competition in the market 
place, consumers would continue to face a rest ricted choice of products at a higher price.   
Impact on consumer protection : This option includes the adopti on of the CRD which, due to its 
nature as a full harmonisation Directive ensures th at within its scope, consumers have the same 
rights which are harmonised across the EU. Theref ore differences between the consumer protection 
rules of different MS remain. Many Green Paper re spondents stated that action should only be taken 
if a previously adopted instrument has proven to be inefficient.144  However the text adopted does 
not harmonise important areas of consumer contract  law. For instance, sales remedies and unfair 
contract terms would remain frag mented across the EU.  In additi on, the CRD does not cover the full 
life cycle of a B2C contract or B2B contract.    
Impact on SMEs:145 For those performing B2B contracts, where parties are of a similar size, 
negotiating the applicable law is  a time consuming factor which causes opportunity costs. In the 
SME Panel Survey, 55% of SMEs responded that the negotiation of applicable  law was an important 
obstacle to cross border trade. 146  In addition, it is normally the stronger (usually larger) party which 
                                                 
140 See problem definition and Annex III. 
141 See Annex VII on administrative costs. 
142 See Annex VII. 143 Thereby not contributing towards the Commission policy towards increasing competitiveness 'An Integrated Industrial Policy for the Globalisation Era Putting 
Competitiveness and Sustainability at Centre Stage', COM (2010) 614.  144 E.g. BEUC's response to the Green Paper consultation, p. 4; UEAPME's position on the EC Green Paper, p. 2; EuroCommerce's r esponse to the EC consultation, p.1-2. 
145 Both Eurochambres and the Eu ropean Association of crafts, small and medium -sized enterprises (UEA PME) felt the publication of the Expert group's work would be 
more beneficial from an academic perspective.   
146 According to EB 320, p. 15: respectively 5%, 10% and 15% of the respondents, also representing large companies, considered this was a barrier which impacts their 
decision to sell cross-border.  
 
 29imposes their country’s law on the smaller party147 as the law applicable to the contract. The smaller 
party then has to bear the tran saction costs of finding out about the foreign contract law which 
applies to their contract. If the SM Es concerned in both scenarios are micro or small enterprises, then 
these costs would weigh, in relative  terms, more heavily upon them.   
Impact on law firms : No impact.   
  
Public authorities: MS :148 No impact.  
  
Judiciary:  Litigation costs which result from the need for courts to investigate and apply different 
national laws than their own which are relevant  for cross-border contracts would remain. Judges 
would either need to investigate the foreign a pplicable law themselves or obtain the necessary 
knowledge through the advice of le gal experts or the evidence s ubmitted by lawyers. In these 
instances, time of the judges and ex perts/lawyers would be taken to research the foreign applicable 
law.  The cost of this time and research would be borne by either the cour ts or parties involved.    
Analysis of provisions of instrument:149 No impact.  
 Social impacts: No impact.   
 
Environmental impacts: No impact.   
Online environment: With no EU action, the trend of domestic  sales being far greater than cross 
border ones would continue.  
Overall assessment: This option would not remove the additi onal transaction costs for cross-border 
trade identified in the problem definition. The subsequent opportunity co sts would continue; the 
level of legal complexity for businesses wishing to trade cross border woul d not be reduced. This 
option would also mean that the complexity cons umers experience regarding their rights in a cross-
border context would remain and the practice of re fusal to sell across borde r would not decrease.  
 Even though this option takes account of full harmonisation of some consumer protection rules due to the adoption of the CRD, this harmonisation is restricted to only a few selected areas of consumer 
contract law. Most aspects of this law such as sa les remedies and unfair cont ract terms would remain 
fragmented across the EU. This fragmentation w ould not give consumers the full confidence on all 
their consumer rights for when they purchase across border.    
5.2. MAIN IMPACTS OF POLICY OPTION 2 
 
5.2.1.   2a: Toolbox as a Commission Document      
The toolbox itself would only have an indirect  impact upon businesses and consumers because 
concepts from the toolbox would be used for the de velopment of future contract law legislation or 
the revision of existing EU legislati on. The legislation itself would have  the direct impact.  As such a 
Commission instrument would not be agreed by the Council and EP, the EU le gislator could always 
deviate from the parts on Commission proposal s implementing the toolbox. Because of the 
uncertainty of its implementation, th e impact of this option would not only be indirect but also very 
                                                
 
147 It is recognised that SMEs are not always in a weaker barg aining position; this example only applies to those who are. 
148 In their Green Paper responses, most Member States endorsed the publication of the work of the Expert Group. 149 This analysis is only applicable to those options which describe the impacts of a legal instrument. 
 
 30limited.150 For this reason it is difficult to quantify wh at this impact would be. In addition, there 
would not be any immediate impact of this  option upon businesses as negotiations for new 
legislation or an amendment to existing legislation would take time to achieve.    
Economic impacts  
 
Transaction costs : In the longer term this option could lead  to a small reduction in the transaction 
costs, but the extent of this is unknown as one cannot predict when and how the toolbox concepts 
would be used.   
Administrative costs (included in th e overall figure of transaction costs) : This option could create 
indirect administrative costs associated with futu re contract law requirements. For example if a 
future law based upon the toolbox obliged a trader to  provide information not previously required, it 
could mean that the trader would have to  bear the associated administrative costs .    
Competition in internal market and impact on consumer prices:  There would be little changed from 
the BS.   
Impact on consumer protection : Where rules from the toolbox (which are not in the current acquis or 
domestic legislation) are adopted in EU legislatio n, they could raise the leve l of consumer protection 
in the laws of some MS.    
Impact on SMEs : Very little change compared to the BS.   
Impact on law firms : No change from the BS.   
Public authorities: MS:  Very little change compared to the BS. 
 
Judiciary: Very little change compared to the BS. A limited indirect impact could be felt by the 
judiciary who, depending on the extent of the change would need to train for new concepts in future 
legislation.   
Analysis of provisions of instrument:151 No impact.   
Social impacts: No change from the BS. 
 
Environmental impacts: No change from the BS. 
 
Simplification potential: This option could create some converg ence of the relevant contract law 
legislation and result in a small level of simplif ication as national laws would in time begin to 
develop similarities to each other. 
 
Online environment: No change from the BS.   
Overall assessment: Compared to the BS this option may to a ve ry small extent help to facilitate the 
expansion of cross-border trade in th e internal market. It may also to a small extent indirectly lead to 
an increased level of consumer prot ection in national contract laws.  
 
                                                 
150 European Small Business Alliance response to the Green Paper, p2 also supports that the Toolbox does not have the substance  'to deliver real benefits to businesses 
engaged in transactions across the wider European market.' 151 This analysis is only applicable to those options which describe the impacts of a legal instrument. 
 
 31However, since the contract law related transa ction costs would largel y remain unchanged, the 
positive impacts of this option on businesses and c onsumers would be minimal and in turn so would 
any subsequent impacts upon trade, competition and the internal market. Mo reover, any impacts of 
this option would not be felt imme diately as negotiations for new legislation or amendments to 
existing legislation would take time to achieve. Ov erall, as there is no wa y of knowing whether and 
how widely this option would be used and accep ted by the Council and EP, the impacts of this 
option would not differ greatly compared to the BS  and any impacts felt would be very small and 
would take place in the longer term.  
5.2.2.  Main Impacts of Policy Option 2b: Toolb ox as an Inter-Institutional Agreement  
  
As per policy option (PO) 2a, the toolbox itself woul d not have a direct impact upon businesses and 
consumers. As an inter-institutional agreement w ould bind the three EU institutions to make use of 
the toolbox concepts when drafting and negotiating legislative proposals related to contract law 
(except when overriding sector-spe cific reasons would lead to anot her result) there would be less 
deviation from the use of the toolbox concepts co mpared to PO2a and more certainty in its 
implementation.   However, despite this increased certainty, the impact s of this option would remain indirect. For this 
reason it is difficult to quantify wh at these impacts would be. In addition, there would not be any 
immediate impacts of this option upon businesses as negotiations for agreeing new legislation or an 
amendment to existing legislation would take time to achieve.  
 
Economic impacts  
Transaction costs
: In the longer term this opt ion could lead to a limited reduction in transaction costs 
due to the convergence of certain contract law con cepts. There is a greater likelihood of this taking 
place as all three EU Institutions would agree on app lication of the toolbox concepts rather than just 
the Commission as would be the case in PO2a.    
Administrative costs (included in th e overall figure of transaction costs) : This option could create 
indirect administrative costs associ ated with future contract law requirements as set out under PO2a.   
Competition in internal market and impact on consumer prices : There would be little changed from 
the BS.   
Impact on consumer protection : Where rules from the toolbox are adopted in EU legislation, they 
could raise the level of consumer protection in the laws of some MS.  The im pact would be the same 
as set out under PO2a with one difference. As un der this option th ere the toolbox con cepts would be 
accepted by the Council and EP, the impacts would be  felt to a greater extent than those felt under 
PO2a.   
Impact on SMEs : Very little change compared to the BS.   
Impact on law firms : No change from the BS.   
Public authorities: MS : Very little change co mpared to the BS.  
 
Judiciary : Very little change compared to the BS. A limited indirect impact could be felt by the 
judiciary who, depending on the extent of the change would need to train for new concepts in future 
legislation.   
 
 32Analysis of provisions:152 No impact.   
Social impacts: No change from the BS.   
Environmental impacts: No change from the BS.   
Simplification potential: This policy option coul d create a greater conve rgence of the relevant 
contract law legislation than PO2a  and result in a small level of simplification as national laws 
would in time begin to develop similarities to each other.   
 
Online environment: No change from the BS. 
 
Overall assessment: As this option involves all three Ins titutions agreeing to make use of the 
toolbox, this option would, to a somewhat greater ex tent compared to PO2a, reduce the differences 
between national contract laws which would help to facilitate the expansion of cross-border trade in 
the internal market. This option could to a limited, but  greater extent than PO2a indirectly lead to a 
higher level of consumer protection and le gal certainty about consumer rights.  
 However, since the toolbox would only be used fo r the amendment of existing or preparation of 
future sectoral legislation, contract law related co sts stemming from differenc es of national contract 
laws would largely remain and in turn so would any subsequent impacts upon trade, competition and the internal market. Moreover, there would not be any immedi ate impacts of this option upon 
businesses and consumers as negotia tions for new legislation or an amendment to existing legislation 
would take considerable time to achieve. As this  option would only concern national contract law 
rules which are modified following revised or new EU legislation a nd would only have an impact at 
the earliest at a medium term, the overall positive im pacts of this option would be, albeit greater than 
PO2a, still rather limited. 
  
5.3. MAIN IMPACTS OF POLICY OPTION 3: RECOMMENDATION OF A COMMON 
EUROPEAN SALES LAW
153  
 
This option would encourage MS to incorporate voluntarily into their domestic law a Common 
European Sales Law instrument as  a 'second regime'. This second re gime would not replace existing 
legal traditions, but sit alongside a relevant sp ecific national regime. The rules of the Common 
European Sales Law could be voluntarily chosen by the parties as the law applicable to their cross-
border contracts. Therefore businesses would have the choice to continue to use their national law in 
their cross border transactions or to  use the Common European Sales Law.  
 This option would only be effective if the Co mmon European Sales Law was incorporated by a 
number of MS entirely and without amendment to the original vers ion attached to the 
Recommendation. If this occurred,
154 the transaction costs for cross border trade would be reduced, 
there would be more trade and competitiveness in the internal market and consumers would benefit 
by having an increase in choice of products at a lower price as well as an increased level of 
consumer protection when they buy abroad using the Common European Sales Law.  
 
                                                 
152 This analysis is only applicable to those options which describe the impacts of a legal instrument. 
153 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 
154 In order to estimate the impacts of PO3 assumptions on the number of exporting companies taking up the optional Common European Sales Law have been made. EB 
320 and 321 show that 70% of businesses would be likely to use a new European contract law instrument.  Businesses would howeve r need to agree this choice with their 
business partners. Therefore the more cons ervative assumptions i.e. 25% and 50% of companies using the European contract law ar e applied  throughout in the report. This 
allows demonstrating a range of possible economic impacts. 
 
 33However, it is highly unlikely that  this option would be incorporated entirely or without amendment. 
This would not greatly affect trad ers performing a B2B contract (as they would have the freedom to 
decide on the law applicable to their contract ) and therefore, these traders would have the 
opportunity to reduce thei r transaction costs by using the Comm on European Sales Law of one MS 
which has best implemented it. The same woul d not be the case for traders performing B2C 
contracts, as they would have to research whet her and where MS have changed the drafting of the 
Common European Sales Law with regards to  mandatory consumer protection rules.  
 This means that businesses would not be able to se ll across borders to cons umers on the basis of one 
single law and would theref ore incur transaction costs of the type indicated in the BS. Consequently 
this option would only to a limited extent remove the hindrances to cross-border trade identified in 
the problem definition. The voluntary nature of the incorporation would mean that the instrument 
would not be legally binding and there would be  no jurisprudence mechanism to ensure its 
coherence.  Overall, because of the piecemeal way in which the Common European Sales Law could be incorporated, if at all, this option would further complicate the regulatory environment for both 
consumers and businesses as both pa rties in B2C contracts would be subject to differing degrees of 
the Common European Sales Law in  different MS and the divergen ces in national contract laws 
would remain.  Many respondents to the Green Paper consultatio n (business groups, consumer 
organisations and legal practitione rs rejected this option). Because  this option would add to the 
issues set out in the problem definition it is highly  unlikely to be suitable as a solution, and therefore 
is only summarised here. The full text of the analys is of this option can be found in Annex V.   
 
5.4. MAIN IMPACTS OF POLICY OPTION 4:  REGULATION/DIRECTIVE SETTING 
UP AN OPTIONAL COMMON EUROPEAN SALES LAW
155 
 
An optional Common European Sales Law would insert a set of clear and practical rules into each of 
the different national laws of a MS as a 'second  regime'. This second regime would not replace 
existing legal traditions, but sit alongside a releva nt specific national regime. These rules could be 
voluntarily chosen by the parties as  the law applicable to their cr oss-border contracts. Therefore 
businesses would have the choice to continue to use their national law in their cross-border 
transactions or to use the opti onal Common European Sales Law.  
 
Economic impacts 
 
Transaction costs:  This option would greatly reduce tran saction costs because it would allow 
businesses to use one set of rules for cross border trade irrespective of the number of countries they 
trade with. In practice, this means that busines ses using the optional Co mmon European Sales Law 
may only have to pay one transaction cost for trade with multiple MS. For example, a business 
exporting to between 1 and 26 MS may only have  to pay on average €9,800 for B2B and €9,100 for 
B2C (plus €2,900 for e-commerce oriented enterprise s selling to consumer s that face additional 
contract law related IT costs) (see BS).  
 For businesses that already export and decide to e xpand their sales but decide not to use the optional 
Common European Sales Law, the transaction co sts for exporting to 5 MS could amount to €49,100 
for B2B and €45,600 for B2C if the business applied the law of the country traded to in each case. A 
company applying the optional Common European Sale s Law to the same contracts with all 5 MS 
would save €39,300 and €36,500 respectively. Transaction costs for exports to 10 MS using the law 
of the country traded to could amount to €98,300 for B2B and €91,100 for B2C. If the trader used 
                                                
 
155 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 
 
 34the optional Common European Sales Law the costs saved would be €88,500 and €82,000 
respectively.  
 Assuming that initially only 25%
156 of current exporters decide to use the optional Common 
European Sales Law, the instant one-off implementation costs would amount to €1.89 billion.157 
However a business stakeholder noted, the initial cost of the optional Co mmon European Sales Law 
would be  acceptable when compared to continuing potentially high transaction costs.158 The estimate of 
transaction costs does not include  the potential higher compliance costs for companies in some 
Member States where the level of consumer prot ection would increase (see section on analysis of 
provisions of instrument).  
These costs would however be outweighed on the one hand by costs savings for new exporters and 
on the other by potential savings for current export ers who would expand thei r cross-border sales to 
new countries. Using an assumption of 25% of ne w exporters using the optional Common European 
Sales Law and the current average level of exports, the annual savings159 for new exporters would be 
€150-400 million.160 In addition, for the current exporters wh ich declared an interest in expanding 
their activity cross-border and d eciding to use the optional Common European Sales Law to start 
trading with additional EU countries, the potential saving would be between €3.7bn and €4.3 bn.161  
 
These cost savings would have the biggest imp act upon SMEs (in particular on micro and small 
companies) and this is where the optional Comm on European Sales Law would add the most value 
for such traders.  However the optional Common Eu ropean Sales Law would also save costs (albeit 
on a relatively lesser scale)162 for big businesses who want to use the optional Common European 
Sales Law to trade with other big businesses.  
 The reduction in transaction costs would also facilitate intra EU  trade by removing obstacles for 
those companies which currently experience difficu lties in either conducting cross-border trade or 
transferring, for example, propert y by way of cross border sales and would therefore facilitate the 
exercise of these rights in line with Articles 16  (Freedom to conduct a busin ess) and 17 (Right to 
property) of the Charter on Fundament al Rights of the EU, respectively.
163   
  
Administrative costs (include d in the transaction costs) : This option would require traders to provide 
consumers with information abou t the choice of using the optiona l Common European Sales Law. 
This would cost a business approximately €500.164 The application of the optional Common 
European Sales Law would be voluntary and need onl y be used by contractual parties if it offered 
them a commercial advantage compared to the BS. This is one of the instances where the optional 
                                                 
156 EB 320 and 321 show that 70% of businesses would be likely to use a European contract law for cross border  sales. 38% of a ll the companies surveyed would prefer to 
use a single European contract law as an al ternative to their national law. To use the European contract law, businesses would need to agree its choice as the applicable law 
with their business partners. Assuming that some business partners would not wish to use the European contract law, a more cons ervative assumption i.e. 25% of companies 
using the European contract law is applied throughout the report. 157 25% of current exporters in B2B and B2C multiplied by the respective costs-see Annex III. 158 ESBA response to the Green Paper consultation, p. 2. 
159 Number of new exporters annually multipli ed by the average saving – see Annex III. 
160 In a longer term, these annual savings could be discounted to €3.9-€10 bn and the net benefit for the EU economy would be € 2-€8.11bn  (€3.9-€10 bn minus €1.89bn), 
See Annex III. 
161  Number of current exporters that decide to use the optional Common 
European Sales Law (25%) multiplied by the saving depending on the number of additional 
countries they would make cross-border sales to  i.e. costs if they were to expand their sales to new countries under the BS €5 .6- €6.2 minus the one-off cost of €1.89 bn. See 
Annex III.  
162 The amount a big business spends to trade to the whole of the EU is 0.06% of their average annual turnover (see problem def inition). 
163 See Annex VI.  164 Explained further in Annex VII. 
 
 35Common European Sales Law safeguard s the principle of 'freedom of contract', which was a concern 
raised by business representatives in  response to the Green Paper.  
 Exporters could achieve cost saving s if trading with more than 1 MS  as they would be able to use 
one set of information, available in all EU la nguages, If a business used the optional Common 
European Sales Law the administrative costs woul d amount to (on averag e) for B2C contracts 
€3,000 and for B2B contracts €1,500. Compared to the BS , if a company traded with 2 MS the cost 
saving per company would amount to €1,500 in  B2B and €2,000 in B2C transactions.
 165    
Competition in internal market and impact on consumer prices:  This option would increase 
competition in the internal market and lead to a decrease in prices. For competition to increase 
businesses would need to trade more (bot h export and import). For B2C contracts 40%166 of the 
businesses surveyed said that if they were able to choose a single European contract law they would 
increase their cross border trade in the internal  market. For those performing B2B contracts, this 
figure was 34%.167 These surveys have also indicated that  14% of those perf orming B2B contracts 
would trade with 6 or more addi tional countries if th ey were able to choose a single European 
contract law, 34% said they would trade with 3-5 new countries and 35% said they would trade with 
1– 2 new countries. For those performing B2C c ontracts these figures were: 18%, 32% and 32% 
respectively.   An increase in cross border trade would therefore l ead to a rise in imports, which would be likely to 
increase the competition in the importing MS. To be able to compete in the market, businesses would be encouraged to either by improve the quality of their produc ts or reduce prices. This would 
contribute towards the Commission po licy on increasing competitiveness
168 and would be of 
particular relevance in B2B tr ansactions which include the ma nufacturing industry. Consumers 
would benefit from an increased ch oice of product at a lower price. Prices are expected to decrease 
around 0.04-0.07% if 25% of EU companies used  the optional Common European Sales Law.169  
 If non EU businesses could choose to use the op tional Common European Sales Law, they would 
have easier access to the internal market.  Consumer s would again benefit from an increased choice 
of product at a lower price and competition for businesses would be  stronger as they would be 
competing against non EU businesses as well as those in the internal market.   Impact on GDP
: Overall EU GDP is expected to incr ease by €5- €10 billion (0.04-0.08%) (see 
Annex IV).    
Impact on third countries: if third countries could choose the optional Common European Sales Law, 
they would benefit from an easier access at lower transaction costs to the whole EU market and may 
be able to expand exports to more EU countri es. If they could not use the optional Common 
European Sales Law, some negative impact could be felt as trade would grow more between EU 
countries at the expense of potential partners from third countries.  
 Impact on consumer protection
: This option would provide a high level of consumer protection (in 
line with Article 38 of the Charter of Fundamental Rights of the EU)170 by increasing consumer 
protection in certain areas which are currently harmonised at minimu m level, by creating a high level 
of consumer protection in areas in which the Uni on has not previously acted by integrating the fully 
                                                 
165 See Annex VII for more details on how these costs are calculated. 
166 EB 321, p. 36. 167 EB 320, p. 33. 
168 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage,' COM  (2010) 614. 
169 See Annex IV. 170 See Annex VI. 
 
 36harmonised provisions of the CRD and by taking th e other minimum harmonisa tion provisions of the 
acquis as a benchmark.   
 The optional Common European Sales Law would stre ngthen rights on some points of particular 
concern to consumers compared to the existing or  to be transposed acquis. For instance, the 
consumer could choose the type of remedy if th e goods did not conform to the contract; these 
remedies would also be availabl e to consumers who bought digital content products which also did 
not conform to the contract. Thes e and other consumer protection provisions would give consumers 
confidence that they would have a very high level of consumer protection whenever they used the 
optional Common European Sales Law. 
 
To strengthen certainty  about their rights and thereby cons umer confidence, businesses would 
provide consumers with a standa rdised information notice whenev er the optional Common European 
Sales Law was chosen for use. This informati on notice would explain th at a Common European 
Sales Law applied and would set out information about the key rights cons umers would enjoy under 
the optional Common European Sales Law. The provi sion of this information responds to some 
concerns (i.e. increase of the legal complexity, in ability for the consumer to make an informed 
choice for the application of the optional Common European Sales Law) raised by consumer and 
legal practitioner representatives in their response s to the Green Paper. Within this setting the 
optional Common European Sales La w could encourage more consumer s to shop across-border, as 
they would have the same rights at a high level of  protection everywhere in the EU, whenever the 
optional Common European Sales Law would appl y. Moreover, the information notice would be 
beneficial for the large percentage of consumers who do not always read te rms and conditions, as it 
would present their key rights in a concise and pr ominent way before they agree to the contract.
171 If 
this information is not provided to the consumer , then the consumer would have the right to 
terminate the contract without bearing any costs. In addition, the agreement would only be valid if 
the consumer consented - in a separate statemen t - to using the optional Common European Sales 
Law. A business would therefore not be allowed to include the choice of the optional Common 
European Sales Law as only a term in its standard terms and conditions.  The optional Common European Sales Law could beco me a 'trust mark' for consumers: once they 
have become familiar with their rights under the optional Common European Sales Law, they would 
become more certain and ther efore confident in purchasing products across the EU under the 
optional Common European Sales Law's unifor m rules. Additionally, the optional Common 
European Sales Law could be of an advantage to th e economic interests of consumers, as they could 
gain access to more and better offers at a cheaper price, which would not have been made available 
by foreign businesses if the optional Comm on European Sales Law had not existed. 
 Thus, the information notice and the explicit separate  statement of consent the consumer will have to 
provide would also eliminate the fears of several MS and consumer  associations who have some 
concerns about the opti onal Common European Sales Law, as they think businesses could take 
advantage of the weaker position of the consumer s, as the latter would n o t  b e  f u l l y  a b l e  t o  
understand the consequences of choosing an  optional Common European Sales Law.   
Impact on SMEs: 
There would be a positive impact upon SMEs trading with more than 1 MS. Micro 
and small companies would benefit in particular as the cost savings of using the optional Common 
European Sales Law would be dispropor tionately high compared to the BS.  
 
                                                 
171 According to data from EB 342, p. 122-125, most consumers either do not read the terms and conditions (27%) or do not read them carefully and completely (30%). 
According to Allen and Overy, Online consumer research, 2011: 52 % of the consumers in the 6 largest EU MS never (5%) or only oc casionally (47%) r ead the terms and 
conditions when purchasing online. 
 
 37For B2C contracts, if the optiona l Common European Sales Law were  chosen, it would be the only 
applicable law in the area covere d by its scope. Therefore,  the trader would ha ve to consider only 
one set of rules – those of the optional Comm on European Sales Law. It would no longer be 
necessary to consider ot her national mandatory provisions as they would normally have to when 
concluding a contract with a consumer from anot her MS. Businesses would al so not be required to 
provide individual explanations of the consequen ces of the use of the optional Common European 
Sales Law to the consumer, as the information notice would fulfil this purpose. Businesses could 
also use optional Common European Sales Law as  a mark of quality, ensuring the high level of 
protection consumers would enjo y under its rules. As consumer s increasingly use the optional 
Common European Sales Law and become more certa in about their rights and more confident in 
cross border purchases, they could seek to contr act with it more and more, thereby increasing a 
businesses customer base.   There would be some administrative costs wher e provision of informa tion would be required.
172 
However these costs would be unlikely to outweigh the cost savings, especially for those companies 
trading in multiple MS. For SMEs performing B2B contracts, the negotiation of an applicable law between similar sized companies are likely to become easier.
173   
Impact on law firms : There would be a new demand for legal advice from new exporters, as well as 
from existing exporters who would need to beco me familiar with the optional Common European 
Sales Law. This would create an opportunity for la w firms to tap into the new market and expand 
their business on giving advice on contract law.   In their responses to the Green Paper several prac titioner representatives mentioned that there would 
be a cost for law firms to train and familiarise themselves with the optional Common European Sales 
Law, as with all new legislation. However unlike the BS, some of these costs would be relieved 
given that the optional Common European Sales Law would be user-friendly, clear and available in 
all official languages in the EU, and would theref ore be more accessible. Moreover there would be 
public funding available for tr aining on new EU legislation.
174  
 In time, there could be a chance that law firms c ould advise less, which would mean less billable 
hours for them. However this would be mitigated by the increased flow of new businesses entering 
the 'cross-border-trade' market and the expansion of existing client advice to  a wider range of cross-
border transactions covering all MS.   The simultaneous application of the optional Common European Sale s Law by national courts would 
allow case law to build up quickly . The uniform application would be  ensured firstly by the ultimate 
interpretation of the optional Common European Sa les Law through the ECJ. A database, accessible 
to judges and legal practitioners and containing tr anslated summaries of na tional rulings applying 
optional Common European Sales Law provisions  would ensure transparency and de-facto 
convergence of relevant case-law.  This would alleviate concerns rela ted to legal certainty raised by 
some Green Paper respondents.   
                                                
 
172 See Annex VIII. 
173 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross bo rder trade. In response to a similar 
question in the EB 320 (p.16) 25% of respondents said that diff iculties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-
border. However, as the sample in the EB al so included large companies, the results of  the SME Panel survey are more relevant f or the SME test.  
174 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser e xtent) to train on EU new legislation. The 
cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this to pic by the end of 2011 in which the training 
on a Common European Sales Law instrument will be mentioned as a priority. 
 
 38Legal stakeholders were mostly positive toward s this option. Some stakeholders from the UK 
expressed views175 that this option would make the UK, and in particular London, a less attractive 
place for, in particular, large companies (who are advised to us e common law as their preferred 
choice of law for international transactions) to obtain legal advice from English law firms. These 
stakeholders maintain that as a re sult, the expenses for legal advice176 made by these businesses 
would be lost to the UK as companies would obtai n legal advice in the US. While these submissions 
are relevant for PO5/6, they do not really apply to PO4.  
 An optional Common European Sales Law would not  replace national laws. It would become a 
second regime existing alongside domes tic legislation, which could be ch osen as an alternative to the 
national law, only when businesses s ee fit. Since English law is chos en by companies because of its 
specificities, compared to other legal systems it is  unlikely that companies which already choose it 
for these reasons would cease to do so.   Thus companies could continue to use common law and the services of English law firms if they 
choose to do so. In this context it is important  to note that the number of EU exporting companies 
using the law of a 3rd count ry (for instance English law or Swiss law) is at any rate only 0.6% of EU 
exporters.
177 SME from non Common law pract ising countries would not be  likely to apply Common 
law to their contracts (e.g. a Swedish SME trading w ith an Italian SME would be more likely to use 
Swedish or Italian law). However a UK based SM E trading with a non-Co mmon law country would 
still have the choice to use common law.   
Public authorities:  There would be a cost concerning a data-base which would be created and 
maintained by the Commission. This database would contain summaries of rulings of the application 
of the optional Common European Sales Law provisi ons (as submitted by national courts). This cost 
would fall upon the Commission and would be broken down as follows: 
 
- one-off approximately €100,000178 for creating the we bsite and database; 
- annually approximately €100,000179 for maintaining the website and database; 
- €160.56 for summarising a ruling submitted by a MS' co urt (assuming that it will take 4 hours to 
read and summarise one ruling a nd a documentalist is paid €321.12180 a day), and  
- €117 for the translation of a summary into English, French and German (assuming that each summary will be one page and the translation cost will be €39
181 per page).    
MS: The national laws of MS woul d not be affected. However, MS would bear the costs which 
would accompany the implementation of EU legisl ation (such as consultation of stakeholders, 
                                                 
175 Law Society of England and Wales Response to the Green Paper, p.17 – 20; Bar Council of England and Wales response to the G reen Paper p.20 and p.21; COMBAR 
response to the Green Paper p.3; City of London Law So ciety response to the Green Paper on contract law p. 2. 
176 According to the Bar Council of England and Wales Response to Green Paper p.20 and p.21  "Currently the annual fee income o f the 100 largest law firms is 
approaching £15bn, with over half of that revenue being generate d by London – based law firms." According to the Law Society of  England and Wales Response to the 
Green Paper  p.18. "The City Business series Report on Legal Services in 2007 valued the contribution of legal services to the UK economy at £14.9bn in 2004". However it 
would need to be noted that the income mentioned above seems to refer to the contributions of all legal services, not just on c ontract law. Therefore income solely due to the 
areas of contract law as defined under section 4.2.3. of the IA report in a cross border scenario would be a relatively small p ercentage of this overall income. 
177 EB 320, p. 57. 178 In 2002 a database (JURE data-base) was created for summarie s of judgemen ts concerning the Brusse ls I Regulati on no 44/2001  of 22 December 2000 on jurisdiction 
and the recognition and enforcement of judgements in civil and commercial matters, the Brussels II Regulation no 1347/2000 of 2 9 May 2000 on jurisdiction and the 
recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for children of both  spouses, the new Brussels II Regulation no 
2201/2003 of 27 November 2003 on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and in m atters of parental responsibility for 
children of both spouses, repealing Regulation no 1347/2000 and the Convention of 16 September 1988 on jurisdiction and the enf orcement of judgements in civil and 
commercial matters (Lugano Convention). The creation of  this database cost at that time less than €80,000. 
179 In the past four years the maintenance of the JURE data-base has cost on average €117,500. As the new data-base will likely  be linked with the system of an existing 
data-base – e.g. the data-bases on the e-justice portal – the cost will  assumable be lower. 
180 Annex 1 of amendment №4 to Framework contract no JLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer services". 
181 Price list in the Framework contract no JLS/2008/A5/01/lot 21  "Websites, web content management systems and other computer services". 
 
 39printing of new legislation, educating the public a bout the new law, time and cost of legislative 
process, etc.)  Judiciary:
 As raised in the Green Paper consultation, th ere would be a need for some initial training 
for judiciaries to familiarise themselves with a new system.  However this cost would be mitigated by 
public funding available for traini ng on the new EU legislation.182  All legal practitioners across the 
EU would have access to a database containing summaries of rulings on the application of the optional Common European Sales Law. This would allow them to view the application of the 
optional Common European Sales Law and ensure the co nsistency of its application. The use of this 
option, i.e. a single body of rules, would remove th e necessity for judges to investigate foreign law 
and compare several laws decreasing litigation cost s compared to the BS. In  the longer term, this 
would alleviate the administrative load on a MS j udicial system. Moreover, the database would also 
reduce the risk of a different ap plication and interpre tation of the optional Common European Sales 
Law mentioned by several responden ts to the Green Paper.   
 European Court of Justice (ECJ)
: In the first instance national courts would rule upon cases and 
submit summaries which would be entered into th e Commission created database. These summaries 
are likely to lead to a de facto  convergence of rulings by national courts which national judges would 
be able to access when needing to refer to how  provisions of the optiona l Common European Sales 
Law have been ruled upon. There may be a limited number of cases which may need to be referred 
to the ECJ,183 which would increase the caseload. There w ould be a financial cost of referral of a 
case which would need to be borne  by the parties to the trial. 
 Analysis of provisions of instrument
:  
The tables below present some key proposed  consumer and SME protection provisions184. They 
analyse their impact on the level of protection in a representative samp le of MS. They also reflect the 
related potential additional compliance costs for businesses as well as their likely impact on the take-
up of the optional Common European Sales Law.    
CONSUMER PROTECTI ON PROVISIONS 
Provision Impact on 
consumer 
protection Compliance costs for businesses Impact on take-up of optional Common 
European Sales Law 
Remedies for breach of 
information duty in doorstep/off-
premises and 
distance contracts +  
BE,NL,LU, HU, UK 
= 
DE, EE, FI, ES, 
FR, IT, PL, PT, 
RO No direct compliance costs. 
 
Any additional costs would relate to any potential claims for damages for traders 
who do not fulfil their obligations in NL, 
BE, HU, LU, UK 
 = 
In most MS, the general provisions 
regarding the rights to damages currently 
already apply.  The Common European 
Sales Law would confirm or further clarify 
these obligations but not create any 
additional obligations that could impact on 
the take-up of the optional Common 
European Sales Law. 
Duty to ensure information 
supplied is correct ++ 
PL, FI 
+  
BE,ES, IT, LU, 
PT, UK (mostly 
for remedies) 
= 
EE Businesses might face some additional 
costs to ensure that the information 
supplied is correct and not misleading; 
these costs are considered as minor as the 
required standard would correspond to 
normal business practices. = 
Ensuring that the information supplied is 
correct is normal business practice and 
does therefore not create any burden that 
could impact on the take-up of the optional 
Common European Sales Law. 
 
Mistake  ++ 
FI, IT, RO, UK 
+ Some businesses might face a minor increase of costs as the result of 
strengthened rules concerning the = 
Any potential costs would impact on the 
small number of traders who act in 
                                                 
182 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser e xtent) to train on EU new legislation. The 
cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this to pic by the end of 2011 in which the training 
on an European contract law instrument will be mentioned as a priority. 
183 This increase of caseload would form a minor part of the ongoing overall institutional and bu dgetary discussion of the of t he resources and responsibilities of the ECJ. 
184 See more detailed analysis in Annex VIII. 
 
 40FR, PL, PT 
= 
AT, EE, ES, HU, 
LU, NL 
- 
DE situations in which a contract might be 
avoided in UK, PT, IT, PL, FR, FI, RO. 
These costs are considered as minor as 
pointing out a mistake is fair business 
practice. contrary to fair trading principles and 
conclude a contract not pointing out a 
mistake. 
Fraud + 
NL, PL, UK 
= 
AT, BE,  EE, ES, FR, HU, IT, LU, 
PT, RO 
- 
DE No additional costs for businesses as in 
most MS the current rules provide for 
avoidance of a contract for fraud. Any 
potential costs would only arise for rogue 
businesses which use fraudulent practises 
possibly in countries where the present rules are not so clear (e.g. UK, NL, PL). = 
The provision does not introduce any new 
obligations but rather clarifies the existing 
law. 
Unfair exploitation + 
BE, ES, UK 
= 
AT, DE, EE, FI,  FR, HU, IT, LU, 
NL, PL, PT, RO No additional costs for businesses as in 
most MS the current rules provide for the 
same level of consumer protection. Any 
increase of costs would affect only rogue 
traders. = 
The provision does not introduce any new obligations. Any costs would affect only 
rogue traders. 
 
Interpretation in favour of 
consumers ++ 
DE, EE, ES, FI, NL, PL, PT, RO, 
UK 
+ 
AT 
= 
FR, HU, IT, LU, MT  Some additional costs for companies in 
case of doubts about the meaning of a 
contractual term which has not been 
individually negotiated.  - 
The interpretation most favourable to the 
consumer is likely to be more costly for 
businesses. Businesse s would however be 
able to avoid potential costs by making 
sure that the contractual terms do not raise 
any doubts. 
Terms unfair as 
not sufficiently 
drawn to the 
consumer's 
attention + 
 ES, IT, HU, PL, 
UK 
= 
BE,EE, LU, PT Some additional costs for traders as  when 
supplying the terms to a contract they 
would be obliged to take reasonable steps 
to draw consumers' attention to them, 
before or when the contract was 
concluded in ES, IT, HU, PL, UK. - 
The additional costs are considered as minor as the reasonable steps to inform the 
other party about inserted terms would in 
practice be relatively easy to implement. 
Merger clauses + 
BE, DE, ES, FI, FR, HU, NL, PL, 
PT, RO, UK 
= 
AT, IT, LU Some additional costs for businesses to 
adjust their contracts in order to eliminate 
merger clauses in BE, DE, ES, FI, FR, 
HU,NL, PL, PT, RO, UK - 
Any potential costs are likely to be one-off 
and only affect companies which use 
merger clauses in their contracts. 
Method of 
payment ++ 
DE, ES, FI, FR, 
HU, IT, NL, PL, 
PT 
+ 
UK 
= 
EE  Any potential additional compliance 
costs would only affect traders which do 
not provide information on the accepted 
method of payments to consumers. In this 
case, they would be obliged to accept the 
usual and appropriate payment methods. = 
Businesses would be able to avoid any 
additional compliance costs as they would 
have the possibility to indicate the accepted 
method payments to consumers. 
Place of delivery + 
BE, EE, ES, HU, 
IT, LU, PL, PT, 
UK Additional costs for distance and off-
premises traders to deliver the goods to 
consumers' place of residence in most 
MS. = 
These additional costs would depend on the delivery distance and would occur only 
where the place of delivery was not agreed 
between the parties.  
Right to damages for non- 
performance = 
BE, DE, EE, ES, FR, HU, IT, MT, 
NL, PL. RO, UK No additional compliance costs for 
businesses. = 
No additional costs as in most MS the 
current rules provide for the same level of 
consumer protection. 
Length of 
prescription period = 
BE, DE, EE, ES, 
HU, NL LU, IT, 
PL, RO 
- 
FR, UK No additional costs for businesses as in 
practice the current 2-years substantive 
period which applies in most MS at 
present and the proposed 2-year 
prescription period provide for a similar 
level of consum er protection. = 
No additional compliance costs for companies 
as in most MS the current 
rules provide for the same or even higher 
level of consum er protection. 
Period for 
notifying the seller 
of non-conformity ++ 
EE, FI, HU, IT, MT,NL,PL,PT 
+ The compliance costs for businesses 
could increase as the number of 
consumers now legitim ately relying on 
the lack of conformity claims for - 
The compliance costs in those MS where a 
2 month deadline for notification exists are 
likely to increase only marginally as the 
 
 41ES 
= 
FR, LU, RO, UK remedies made later than 2 months after 
the consumers discovered the lack of 
conformity could slightly increase.  risk of consumers discovering faults and 
claiming redress after the previous deadline 
of 2 months is not high, considering that 
most faults are likely to occur once the 
consumer starts operating the product after 
buying it.   
Remedies in case 
of lack of 
conformity ++ 
AT, BE, BG, CY, CZ, DE, DK, EE, 
ES, FI, HU, IT, 
MT, NL, PL, RO, 
SK, SE  
+ 
IE, LV, SI, UK 
= 
EL, FR, LU, LT, PT  The compliance costs for businesses 
would increase due to increased requests 
from consumers to rescind the contract 
and refund the price. In the case of refund 
after termination of the contract, the loss 
is the sale price (plus returns handling) 
minus the remaining value of the goods 
returned. The loss in the case of 
replacement is considered to be the 
production cost of the replacement good 
concerned (plus returns management) 
minus the remaining value of the goods 
returned.  -- 
SMEs which currently rely on (multiple) repair can be more disadvantaged and may 
be more cautious to sell abroad using the 
optional Common European Sales Law, as 
distance consumers might be more likely to 
ask for a termination of the contract 
resulting in a refund (not accepting the 
inconvenience of lengthy repairs or waiting 
for a replacement). 
DIGITAL CONTENT PRODUCTS 
'Cost-free' 
products + 
DE,FR, HU,IT, 
NL, PL Businesses providing 'cost-free' products 
would have additional costs as at present 
there are cases of defective cost-free 
products.  
 - 
Providers of 'cost-free' products might be 
unwilling to use the optional Common 
European Sales Law due to increased 
compliance costs. On the other hand they 
could benefit as more consumers would be 
more confident to download 'cost-free' 
products and as a result they would 
increase their profits (e.g. advertisements 
linked with cost- free products).  
Sales remedies for 
digital content 
products + 
DE,FR, HU,IT, 
NL, PL Businesses would have to bear some 
additional costs as their customers would 
be able to freely choose the remedy they 
prefer which is not the case in most MS at 
present. - 
The additional compliance costs might 
deter companies selling digital content 
products from using the optional Common 
European Sales Law. However, these potential additional costs could be offset by 
savings due to expansion of cross-border 
trade and economies of scale (digital 
content products can easily be sold on the 
internet irrespective of national borders, 
therefore the expansion of cross-border 
trade in digital products is likely to be 
higher than for tangible goods).
 
Conformity in long 
term contracts + 
DE,FR, HU,IT, 
NL, PL This provision does not involve a direct 
burden and cost but nevertheless might 
imply a burden for digital content 
providers. This burden would stem from 
the increased liability of digital content 
providers which as a result could increase 
the cost of after-sales services. - 
The increase of costs for after-sales services might have a negative impact on 
the take-up of the optional Common 
European Sales Law. The impact is not 
expected to be significant as in contrary to 
tangible products, repair  or replacement of 
digital products are not so costly.
 
 
SME PROTECTION PROVISIONS 
 
Provision Impact on the level 
of protection Compliance costs for businesses Impact on take-up of the optional 
Common European Sales Law by 
SMEs 
Duty to disclose information about 
goods and services + 
BE, ES, FI,FR, IT, 
NL, PL 
= 
EE, HU, PT, DE Businesses might incur some minor 
administrative costs for providing 
information on their products. It could 
however, be expected that similar 
information is already provided in the 
usual course of business. + 
In general, businesses would be in a 
better position to judge  the charact eristics 
of the products they purchase in advance 
of concluding a deal. This information 
would enable them to select the products 
that mostly suit their needs. 
Duty to ensure that 
information 
supplied is correct 
 + 
BE, ES, FI, IT,PL, 
PT, UK 
= 
EE Some additional costs may be incurred by 
businesses to adapt the information 
materials to make sure that the 
information supplied is correct and is not 
misleading. In the case of breach of this = 
Businesses would receive complete and 
correct pre-contractual information that 
would facilitate th e business' decision 
making process. The potential costs for 
 
 42duty the business woul d be liable for 
damages. compensating damages would only affect 
traders providing incorrect or incomplete 
pre-contractual information to other 
parties. 
Unfair exploitation  + 
BE, ES, IT, PL, UK 
= 
EE, FI, PT Businesses which exploit the other 
party’s situation by taking an excessive 
benefit or unfair advantage would need to 
change their businesses practices. These 
costs are considered as minor as the 
required standard would correspond to 
normal business practice. + 
SMEs would be particularly interested in 
taking up the optional Common European 
Sales Law as they are often the weaker 
party and are more likely to fall victim of 
unfair exploitation.  
Unfairness control 
of standard terms  + 
BE,ES, FI, FR, HU, 
IT, PL,UK 
= 
NL, DE Businesses would no longer be reliant 
that their standard terms and conditions 
(which include some unfair terms) could 
be enforced and might be faced with 
some legal uncertainty. However the risk 
and costs are considered minor as 
including terms which deviate from good 
commercial practices or which are in 
contrary to good faith and fair dealing do 
not correspond to normal business 
practices. + 
SMEs would be particularly interested in 
taking up the optional Common European 
Sales Law, as they  usually have less 
market power to oppose unfair terms or 
legal resources to identify them in a 
contract.  
Terms which are 
unfair if not 
sufficiently drawn 
to the buyer's 
attention  + 
BE, DE, FI , IT, PL, 
PT,UK 
= 
ES, EE 
- 
HU Some additional costs as businesses 
supplying the terms to a contract would 
be obliged to take reasonable steps to 
draw the other party’s attention to them, 
before or when the contract was 
concluded.  = 
Any additional costs are considered as 
minor as the reasonable steps to inform 
the other party about inserted terms 
would correspond to normal business 
practice.  
Seller's right to 
cure for 
fundamental non-
performance  + 
BE, EE, 
ES,HU,IT,PL,PT, 
UK 
= 
FI There could be some additional costs for 
buyers as the sellers would have the right 
to cure for non-performance whereas at 
present in some Member States a buyer 
can refuse the cure and opt for the 
recession of the contract. -/ + 
The provision would be beneficial for 
sellers as they would have the opportunity 
to cure for non-performance and thus 
avoid additional costs if a buyer opts for 
the recession of the contract and 
compensation for damages. For buyers, 
the provision might have a negative 
impact on the take-up of the optional 
Common European Sales Law.  
 
Legend for table: Impact of substantive provisions  
++  positive impacts - -  negative impacts 
+  limited positive impacts -  limited negative impacts 
= neutral, no impacts expected  
 
While most of the provisions lead to an increase in  the level of protection compared to the existing 
acquis and the national laws of a representative sele ction of MS, the analysis found that they strike a 
reasonable balance. Traders from those MS where th e level of protection is overall lower, may face 
moderate additional compliance costs. For some provisions such as remedies in cases of lack of conformity or interpretation in favour of consumers, the additional compliance costs might impact negatively on the take-up of the optional Common European Sales Law in MS where the level of 
consumer protection is lower. However, the optional Common European Sales Law would be 
voluntary and companies would use it only if the be nefits (e.g. lower transa ction costs) outweigh 
possible higher compliance costs.  
 
Social impacts: Compared to the BS, this option would help to facilitate cross border trade and as a 
result would create 159,300-315,900 new jobs in the EU  if 25% of companie s used the optional 
Common European Sales Law.
185 With regard to impacts on fundame ntal rights, this option would 
not lead to discrimination, as it would apply acro ss the EU without any distinction on the basis of 
nationality, in line with Article  21(2) of the Charter of Fundamental Rights of the EU.  
 
                                                 
185 See Annex IV. 
 
 43Environmental impacts: This would be dependent upon the number of businesses who use the 
optional Common European Sales Law, as an increase in use of transport for delivery would lead to 
an increase in CO2 and other vehicle emissions a nd would increase the cost to control pollution due 
to the binding EU rules. 
 
Simplification potential:  For businesses, this option would simplify the regulatory environment, 
eliminating the need for research of different na tional laws as only one regulatory framework need 
be used. Consumer representatives  voiced the concern that consum ers could be subject to a new 
unfamiliar system.186 To aid the consumers' understanding of  the optional Common European Sales 
Law, a standardised information notice would be presented to them alerting them of the use and 
implications of an optional Common European Sales Law. 
 
Online environment: Compared to the BS, this would be a more simple187 way to conclude a 
contract and give a trader cost  savings. The additional transacti on costs would no longer apply: 
Businesses would not need to adapt their terms and conditions and IT platforms to take into account 
the laws of all Member States they trade with. This could provide an incentive to businesses to increase their online cross border sales (or in so me cases to commence them). If there were an 
increase in the number of businesses who used this instrument to trade cross border, then compared 
to the BS, this option would he lp towards narrowing the gap between domestic  and cross border 
online sales. 
 
However, an instrument dedicated  only to e-commerce could lead to increased legal complexity. 
Companies using distribution channe ls other than e-commerce would have to apply different legal 
rules depending on the distribution channel used. This would create a fragmentation of the market 
and distort competition. Furthermore, as mentione d by business representatives in their Green Paper 
consultation responses,
188 it would not be technologically ne utral and thus may generate legal 
uncertainty should new forms of dist ance sales occur in addition to e-commerce, for instance mobile 
telephony commerce. A scope limited  to cross-border online sales on ly could however also create 
additional legal complexity for consumers who c ould be subject to diffe rent rules depending on 
whether they make a purchase online, at a distan ce using another method (i.e. post or telephone) or 
face-to-face.  
 
Impact if this option is applied in a domestic  and cross border contract as well as cross border 
only  
Domestic and cross border: 
An optional Common European Sales Law would facilitate the legal 
environment for businesses which trade both cross-bor der and domestically, if they chose to operate 
under the optional Common European Sales Law for all contracts. On the one hand, if the optional Common European Sales Law also applied in a do mestic context it would go beyond what would be 
necessary to resolve the problem of additional transaction costs and legal complexity. It would 
therefore not be a proportionate solution to the problem. On the other hand, several respondents to 
the Green Paper favoured this scope.
189 However as many respondents w ho favoured this scope, also 
favoured a cross border only scope. Therefore a more  pragmatic solution may be to allow MS the 
choice as to whether they would also like the optional Common European Sales Law to apply in 
domestic contracts too. 
                                                 
186 BEUC's response to the Green Paper, p. 15. 
187 Allen and Overy, Online Consumer Research, found that a relati ve majority of 46% of the surveyed consumers in the 6 largest  MS would be more likely to buy online 
from another EU country if an EU-wid e contract law was put in place. 
188 Eurochambres response to the Green Paper, p.3, European Small Business Alliance response to the Green Paper, p.4. 
189 Member States: EE, LT and NL.  Stakeholders (business): BIPAR, EMOTA, UPSI, Eurochambres, EFBS, ICAEW, UEL,  I.A.N.U.S., Al lianz SE, Audi AG, LVMH, 
Nokia. Legal practitioners: CCBE, Bundesrech tsanwaltskammer, Sc ottish Law Commissi on,  Ordre des Barreaux Francophones et Germo nophone de Belgique, Deutscher 
Richterbund, Scottish Law Commission, Law Society of Scotland,  Law Society of Ireland.   
 
 44 
Cross border only : Traders could use one cont ract law (the optional Co mmon European Sales Law) 
for cross border trade with multiple MS (both in  B2C and B2B transactions). Thus, they could 
reduce transaction costs and legal complexity. Bu sinesses could continue to use their national 
contract laws for domestic trade, whilst at the same  time they would also be able to export using the 
optional Common European Sales Law if they wish to do so. Theref ore, business could save costs 
when trading cross border a nd continue to enjoy their cu rrent arrangements under domestic 
legislation. A cross border only scope is in accorda nce with the principle of proportionality as the 
instrument does not go beyond what is necessary to  achieve the objectives. Several respondents to 
the Green Paper,190 who commented on this, favoured an in strument which was limited to cross 
border contracts (in some cases as a first step).   Overall assessment: This option would not replace existing dom estic regimes, but complement the 
national law of MS, as it would be inserted into their national laws as an optional set of contract law 
rules which could be used for trad ing across borders. It need only be chosen by parties voluntarily 
only when it suits their interests.   The main advantage of this option is that it would eliminate the transaction costs which are incurred 
by businesses when trading with mo re than one MS. On a relative scale in comparison to annual 
turnover, this advantage would be nefit trade for businesses perfor ming B2C contracts and those B2B 
contracts which are between SMEs.  As it would al so offer cost savings to large businesses which 
contract with other large businesses, this combina tion for the application of the scope of the optional 
Common European Sales Law should not be ruled out.  It could be left to MS to decide upon. The 
decrease in costs would provide in centives to increase trade which w ould result in more competition 
in the internal market.  The increase in trade and competition would benefit consumers by giving them more product choice at a lower price.  
 
There could be some administrative costs which arise from the need for businesses to provide 
information to consumers not previously require d. These costs are however by far outweighed by the 
savings and the potential savings which are made fr om not paying the additional transaction costs for 
when a business trades with more than 1 MS. This option would create opportunities for legal 
practitioners to cater for new clients as law firm s would experience an in crease in demand by those 
expanding their cross-border trade and existing exporters wishing to use the optional Common 
European Sales Law.   Overall, this policy option meets the policy objectives  as it reduces costs for businesses and offers a 
less complex legal environment for those who wish to  trade cross border to more than one MS and at 
the same time it provides a high level of consum er protection, whilst simplifying the regulatory 
environment.    
5.5. MAIN IMPACTS OF POLICY OPTION 5a AND 6
191 
 
5.5.1.  Policy Option 5a: Directive on a manda tory Common European Sales Law (full 
harmonisation) and Policy Option 6: Regulation establishing a mandatory 
Common European Sales Law   
                                                 
190 Member States: AT, BG, EL, FI,  DE, PL. Stakeholders (business): AMICE, FEDSA, APCMA, BdB, EuroCommerce, FAEP, CCIP, Bundes verband der Deutschen 
Industrie. Legal practitioners: CLLS, CNUE, Bundesnotarkammer, Österreich ische Notariatskammer, DBF,  Association of Spanish Pr operty and Commercial Registrars, 
ELRA, UNCC. Stakeholders (consumer): VZBV, Belgian Consumer Organisation.  
191 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting.  
 
 45The end result of a full harmonisation Directive ( once it has been implemented) and a Regulation 
replacing national laws would be very close in  their outcome (although not exactly the same); 
therefore both these options are assessed together.192 The instrument would allow businesses to use 
one set of rules in B2B and B2C contract s for both domestic and cross border trade193 irrespective of 
the number of countries they trade with in the EU. It w ould also remove the necessity for businesses 
to investigate, compare and possibl y adapt to several foreign laws.  
 Transaction costs:
 The instrument would considerably in crease costs as it would also affect 
companies which do not wish to trade cross border. Companies that trade only domestically (17,136,213 in B2B and 4,420,563 in B2C) would face a one off instant cost of implementation of €208.8 billion
194 to use the new legislation. They would be required to pa y these costs with no real 
financial gain, as the advantages would only be realised for those co mpanies trading across a border.   
 All current exporters would face a one-off cost of implementation of €8.18 billion  in order to use the 
new law.
195 The estimate of transaction costs do not incl ude the potential higher compliance costs for 
companies in some Member States where the leve l of consumer protection would increase. There 
would not be an additional cost if a business were to export to more than 1 MS.     
 For example, the cost for a micro retailer to ente r the whole of the EU ma rket would be on average 
only 6.5% of its turnover
196 which would be the same as it would have cost to trade with only 1 MS 
in the BS. This option would result in costs savings  for new exporters and for current exporters who 
would expand their cross-border sales to new count ries. The annual savings for new exporters would 
be between €0.63-1.6 bn.197 In addition, similarly as under opti on 4 the current exporters that would 
start trading with additional countries would save at least between €3.7 billion and €4.3 billion.198 
The potential benefits of this opt ion would however not outweigh the initial one-off adaptation cost 
even over a longer time span. 
 
The reduction in transaction costs would also facilitate intra-EU  trade by removing obstacles for 
those companies which currently experience difficu lties in either conducting cross-border trade or 
transferring, for example, propert y by way of cross border sales and would therefore facilitate the 
exercise of these rights in line with Articles 16  (Freedom to conduct a busin ess) and 17 (Right to 
property) of the Charter on Fundament al Rights of the EU, respectively.199     
Administrative costs (these are incl uded in the transaction costs above) : The instrument would create 
an additional cost for 22 million companies (including for those who trade only domestically) in the EU with an average one-off cost per company amounting to €2,500 for those performing a B2C contract and €1,500 for those performing a B2B contra ct. Compared to the BS, to trade with 2 MS 
the cost saving per company would amount to €1,500.
200    
Competition in internal market and imp act on consumer prices (B2B and B2C) : The instrument 
would increase competition in the internal market and lead to a decrease in prices. For B2C contracts 
40%201 of the above mentioned businesses surveyed said that if they were able  to choose a single 
                                                 
192 For simplicity the Directive and Regulation are referred to collectively as the 'instrument' . 
193 Article 16 of the Charter of Fundamental Rights of the EU. See Annex IV. 
194 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  
195 All exporters in B2B and B2C multiplied by the respective costs. Per business this would be €9,100 for B2C (plus €2,900 for  e-commerce oriented enterprises selling to 
consumers that face additional contract law related IT costs) and €9,800 for B2B as in the BS. 196 See section 2.3.2 on problem definition. 197 Number of new exporters annually multiplied  by the average saving – see Annex III.  
198 -See Annex III. 
199 See Annex VI.  
200 See Annex VII for more details.  201 EB 321, p. 36. 
 
 46European contract law they would increase their cr oss border trade in the internal market. For those 
performing B2B contracts, this figure was 34%.202 These surveys have also indicated that 14% of 
those performing B2B contracts would trade with 6 or more additional c ountries if they were able to 
choose a single European contract law, 34% said they would trade with 3- 5 new countries and 35% 
said they would trade with 1– 2 new countries. Fo r those performing B2C contracts these figures 
were: 18%, 32% and 32% respectively.   An increase in cross border trade would lead to a ri se in imports, which would be likely to increase 
the competition in the importing MS. The higher co mpetition would encourage businesses to become 
more innovative and improve the qua lity of their product s or to reduce prices  in order to stay 
competitive. This would contribute towards th e Commission policy on increasing competitiveness
203 
and would be of particular relevance in B2B tran sactions which include th e manufacturing industry. 
Consumers would benefit from an increased choice of product at a lower pri ce. The reduction for the 
average consumer price level w ould range between 0.14% - 0.28%.204   
Impact on GDP:  Overall EU GDP is expected to increase by €20- €40 billion (0.17-0.33%).205 (See 
Annex IV).    
Impact on third countries : Third countries trad ing with the EU would bear some one-off 
implementation costs, but could benefit from an eas ier access to the EU market as a whole in the 
long term. Third countries may be able to expand exports to more EU countries.  
 Impact on consumer protection:
  The instrument would provide a high level of consumer protection 
(in line with Article 38 of the Charter of Fundamental Rights of the EU)206 and would also increase 
consumer certainty and therefor e confidence, as consumers woul d have the same rights when 
shopping cross border.207However, it would also replace national laws and could lead to changes to 
the level of protection consumers in certain MS enjoy. While the c onsumer would benefit from an 
increase in the protection for a number of provisions, some cons umers could lose  protection in 
specific cases compared to their existing national law as their national law would have to be changed.    
Impact on SMEs
: For businesses trading cross border, this  impact would be the same as PO4.  
However the instrument would also place admini strative costs on domestic businesses who do not 
wish to trade cross border. This would have a particular im pact upon micro and sm all enterp rises and 
comparative to their turnover, would weigh more h eavily (compared to the BS).  These SMEs would 
be required to pay these costs with  no real financial gain, as this advantage would only be realised 
for those companies trading across a border.   
Impact on law firms : There would be an increase in the demand for legal services, as more 
businesses would need to understand how to use th e instrument even for those advising on domestic 
transactions. There would be trai ning costs for law firms as they familiarise themselves with the 
changes in their national law. The concerns highli ghted by legal stakeholde rs in the UK in PO4 are 
most relevant here as the contract laws among MS would be harmonised and comparative 
advantages of a specific law like common law as  a popular option for choice of law would be 
fundamentally diminished.  
                                                
 
202 EB 320, p. 33. 
203 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage,' COM  (2010) 614. 
204 See Annex IV. 205 See Annex IV. 
206 See Annex VI. 
207 Allen and Overy, Online Consumer Research, found that a relati ve majority of 46% of the surveyed consumers in the 6 largest  MS would be more likely to buy online 
from another EU country if an EU-wid e contract law was put in place.  
 
 47Impact on Public authorities: MS : The national laws of MS would be affected as this instrument 
would require a complete overhau l of the domestic legi slation. MS would bear the costs which 
would accompany the implementation of EU legisl ation (such as consultation of stakeholders, 
printing of new legislation, educating the public a bout the new law, time and cost of legislative 
process, etc.) MS' governments are li kely to find the instrument (to change domestic legislation for 
contract law in such a fundamental way) to be po litically sensitive. In the Green Paper consultation, 
almost all MS responses to the Green Paper consu ltation rejected both options  5 and 6, stressing that 
to solve the problem of differences in contract laws , this type of instrument was not consistent with 
principle of subsidiari ty or proportionality. 
 Judiciary
: The judiciary of MS would need to familiarise themselves with the new instrument, this 
would mean a substantive financial cost for training. A single body of rules would remove the 
necessity for judges to investigate foreign law and compare several laws. This would decrease 
litigation costs (compared to the BS) and could in time alleviate the administrative load on a MS 
judicial system.     
ECJ: In the first instance national courts would rule upon cases and submit summaries which would 
be entered into the Commission created database. Th ese summaries are likely to lead to a defacto 
convergence of rulings by national courts which national judges would be able to access when 
needing to refer to how provisi ons of the optional Common Europ ean Sales Law have been ruled 
upon. There may be a limited number of cases wh ich may need to be referred to the ECJ,208 which 
would increase the caseload. There would be a financ ial cost of referral of a case which would need 
to be borne by the parties to the trial.   
Analysis of provisions of instrument : The same impacts as PO4 but in contrary to PO4, the 
additional compliance costs would affect all 22 million EU companies.  
 
Social impacts: The instrument is expected to cr eate between 650,000 and 1.3 million new jobs.209 
However this positive impact of job creation is likel y to be counteracted by the costs incurred by all 
companies and may lead to some initial decrease in  employment, which only at a later time would be 
compensated due to the positive effects on the econom y stemming from the rise in intra-EU trade. 
With regard to impacts on fundame ntal rights, this option would not  lead to discrimination, as it 
would apply across the EU without any distinction on the basis of na tionality, in line with Article 
21(2) of the Charter of Funda mental Rights of the EU.  
 
Environmental impacts: The instrument would have an advers e impact upon the environment as an 
increase in trade would increase the use of transport for delivery.  This would lead to an increase in 
CO2 and other vehicle emissions and would increase the cost to control pollution due to the binding 
EU rules. 
 
Simplification potential: Compared to the BS, this instru ment would simplify the regulatory 
environment as the differences between the cont ract laws of MS would be eliminated.   
 
Online environment: If the instrument applied to an onlin e cross border and domestic environment 
only, it would give a trader cost savings as the additional transact ion costs would no  longer apply. 
Businesses would not need to adapt their terms and conditions and IT platforms to a great degree to trade in another country. This could provide an incentive to businesses to increase or commence 
online cross border sales. However, legal comp lexity for businesses and for consumers could 
increase as different rules w ould apply to differing distributi on channels. This would not be 
                                                
 
208 This increase of caseload would form a minor part of the ongoing overall institutional and bu dgetary discussion of the of t he resources and responsibilities of the ECJ. 
209 GTAP model, see Annex IV. 
 
 48technologically neutral and could distort competiti on if new forms of distance sales were used in 
addition to e-commerce.    
Impact if the instrument is applied cross border only: Traders could use one contract law for 
cross border trade with multiple MS (both in B2C and B2B transactions) and reduce transaction costs. With a cross border scope on ly, the instrument would comply w ith the subsidiarity principle as 
the problem of additional transaction costs arises when businesses export.  
 However, the instrument would not comply with  the proportionality prin ciple as it would go beyond 
what is necessary to solve the problem. The instru ment would replace all na tional contract laws in 
relation to cross border contract s.  All exporting firms would have  to use the instrument in their cross 
border contracts (rather than ha ving a choice to). Those firm s who are already exporting would 
mandatorily have to adapt their cont racts to the new instrument – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion for all current exporte rs) above would apply to all  exporting firms. In the Green Paper 
consultation, almost all MS responses to the Green  Paper consultation reject ed both options 5 and 6, 
stressing that to solve the problem of differences in contract laws, this type of instrument was not 
consistent with principle of s ubsidiarity or proportionality. 
 Overall assessment: Compared to the BS, the instrument w ould remove obstacles to cross border 
trade in the internal market as the transaction costs for cross borde r trade would be diminished. The 
instrument would facilitate trade and could make it easier for busine sses to expand across borders, as 
they would only need to use one se t of rules. There would be an in crease in the level of consumer 
protection allowing consumers to have more conf idence to purchase across border and give them 
increased access to goods. In the longer term, le gal practitioners would benefit as they would 
experience an increase in demand by new clients w ho would need to understa nd the instrument for 
domestic and cross-border contract s. However, it is likely to lead to a loss of income for UK law 
firms in the area of provision of legal advice on Common law to businesses if these companies chose 
to obtain legal advice in the United States.   The instrument would have very substantial costs attached to it: Although the transaction costs for 
cross border trade would no longer exist, businesse s which only trade domestically would face a 
very substantial cost to use the new instrument without an added value. A cross border only scope would not be a proportionate soluti on as businesses who do not want to use it would have to adapt 
their contracts and incur tr ansaction costs. MS would be likely to find this option politically very 
difficult to agree and to implement as it would e liminate domestic laws and legal traditions.  The 
majority of MS who responded to the Green Paper c onsultation rejected this option outright. Overall, 
although the instrument would harmonise existing c ontract law legisl ation and eliminate transaction 
costs, it would create other subs tantive costs – which would not only be of monetary value. 
Therefore from a holistic perspectiv e, taking all the costs (monetary or otherwise) into account, these 
costs outweigh by far the benefits of the instrument.  
 
5.5.2.  Main Impacts Of Policy Option 5b: Directive on a  mandatory Common 
European Sales Law (minimum harmonisation)
210 
 
As this option is in the form of a minimum harm onisation Directive, MS could implement legislation 
beyond the consumer protection level of the Dire ctive. As experience with existing minimum 
harmonisation Directives shows, the level of impl ementation could maintain a considerable number 
of differences in nati onal contract laws.   
                                                 
210 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 
 
 
 49 
This option would to a certain ex tent reduce transaction costs and increase the level of consumer 
protection. However, as set out in  PO 5a and 6, there would be a ve ry substantial one-off cost borne 
by all traders (both domestic and cross border) as they  would have to adapt their contracts to use the 
new law. This cost would affect all companies, irre spective of their desire to  trade cross-border. In 
addition, due to the nature of minimum harmonisat ion, there would still be  some extra costs for 
businesses when trading cross border to consumers, these would arise from the necessity to research 
the levels of consumer protection in other MS . Therefore, whilst there may be a worthwhile 
investment for B2B cross border transactions, th ose performing B2C cross border contracts as well 
as trading only domestically would have to pay ve ry substantial additional costs without a clear or 
even no added value. There would also be administ rative costs which would arise from the need for 
businesses to comply with the Directive, these cost s would affect all companies. Because this option 
would add to the issues set out in the problem defi nition it is highly unlikely to be suitable as a 
solution, and therefore is only summarised here.  Th e full text of the analysis  of this option can be 
found in Annex V.    
6. COMPARATIVE ASSESSMENT OF OPTIONS 
The 'comparison of policy opti ons' table below provides a comp arative overview of the policy 
options, showing the extent to which each of the op tions is expected to contribute to the policy 
objectives and their key impacts. Th ese impacts are described below. 
 Policy option 1 - Baseline Scenario
 
This does not remove additional transaction costs for businesses trading cross-border, or reduce the level of legal complexity experienced by them.  Th is option would also mean that the uncertainty 
consumers experience about their ri ghts in a cross-border context w ould remain and the practice of 
refusal to sell across border would not decrease.  Even though this option takes account of full 
harmonisation of some consumer protection rules due to the adop tion of the CRD, this 
harmonisation is restricted to only a few selected ar eas of consumer contract law. Some key aspects 
of consumer contract law, such as sales remedi es, would remain fragmented across the EU. This 
fragmentation would not give consumers the full c onfidence on all their consumer rights for when 
they purchase across border. As MS implement EU le gislation and retain different national laws in 
the non harmonised areas for the whole life cycle of  a contract, with no EU action these differences 
between MS would continue.  Policy option 2a – Toolbox as a Commission document
 
Compared to the BS this option may to a very small extent help to facilitate the expansion of cross-border trade in the internal market. It may also to a small extent indirectly lead to an increased level 
of consumer protection in national contract laws. Ho wever, since the contract law related transaction 
costs would largely remain unchanged, the positive impacts of this option on businesses and consumers would be minimal. In turn, so would any subsequent impacts upon trade, competition and 
the internal market. Moreover, any impacts of this option would not be felt immediately as 
negotiations for new legislation or amendments to existing legislation would take time to achieve. As there is no way of knowing wh ether and how widely this opti on would be used and accepted by 
Council and EP, the impacts of this option would not differ greatly compared to the BS and any 
impacts felt would be very small and would take place in the longer term. 
 Policy option 2b – Toolbox as an inter institutional agreement
 
As this option involves all three Institutions agre eing to make use of the toolbox, this option would, 
to a limited, but somewhat greater extent compared to PO2a, reduce the differences between national 
contract laws which would help to facilitate th e expansion of cross-borde r trade in the internal 
market. This option could to a limited, but greater exte nt than PO2a indirectly  lead to a higher level 
of consumer protection and legal certainty about consumer rights. However, since the toolbox would 
only be used for the amendment of existing or preparation of future sectoral legislation, contract law 
 
 50related costs stemming from differences of national contract laws would larg ely remain and in turn 
so would any subsequent impacts upon trade, competition and the internal market. Similar to PO2a, there would not be any immediate impacts of  this option upon businesses and consumers as 
negotiations for new legislation or an amendment to existing legislation would take time to achieve.  
As this option would only concern national contract  law rules which are m odified following revised 
or new EU legislation and would only have an imp act at the earliest at a medium term, the overall 
positive impacts of this option would be, albeit greater than PO2a, still rather limited.  Policy option 3 – Recommendation
 
This option would only be effective if the Co mmon European Sales Law was incorporated by a 
number of MS entirely and without amendment to the original vers ion attached to the 
Recommendation. Only if all the MS did this, w ould it achieve a result lik e PO4. However, for both 
alternatives – for the latter even more than the fo rmer - it is highly unlikely that this would occur.  
This would not greatly affect trad ers performing a B2B contract as they would have the freedom to 
decide on the law applicable  to their contract. Ther efore, these trad ers would have th e opportunity to 
reduce their transaction costs by using the Common European Sales Law of one MS which has best 
implemented it. The same would not  be the case for traders performi ng B2C contracts, as they would 
have to research whether and wh ere MS have changed the drafting of the Common European Sales 
Law with regards to mandatory consumer protection rules. This means that businesses would not be 
able to sell across borders to consumers on the ba sis of one single law a nd would therefore incur 
transaction costs of the type indi cated in the BS. Consequently this option would only to a limited 
extent remove the hindrances to cross-border trade identified in the problem definition.  
  Because of the piecemeal way in which the Common European Sales Law coul d be incorporated if 
at all, this option would further complicate th e regulatory environment for both consumers and 
businesses. Both parties would be subject to di ffering degrees of the Co mmon European Sales Law 
in different MS and the divergences in nationa l contract laws would remain. In addition, the 
voluntary nature of the incorporation would mean th at the instrument would not be legally binding 
and there would be no jurisprudence mechanism to en sure its uniform application.  As this option 
would add to the issues set out in the problem defi nition it is highly unlikely to be suitable as a 
solution.    Policy option 4 – Optional Common European Sales Law
  
This option would not replace existing domestic regime s, but complement the national law of MS: It 
would be inserted into their national laws as an optional set of contract law rules which could be 
used for trading across borders. It need only be chosen by parties voluntarily only when it suits their 
interests. The optional Common European Sale s Law would very cons iderably reduce the 
transaction costs for businesses and offer a less complex legal environment for those who wish to 
trade cross border to more than one  MS. The decrease in costs would provide incentives to increase 
trade which would result in more competition in the internal market. The increase in trade and 
competition would benefit consumers by giving them mo re product choice at a lower price. It would 
increase the level of consumer protection ther eby increasing confidence to shop abroad whilst 
simplifying the regulatory environment.   This option would mainly be of benefit for bus inesses who perform B2C contracts and SMEs who 
perform B2B contracts as:  - For B2C contracts, the optional Common European  Sales Law would be the only applicable law in 
the area covered by its scope. Therefore, for acro ss the EU, the business would no longer have to 
consider other national mandatory provisions as th ey would normally have to when concluding a 
contract with a consumer from another MS.  - For B2B contracts, the cost savings – in part icular for micro and small companies - would be 
disproportionately high. In addi tion, for SMEs, the negotiation of  an applicable law between a 
similar sized company may not be so relevant. 
 
 51 
Cost savings may also be made fo r those large businesses that contra ct with other large business. To 
ensure all businesses have the opportunity to take  full advantage of the optional Common European 
Sales Law, it may be opportune to allow MS to ma ke the choice as to whet her large businesses could 
use the optional Common European Sales Law to  contract with other large businesses. 
 This option does not replace existing domestic regimes and is therefore less poli tically sensitive. If it 
applied in a cross border only cont ext it would be a propor tionate solution to th e problems identified; 
those businesses who wished to cont inue to use their national contract  laws for domestic trade would 
be free to do so; whilst at the same time they w ould also be able to export using the optional 
Common European Sales Law. Ho wever this option w ould also further facilitate the legal 
environment for businesses if it applied to both dome stic and cross border contracts. As Green Paper 
respondents were mixed in their responses to th e scope of the optional Common European Sales 
Law (domestic and cross border or cross border application only), a proportionate solution, could be 
to allow MS the choice as to whether they w ould also like the optional Common European Sales 
Law to apply in their domestic contracts too.  Some administrative burdens could arise from th e need for businesses to provide information to 
consumers not previously required. However, they  are by far outweighed by cost savings. Contrary 
to PO5a and 6 it would only affect those companie s who choose to use the instrument and not all 
enterprises. This option meets the policy objective s as it reduces costs for businesses and offers a 
less complex legal environment for those who wish to trade cross border to more than one MS. At the same time it provides a high level of consum er protection and reduces uncertainty about 
consumer rights in cross-border shopping , whils t simplifying the regulatory environment.   
 Policy option 5a – Full harmonisati on Directive and policy option 6 -  Regulation establishing a 
mandatory Common European Sales Law  
Compared to the BS, transaction costs for cross bor der trade would be diminished as there would be 
no differences in contract laws and no legal complexity. The instru ment would facilitate trade and 
could make it easier for businesses to expand across borders, as they would only need to use one set 
of rules. Consumers would have mo re access to goods, be more certain of their rights and feel more 
confident to shop cross border.   Compared to PO4 the instrument would however ha ve substantial costs atta ched to it: Although the 
transaction costs for cross bor der trade would no longer exis t, businesses which only trade 
domestically would face a substan tial cost to use the new instrume nt without an added value. The 
instrument would not comply with the proportio nality principle as it would go beyond what is 
necessary to solve the problem. The instrument would replace the national contract law both in 
relation to domestic and/or cross border contracts.  All domestic fi rms and/or those who are already 
exporting would mandatorily have to adapt their contra cts to the new instrument – even if they have 
no desire to enter a new market.  This would mean  they would incur the a dditional transaction costs 
once again.   MS would be likely to find this option politically very difficult to  agree and to impl ement as it would 
eliminate domestic laws and legal traditions.  The majority of MS who responded to the Green Paper 
consultation rejected both options 5 and 6, stressi ng that to solve the problem of differences in 
contract laws, this type of inst rument was not consistent with th e principles of subsidiarity and 
proportionality. Overall, although th e instrument would harmonise ex isting contract law legislation 
and eliminate transaction costs, it would create compared to PO4 - other substantive costs which 
would not only be of monetary value. Therefore fr om a holistic perspective, taking all the costs 
(monetary or otherwise) into account these cost  outweigh by far the benefits of the instrument. 
 
 
 52Policy option 5b – Minimum harmon isation Directive establishing a mandatory Common European 
Sales Law  
Compared to the BS, this option would to a certain  extent reduce transaction costs and increase the 
level of consumer protection. However, as set out in options 5a and 6, there would be a very 
substantial one off cost borne by all traders (both do mestic and cross border) as they would have to 
adapt their contracts to use the new law. This cost  would affect all companies, irrespective of their 
desire to trade cross-border. In  addition, due to the nature of minimum harmonisation, there would 
still be some extra costs for bus inesses when trading cross border to consumers, these would arise 
from the necessity to research the levels  of consumer protection in other MS.  
 Therefore, whilst there may be a worthwhile investment for B2B cross border transactions, those 
performing B2C cross border contra cts as well as trading only dom estically would have, compared 
to PO4, to pay very substantial additional costs w ithout a clear added value. There would also be 
administrative costs which would arise from the need  for businesses to comply with the Directive; 
these costs would affect all comp anies. Similar to PO5a, MS would be likely to find this option 
politically very difficult to agree and to implem ent as it would eliminate domestic laws and legal 
traditions.  It could also lead to a loss of income for law firms in the area of provision of legal advice 
of a specific law if companies chose to obtain le gal advice elsewhere. The majority of MS who 
responded to the Green Paper consultation rejected  this option outright. Although this option would 
minimally harmonise existing contract law legisla tion and civil codes and reduce transaction costs 
for some traders, it would add to  the issues set out in the probl em definition as some costs for 
researching the law would still re main. Therefore from a holistic perspective, taking all the costs 
(monetary or otherwise) into account the costs outweigh by far the benefits of the instrument. 
 Comparative assessment
 
 
The comparative assessment shows that that PO 4 (optional Common European Sales Law), PO5a 
(full harmonisation Directive)  and PO6 (Regulation) both establishing a mandatory Common 
European Sales Law) would best meet the policy objectives. Transaction costs and legal complexity 
in cross-border trade would be re duced for business. Consumers woul d be more certain about rights 
due to the high level of consumer protection availa ble under these options. Therefore, they would be 
more confident to shop cross-border and woul d benefit from better choice and prices.  
 However, PO5a and PO6 create a substantial burden  for businesses as all companies would need to 
adapt to a new legislative framework. The costs for the one off implementation for companies are 
particularly significant when compared to the other policy options because they  would be felt by all 
traders (22 million companies) in the EU. Th ese costs in total would amount to €217 bn. In 
particular, they would create a financial burden which will not be compensated by any benefits for 
the companies who only trade domestically and for whom cross border trans actions costs do not 
create a problem. Taking account of the costs co mpared to the benefits, PO5a and PO6 are not 
proportionate solutions to the contra ct law related obstacles to cross- border trade. In addition to the 
monetary costs, MS would be likely to find thes e policy options politically very difficult to agree 
and implement as they would eliminate domestic laws and legal traditions. Almost all MS who 
responded to the Green Paper consultati on rejected these options outright. 
 
   53 Preferred policy option  
The preferred policy option is therefore option 4 whic h would meet the policy objectives in terms of 
reducing legal complexity and transaction cost s, it would also simplify the current legal 
environment. The current legal framework is pa tchy and does not contain a comprehensive set of 
uniform rules for B2B and B2C contracts. An  optional Common European Sales Law would 
introduce such a set of rules for both types of cont ract without interfering with national laws. This 
option would also ensure a high level of consum er protection which would increase consumer 
certainty and confidence about ri ghts in cross-border shopping. It would cont ribute to the cross-
border trade and competitiveness of the EU econo my and would benefit the consumer by greater 
choice of products and better prices. As this opti on would be chosen voluntarily by businesses, it 
would not impose additional burdens but bring si gnificant cost savings for companies extending 
their trade cross-border. In comparison to PO5a and PO6, the one off implementation cost would be 
much lower: €1.89 - €3.78 bn for PO4 compared to €217 bn for PO5a and PO6.  Scope of application of the preferred policy option
 
 The problems of transaction costs and legal comp lexity have a particular impact upon businesses 
who perform B2C contracts (as th ey would have to consider th e different national mandatory 
provisions when concluding a contr act with a consumer from anothe r MS) and SMEs who trade with 
other SMEs (as the costs to trade to more than 1 MS are high in relation to tu rnover, in particular for 
micro and small companies). As the optional Common  European Sales Law would be of a distinct 
benefit to businesses performing B2 C contracts and SMEs performing B2B contracts, this would be 
the preferred scope of a pplication. However, large businesse s that contract with other large 
businesses may want to have the choice of using the optional Comm on European Sales Law if they 
can also make cost savings. Theref ore MS ought to have the choice  as to whether large businesses 
could use the optional Common European Sales La w to contract with other large businesses. 
 
In addition, the preferred scope would also be  for the optional Common European Sales Law to 
apply to cross-border only situations as this is wh ere the problems of additional transaction costs and 
legal complexity arise. This w ould correspond closest to the pr inciples of subsidiarity and 
proportionality as it would addre ss the problem of lowering barrie rs to cross-border trade without 
interfering in national rules. However to address the issue of this option also facilitating the legal environment for businesses if it appl ied to both domestic and cross border contracts (taking account 
of mixed responses to the Green Paper), and ensuring proportionality, MS ought to have the choice to apply the optional Common European Sales Law in  their domestic contracts if they wish to. 
 
Legend for tables: Comparing policy options & Effect iveness in meeting the objectives and key impacts:  
+++ : very positive impacts - - - : very negative impacts 
  ++ : considerable positive impacts   - - : considerable negative impacts 
     + : limited positive impacts      - : limited negative impacts 
     0 : no impacts expected  
 
 54 Effectiveness in Meeting the Policy Objectives and Key Impacts 
 PO1 Baseline 
Scenario (BS)  PO2a 
Commission's 
toolbox  PO2b 
Inter-
institutional 
agreement  PO3 
Recommendation  PO4 
optional Common 
European Sales Law  PO5b Minimum 
harmonisation 
Directive  PO5a full harmonisation 
Directive& PO6 Regulation  
Business Objectives 
 
Reduce 
transaction costs 
for cross-border 
trade  -- 
Baseline 
transaction costs 
in B2C: €8,695- 
€9,565 per 
company per 
MS. Baseline 
transactions 
costs in B2B: 
€9000- €10,568 
per company per 
MS. -- 
Very little change 
compared to the BS.  - 
Little change 
compared to the 
BS. 0 
 
Very limited, highly 
unlikely  +++ 
Elimination of 
transaction costs for 
cross-border trade. 
One-off costs for 
familiarising and 
compliance with a new 
legal regime. + 
Positive, but limited 
effect depending on 
variances in 
implementation. One-
off costs for 
familiarising and 
compliance with a new 
legal regime. 
Positive effect by far 
outweighed by 
substantial increase in 
costs for domestic 
traders. 
 +  
Elimination of transaction costs for 
cross-border trade. One-off costs for 
familiarising and compliance with a 
new legal regime. 
Positive effects outweighed by 
substantial increase in costs for 
domestic traders.  
Reduce legal 
complexity  in 
cross-border 
trade  -- - 
Very little change 
compared to the BS.  0/+ 
Little change 
compared to the 
BS. 0/- 
Very limited, highly 
unlikely  
 +++ 
Positive impact, one 
legal regime that could 
be chosen for all cross-
border transactions. + 
Positive, but limited 
effect depending on 
variances in 
implementation.  +++ 
Positive impact, the same law 
applicable in the whole of the 
internal market.  
Consumer Objectives 
Reduce 
uncertainty 
about consumer 
rights in cross-
border shopping 
 -- - 
Very little change 
compared to the BS.  0 
Little change 
compared to the 
BS. 0/+ 
Very limited, highly 
unlikely 
 ++ 
Uniform optional rules 
for all cross-border 
transactions with clear 
rights for consumers.  + 
Positive, but limited 
effect depending on 
variances in 
implementation  +++ 
Uniform, mandatory rules applicable 
to all cross-border transactions.  
Increased  
consumer 
protection  - 0 
Very little change 
compared to the BS.  0/+ 
Little change 
compared to the 
BS. + 
Very limited, highly 
unlikely  ++ 
Consumer protection 
increased compared to 
BS. +++ 
Consumer protection 
increased compared to 
BS.  MS could go 
beyond the minimum 
rules.  ++ 
Consumer protection increased 
compared to BS.  
 
55 Comparison of Policy Options 
 PO1 Baseline 
Scenario (BS) PO2a 
Commission's 
toolbox PO2b 
Inter-institutional 
agreement PO3 
Recommendation PO4 
optional Common 
European Sales Law PO5b Minimum 
harmonisation Directive PO5a full harmonisation 
Directive & PO6 
Regulation 
Key Economic Impacts 
 
Administrative 
costs -- 
In B2C €10,000 
average per 
company and 
€11,664 additional 
for a company 
selling via e-
commerce) In B2B 
€6,000 average per 
company Same as BS. Same as BS. 0 /+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and 
variances in 
implementation. - 
In B2C €3,000 average 
per company. In B2B € 
1,500 average per 
company. Number of 
companies affected: 
571,685 (B2C) and 
240,737 (B2B) -- 
In B2C € 2,500 average per 
company. In B2B €1,500 
average per company. All 
traders affected (22 million 
companies) and additional 
costs for companies exporting 
(as under the BS) -- 
In B2C € 2,500 average per 
company. In B2B €1,500 
average per company. All 
traders (22 million 
companies) affected. 
Competition in 
internal market 
and impact on 
consumer prices  -- 
Competition in the 
internal market 
remains limited. 
Businesses 
deterred from 
trading cross-
border.  - 
Very little change 
compared to the 
BS. 0 
Little change 
compared to the BS. 0/+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and the 
number of businesses who 
use it.  +++ 
Positive impact due to 
an increase of cross-
border trade. Increased 
competition is likely to 
decrease consumer 
prices.  + 
Little change compared to the 
BS as the differences between  
contract laws are likely to 
remain. ++ 
Cross-border trade is likely 
to increase but the positive 
effect on competition is 
reduced due to additional 
costs on business when 
trading domestically. 
Impact on 
SMEs --Transaction costs 
weigh, in relative 
terms, more 
heavily on micro 
and small 
businesses. - 
Very little change 
compared to the 
BS. 0 
Little change 
compared to the BS. 0/+ 
Positive, but very limited 
depending upon the number 
of MS who incorporate the 
Common European Sales 
Law and variances in 
implementation. +++ 
Positive impact due to 
elimination of cross 
border transaction costs 
that weigh heavily on 
SMEs + 
Positive, but limited impact as 
transaction costs only reduced 
for B2B contracts. For B2C 
transaction costs would still 
occur, plus domestic SMEs 
would face substantive cost to 
use new law. 0 
Positive impact of 
elimination of transaction 
costs for cross-border trade 
is outweighed by costs 
incurred by all companies 
that will need to adapt to a 
new legal framework. 
Social Impacts 
 No impact No impact No impact 0/+ 
Positive, but very limited 
impact depending upon the 
number of MS who 
incorporate the Common 
European Sales Law and the 
number of businesses who 
use it.  ++ 
Positive impact due to 
an increase in cross-
border trade that would 
result in increased 
employment + 
Limited positive impact as the 
cross-border trade would only 
slightly increase. - 
Positive impact for cross-
border trade is outweighed 
by costs incurred by all 
companies that may lead to 
some initial decrease in 
employment.  
Environmental Impacts 
 No impact No impact No impact 0/- 
Very little change compared 
to the BS. - 
Some impact upon 
environment due to 
increase in transport. -- 
Adverse impact upon 
environment due to increase 
in transport. -- 
Adverse impact upon 
environment due to 
increase in transport. 
 
   56 Table 4: Cost/benefit co mparison of Policy Options  
 Table 4 summarises the costs/benefits
211 of policy options 1, 4 and 5a and 6.212 The estimates are 
based on the low and medium scenarios of the cros s-border trade increases as described in Annex 
IV.213 
 Due to a substantial one-off cost imposed on all existing companies, the re sults of PO5a and PO6 
would be dependent upon future GDP growth and ma y result either in a be nefit of €105 bn or a loss 
of up to €57 bn. PO4 would be the most beneficial for the economy over the next 10 years as there 
would be a benefit in a range between €32 bn and €149 bn.  
 
 
7. MONITORING AND EVAL UATION ARRANGEMENTS    
MS will be required to send to the Commission notif ication measures. These measures will set out 
the text of the adopted legislation by the MS. The Commission will monitor these measures to 
ensure compliance with the preferred option.   The Commission will launch a monitoring and evalua tion exercise to assess how effectively the 
Common European Sales Law will achieve its objectives . This exercise will take place 4 years after 
the date of application of the. The intention is fo r the exercise to precede and feed into a review 
process which will examine the effectiveness of the Common European Sales Law instrument.    
                                                
 
211 The calculations of the costs/benefits are based on the net present value (i.e. the value of future benefits evaluated in t he present) of the difference between the annual 
GDP increase (calculated with the GTAP mode l, see Annex IV) and the annu al transaction cost s, minus the one-off implementation cost for current exporters (or for the 
whole economy for PO5a and PO6). This calculation takes place over a time span of 10 years, using a discount rate of 4% as indi cated in the IA Guidelines, Annex XI.  For 
example, if the GDP increase is €5 bn, th e annual transaction costs €0.85 bn, the one-off cost €1.89 bn, and the discount rate 4%, the benefit for the society in 10 years is 
computed with the following mathematical formula: (5-0.85)/1.04 + (5-0.85)/1.042+(5-0.85)/1.043+…+(5-0.85)/1.0410 – 1.89 = 32. 212 The impacts of PO2a and PO2b are difficult to quantify as they would not have a direct impact.  Concepts from the toolbox w ould be used for the development of future 
contract law legislation or the revision of existing EU legislat ion. The legislation itself would have the direct impact.  The impacts of PO3 and PO5b could not be quantified 
due to several possible variants of implementations and their subsequent impacts. 213 In the low and the medium scenarios, it is assumed that intra-EU trade increases based on the replies of the businesses (EB  320 and 321) who were asked about the 
impact of an European contract law on their exports. In the lo w scenario intra-EU trade increase s by 0.76% and in the medium on e it increases by 1.53%.  For PO4 low and 
high assumptions, of respectively 25% and 50%, of exporting comp anies using the optional Common European Sales Law are also con sidered.  The break-even point for 
PO4, i.e. the moment in which the take-up of the optional Common European Sales Law starts to bring positive benefits to the ec onomy, is just above 5%. This means that a 
minimum of 5% of current exporters would have to use the optional Common European Sales Law in order for this option to bring b enefits to the econom y. However, even 
in the case of a lower 'take up' rate of the optional Common European Sales Law, any loss would be smaller than the loss foreca sted for PO1 as PO1 is equivalent to PO4 in 
the circumstances where nobody uses the optional Common European Sales Law. (This is computed setting the benefits to zero and checking the relative take-up 
percentage).   214 Administrative costs are included in the transaction costs for PO1 and one-off implementation costs for PO4 and PO5a/6.   Annual GDP 
increase Employment 
effect Annual 
transaction  
costs214 One-off 
implementation 
cost for 
companies Costs/ Benefits (10 
years) 
Option 
1 0 0 € 1 - 2 bn 0 € (-16) to (-8) bn 
Option 
4 € 5 - 20 bn 160 000 - 
640000 € 0.85 - 1.2 bn € 1.89 - 3.78 
bn € 32 to 149 bn 
Option 
5a/6 € 20 - 40 bn 640,000 - 
1,300,000 € 0.3 bn € 217 bn € (-57) to 105 bn 
 
 57The comprehensive statistics on cross-border trad e in the EU and cross-border purchases by 
consumers are available in the Euro stat database which should be a primary source of data for the 
evaluation. Other suitable data co llection tools could be in-depth interviews, survey s and a mystery 
shopper exercise. Depending on the cost-efficiency of the availabl e monitoring options, these tools 
could be combined within a comp rehensive market monitoring study.215 Alternatively, the 
Commission may launch separate data  collection initiatives on differe nt indicators. For instance, the 
indicators for the achievement of business objecti ves could be assessed by means of Eurobarometer 
and the more specific SME Panel and European Bu siness Test Panel surveys. The indicators for 
consumer objectives could be addressed by means of Eurobarometer surveys and a possible mystery 
shopper exercise examining the ease of access to  cross-border offers. Based on the data on the 
indicators and information obtained from MS th e Commission will assess the progress achieved and 
will evaluate the effectiveness of the Common European Sales Law instrument.    
General business objective  
• Facilitate the expansion of cross-border trade 
in the internal market 
 Indicators 
• Variation in number of enterprises trading 
cross-border 
• Variation in average nu mber of EU countries 
companies export to 
Operational  business objectives 
• Reduce transaction costs for cross-border 
trade 
    
• Change in transacti on costs per company 
trading in more than 1 MS under a Common 
European Sales Law  
• % of companies using the Common 
European Sales Law 
• Change in aggregate transaction costs of 
exporting companies within the EU 
• Reduce legal complexity  in cross-border 
trade  • Rate of importance that businesses assign to 
contract law related obstacles in cross-border trade  
General consumer objective 
• Facilitate cross-bo rder purchases by 
consumers in the internal market  
• Variation of % of consumers shopping cross-
border 
Operational  consumer objectives  
• Reduce level of uncertainty about consumer 
rights in cross-border shopping 
• Ensure high level of consumer protection  
• Variation in consumer confidence in cross-
border shopping 
• % of consumers who experienced refusal of 
cross-border offers  
 
                                                 
215 http://ec.europa.eu/consumers/strategy/facts_en.htm#In-depth (last visited: May 2011). 
 
   58 ANNEX I:  PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
 
1.1. Policy Background  
With its 2001 Communication on European contract law,216 the European Commission 
(Commission) launched a process of extensive pub lic consultation on the problems arising from 
differences between Member States' contract laws and on potential actions in this field. As a follow-
up, the Commission issued an Action Plan in 2003217, with the intention among others to improve 
the quality and coherence of European contract  law by establishing a Co mmon Frame of Reference 
(CFR) containing common principles, terminology and model rules to be used by the Union 
legislator when making or  amending legislation.  
Via a grant under the 6th Framework Programme fo r Research, the Commission financed the work 
of an international academic network which carried out the preparatory legal research in view of the adoption of the CFR. This research work was fina lised at the end of 2008 and led to the publication 
of the Draft Common Fram e of Reference (DCFR)
218 as an academic text.219   
The Stockholm Programme for 2010-2014220 states that the European ju dicial area should serve to 
support the economic activity in th e internal market. The Program me invited the Commission to 
examine further the issue of contract law. Th e Commission Work Progra mme 2010 provided for a 
communication on European contract law. Cons equently, a 'Green Paper on policy options on 
progress towards a European contract law for consumers and businesses' (Green Paper) was 
published in July 2010. Following the publication of  the Green Paper, the Commission's Work 
Programme for 2011 provided for a legal instrument  of European contract law as a strategic 
initiative to be proposed in the last quarter of 2011. 221 
1.2. Organisation and timing  
The Commission adopted a Decision222 on 26 April 2010 to establish an Expert Group (EG). Its role 
was to produce a feasibility study of a 'user-friendly' instrument covering the life-cycle of a contract. The EG was composed of, former judges, academic s, legal practitioners and representatives of 
consumer and business organisations (who acted in  their personal capacity). The EG members also 
reflected the main legal systems and traditions  within the EU. The EG feasibility study was 
completed at the end of April 2011.  It supported the Commission's work in developing its proposal 
for a legal instrument of a Common European Sales Law for the EU.  
An Impact Assessment Steering Group (IASG) was set up in May 2010. The participating 
Commission services included: the Secretariat General, the Legal Service, Directorate-General (DG) 
Competition, DG Communication, DG Economic and Fi nancial Affairs, DG Internal Market and 
Services, DG Enterprise and I ndustry, DG Health and Consumers,  DG Information Society and 
Media, DG Mobility and Transport, DG Trade. The IASG met 5 times and was consulted on the 
draft Green Paper on European contract law, on th e impact assessment (IA) report as well as on the 
provisions of the Expert Group and the possible in strument of a Common European Sales Law for 
the EU.   
 
                                                
 
216 COM(2001) 398, 11.7.2001. 
217 COM(2003) 68, 12.2.2003. 218 Von Bar, C., Clive, E. and Schulte Nölke, H. (eds.), Principles, Definitions and Model Rules of European Private Law. Draft  Common Frame of Reference  
(DCFR), Munich, Sellier, 2009. 219 Although financed by the Commission, the text is not an official Commission document. 220 Council Act, Stockholm Programme -  AN OPEN AND SECURE EUROPE SERVING AND PROTECTING CITIZENS , (2010/C 115/01) of 2.12. 20 09, 
No 17024/09. 
221 Commission's Work Programme for 2011, COM(2010) 623 final of 27.10.2010. 222 Commission Decision 2010/233/EU , OJ 105 of 27.4.2010 
 
 59 
1.3. Consultation and expertise  
 
1.3.1.  Public consultation  
The Commission organised several general and targeted public consultations throughout the IA 
process.   
• General consultations  
- The  Green Paper  opened an EU wide public consultatio n on 7 policy options. It was launched on 
1 July 2010 and closed on 31 January 2011.  
The Commission received 320 responses from all cat egories of stakeholders  from across the EU. 
The responses came from most Member States' gove rnments (20), some Member States' parliaments 
(5), senates (2) and other government bodies (4);  the European Economic and Social Committee; a 
large number of business organisations (137), severa l consumer organisations  (18) and a Catholic 
NGO; many associations of legal practitioners (52); a considerable  amount of academics (66) and a 
few individual businesses and citizens (14). Mo st responses came from respondents based in 
Germany (96), UK (47), Brussels (3 1), France (29) and Italy (25).  
 
The number of responses shows a widespread interest  for European contract law at all levels. While 
many respondents wanted to participate in the di scussion, some felt unable to provide in depth 
comments given the rhythm of the progress of the wo rk and that they did not  know the detail of the 
policy options. A large number of respondents stressed the importan ce of the outcome of the impact 
assessment for their ultimate position. 
 
With regard to the poli cy options set out in the Green Pape r, many respondents saw value in the 
Green Paper option 1 (publication of the results of the Expert Group) and supported green Paper 
option 2 (a 'toolbox' for the EU legislator). Howeve r, there was little support for Green Paper option 
3 (a Commission Recommendation).    With regard to Green Pape r option 4 (an optional inst rument of European contract law) the responses 
were more varied. Several Member States an d a considerable number of other respondents – 
particularly business representative s, legal practitioners and academ ics – said they could support an 
optional instrument, provided that it fulfilled certa in conditions (for example: had a high level of 
consumer protection, a clear and user-friendly nature, was clear about its link with the proposed 
Consumer Rights Directive and other EU-legisla tion). A large number of Member States and 
business representatives did not want to take a po sition at that time, because they did not know the 
detail of this option and the wo rk of the Expert Group. Some res pondents expressed a preference for 
Green Paper option 6 (a Regulation establishing a European contract  law that would replace Member 
States' national contract laws). There was very l ittle support for Green Paper options 5 (a minimum 
harmonisation Directive) and 7 (a Regulati on establishing a European civil code). 
 
 
Of those respondents to the Green  Paper who commented on the scop e of a European contract law 
instrument most only expressed  opinions on a toolbox (Green Paper option 2) and an optional 
instrument (Green Paper option 4). Out of t hose respondents who made explicit comments 
concerning the scope of the toolbox, the majority belie ved it should be as comp rehensive as possible, 
i.e. should not be restricted to certain types of contract and should have a rather broad scope. Out of 
those respondents who made explicit comments con cerning the scope of the optional instrument, the 
majority seemed in favour of an instrument wh ich focused on cross-border business to consumer 
(B2C) sales contracts.   
 
 60Based on the stakeholder responses to the Green Paper several specif ic and general concerns relating 
to the creation of a European cont ract law could be identified.  Diffe rent categories of stakeholders 
raised specific concerns. A number of Member  States were concerne d about business taking 
advantage of the weaker position of the consumer /SME, the reduction of the level of consumer 
protection and legal uncertainty. Some business representatives raised concerns relating to the 
increased legal uncertainty and an unbalanced hi gh level of consumer protection which would be 
burdensome for business. On the other hand, cons umer representatives insisted that any new 
regulatory or non-regulatory tool in  the field of consumer policy should have a clear added value for 
consumers, as they feared a reduction of consumer  protection levels in th eir Member States. They 
also expressed a specific concern relating to an optional instrument (Green Paper option 4), which 
they thought would lead to uncertainty and conf usion for consumers. Associations of legal 
practitioners were concerned about  an increase of legal complexity and uncertainty, largely due to 
the lack of accessible case law. 
 
The Commission addressed all the abovementioned concerns. With regards to the concern of 
Member States and consumer representatives a bout a decrease in cons umer protection, the 
Commission created a special sub-group within th e Expert Group focusing on ensuring a high level 
of consumer protection. However, the Commissi on also took care that the level of consumer 
protection would be balanced with the needs of business. It invited both consumer and business 
representatives as part of the key stakeholders expert group  (described in the paragraph below) to 
comment on a continuous basis on the work carried out by the Expert Group. This would ensure that 
the different views would be taken into account in the development of the substantive rules. 
Furthermore, the advice of the key stakeholder expert group was taken into account in order to 
ensure that the rules the Common European Sales Law for the EU pr oposal were user-friendly and 
practical. For this purpose, for instance a distinct ion between the rules fo r B2C and B2B was made. 
The Commission also addressed the specific con cern by consumer organisa tions that an optional 
instrument (Green Paper option 4) would create un certainty and confusion for consumers, as they 
would not be able to assess the implications of an  optional instrument when it applied to a contract 
instead of their national law. If this option were chosen for the Commission proposal, the Commission would develop a standardised inform ation notice, which busin esses would have to 
provide to consumers when they used the optional instrument. Th is information notice would be 
available in all official languages of the EU, but would have the same content. It would inform the 
consumers in their own language that the Common European Sales Law applied and what their key 
rights under this law would be. At the same time, the information notice would reduce the 
administrative burden for businesses, as it will remove the need for each trader to individually 
explain the implications of the Common Europ ean Sales Law for the EU to consumers. The 
Commission also examined ways to minimise th e legal uncertainty which would accompany the 
introduction of a Common European Sales Law for the EU. One solution could be the creation of a 
data-base on relevant future European and nati onal case-law which would be accessible by legal 
practitioners from all Member Stat es (i.e. judges, notarie s, lawyers and legal ad visors).  For this 
purpose the Commission would expl ore the suitability of comparable databases (e.g. the JURE 
Database) and systems linking national authoritie s (e.g. the Internal Market Information System
223, 
European e-Justice Portal). 
- A key stakeholder experts group  was set up in September 2010. It included representatives of the 
main European organisations of busine ss (Businesseurope, UEAPME, Eurocommerce, 
Eurochambres and the Internationa l Chamber of Commerce),  consum ers (BEUC), representatives of 
                                                 
223 Commission Staff Working Paper, Background information related to the strategy for expanding and developing the Internal Ma rket Information System ( ‛IMI’), 
Brussels,  
21.2.2011, SEC(2011) 206 final, p. 9: European contract law is indicated as a potential area which could benefit from an extens ion of IMI  to cooperation of national judicial  
authorities.    
 
 61the legal professions of lawyers and notaries (CCBE and CNUE) and representatives from the 
banking and insurance sectors (EBIC and CEA). 
The first role of the stakeholder group was to provide a practitioner' s perspective on the work of the 
Expert Group, thereby ensuring the instrument developed was user-frie ndly and practical. The 
Commission organised 10 meetings during which the stakeholder group  were continuously consulted 
on the draft chapters of  the instrument developed by the Expert Group.  
Once the concrete work on the preparation of th e IA was launched, the stakeholder group discussed 
IA related matters at 5 of its meetings. The Commission presented the developments and asked 
stakeholders to comment on the main issues concerning the methodology of the IA study and the 
approach to the data collection, problem definition and the analysis of impacts of policy options in 
the IA report. The stakeholders' suggestions cont ributed to refining the methodology of the IA study, 
the development of the problem definition and the analysis of the impact s in the IA report.  
 
•  Specific consultations targeting main stakeholder groups  
- A workshop with business stakehol ders on potential benefits of a Eu ropean contract law instrument 
from the perspective of large businesses a nd SMEs was organised in November 2010.  
- Several surveys consulte d businesses on their attit udes and experiences with  problems related to 
contract law, and the impacts of an instrument of European contra ct law. Two Flash Eurobarometer 
surveys (EB 320/2011 and 321/2011) enqu ired about contract law rela ted experiences of companies 
involved or interested in cross- border trade with busin esses and consumers. The SME Panel survey 
conducted within the Enterprise Europe Network gathered responses from 1,047 micro, small and 
medium sized businesses, while a European Busi ness Test Panel attracted responses from 378 
companies of all sizes at the end of 2010.   
-  Targeted meetings with consumer stakeholde rs: took place between October and January 2010. 
Commission officials met representatives of BEUC  and attended two meetings of the European 
Consumer Consultative Group (ECCG ) to discuss the Green Paper and how it addressed consumer 
problems.   
- A consumer survey (Flash Eurobarometer 299) enquired about consumer experiences with cross-
border shopping and in particular pr oblems related to contract law.  
The survey results were used as data sources on business and consumer attitudes to contract law 
related problems and the assessmen t of policy options in the IA re port. The Commission ensured that 
the specific concerns expressed by representativ es of business, consumers and legal practitioner 
stakeholders during the consulta tion process were taken into account in the development of 
substantive provisions of the text  drafted by the EG and in the IA.  In particular, the comments, 
questions and suggestions of the stakeholder gr oup were discussed and followed up by the EG.  
 
1.3.2.  Outside expertise  
In November 2010 the Commission awarded a public tender to IBF Internati onal Consulting to carry 
out a study in the context of preparing the IA. The aim of the study was to a ssist the Commission in 
gathering further evidence on the problems identified and to carry out an ec onomic analysis of the 
impacts of the main policy options set out in the Green Paper. The contractor carried out economic 
analysis and modelling, supplemented by in-depth in terviews with representatives of business and 
consumer organisations and legal professionals.  The draft final report of the study was submitted on 
16 March 2011 and the final report was submitted in spring 2011. 
 
 
 62ANNEX II: THE CURRENT LEGAL FRAMEWORK 
1. Overview  
The current legal framework in the area of contract law in the EU is characterised by the differences 
between the respective national laws of the Member States (MS).   The EU developed uniform conflict of law rules, wh ich help determine which substantive laws apply 
to cross-border contracts. However, when it co mes to the substantive laws, the current legal 
framework does not contain a single set of uniform substa ntive contract law ru les which would cover 
a life cycle of a cross-border c ontract comprehensively. A patchwor k of European and international 
rules has led to a limited approximation of national laws only in a few areas of contract law, as 
described in sections 2 and 3 below.   As a result, substantial differe nces between MS contract laws  remain under the current legal 
framework. These differences in contract law are s een as a barrier to cross-border trade by business 
with a slightly higher impact on B2C tr ansactions than in B2B transactions.
 224 
 
• Conflict of law rules 
 
The EU put in place uniform conflict of law rules  on contractual225 and non-contractual 
obligations226 in order to improve legal certainty for cross-border contracts. Conflict of law rules 
allow contracting parties within certain limits to  choose which law applies to their contract and 
which law applies in the absence of choice.   However, due to the nature of conflict of law rules, even uniform conflict of law rules cannot 
remove the differences between su bstantive contract law. They onl y lead to the application of a 
given substantive national law in cross-border transactions when ot herwise several different national 
laws could potentially apply. This means that, no ma tter what the choice is, at least for one of the 
parties to a contract the applicable law is a forei gn law. This party is ther efore disadvantaged by the 
need to familiarise itself with a different legal system. This situation disadvantages both businesses 
and consumers who have to deal with unfamiliar foreign laws in cross-border transactions.   
• Substantive rules   
 
The EU has partially reduced the differences by ha rmonsation measures in some areas of contract 
law. The legal framework applicable to B2C contracts has been ch aracterised by minimum 
harmonisation legislation at EU level. While the c onsumer acquis has led to an increase of consumer 
protection to the advantage of cons umers, it does not completely eliminate the differences in national 
contract laws. MS still have th e possibility to go beyond the mini mum standards established by the 
consumer acquis. They can also legislate freely in the areas of contract  law where no European 
legislation has been adopted.   The legal framework applicable to B2B contra cts has been characterised by very limited 
harmonsation measures at European level. Unifor m rules of a wider scope  have been introduced 
through an instrument of international law, th e 1980 UN Convention on the International Sale of 
Goods (Vienna Convention), which applies by defau lt to cross-border B2B transactions. However, 
                                                
 
224 See, for example, Eurobarometers 320 on European contract law in business-to-business transactions (EB 320) and 321 on Euro pean contract law in consumer  
transactions of 2011(EB 321): 32% in B2B and 36% in B2C of exporting businesses said that contract law difficulties were a barr ier to cross border trade and were  
almost equally cited as other practical barriers such as language and delivery. See also the SME Panel, the EBTP, 2010 surveys,  presented in Annex 3 and the Clifford  
Chance Survey in European Contract Law (2005). 
225 Regulation (EC) No 593/2008 of the European Parliament and of  the Council on the law applicable to contractual obligations (the Rome I Regulation). 
226 Regulation (EC) No  864/2007 of the European Parliament and of the Council on law applicable in non-contractual obligations  (Rome II Regulation). 
 
 63as described below the instrument s of international law are not co mprehensive and have a number of 
other limitations. They are not widely used in practi ce, with less than 1 in 10 businesses saying that 
they frequently apply them in B2B cross-border transactions.227 
 
2. Legal framework for business-to-consumer (B2C) contracts 
While the overall legal framework for B2C contract s ensures an adequate level of protection for 
consumers who shop in their own country, it crea tes increased complexity and confusion for pro-
active consumers who shop cross-border. Thus, it does not encourage consumers to seek better 
opportunities in the internal mark et. It mostly does not provide a uniform set of  rules thereby 
creating the necessary consumer confidence. It al so creates increased complexity and costs for 
businesses interested in selli ng to consumers across border.  
a) Conflict-of-law rules.  The Union put in place uniform c onflict-of-law rules which cover B2C 
contracts. These rules aim to protect consumer s in situations where the business pursues its 
commercial activities or directs this  activity to the country  of habitual residence of the consumer. In 
practice, whether the business direct s its activity to the consumer's country has to be determined on a 
case-by-case basis.228 This is particularly relevant for e-co mmerce transactions where it may not be 
obvious to which countries a business adve rtises and markets through its web-site. 
Thus, in the absence of a choice of  law, in a situation described in  the paragraph above, the law of 
the consumer's country of habitual residence applie s (Article 6(1), Rome I Re gulation). If the parties 
choose a law other than the law of the country of th e habitual residence of the consumer – in practice 
mostly the seller's law - according to Article 6(2) of the Ro me I Regulation, the contract cannot 
deprive the consumer of the manda tory protection afforded by his or her country. Thus, consumers 
can be confident that they will benefit from at l east the same level of protection as guaranteed in 
their country of residence. 
Practically, the Rome I Regulation does not provide an appropriate level of protection to the pro-
active consumer who shops cross- border as it only grants the co nsumer the protection of the 
mandatory rules of his own national law in cas es where the trader directs its activities229 to the MS 
where the consumer is domiciled. If the trader does not envisage doing business with consumers 
from another MS, but agrees to contract with them  if they contact him on their own initiative, the 
consumers do not benefit from the protection rule s of their national law. These consumers fall under 
the general choice-of-law rules ac cording to which parties are free  to choose the a pplicable law, 
which will lead in practice mostly to  the application of the seller's law. In the absence of choice, the 
law of the seller applies anyway. This means that  consumers who want to take advantage of the 
internal market and want to buy something in a nother country out of th eir own initiative are 
disadvantaged compared to those consumers who are contacted by a foreign trader in their own 
country.  
                                                 
227 EB 320, p. 27. 
228 In the recent  Pammer & Alpenhof judm ent of 7 December 2010 (Joined cases C-585/08 and C-144/09) the Court of Justice estab lished criteria for assessing whether a  
business directs its  country of residence.  However,  as th ese criteria require a case-by-case analysis a degree  of uncertain ty about the level of consumer protection in cross- 
border trade remains. 229 The concept of "commercial or professional activities di rected to the consumer’s domicile",  has been clarified by the Cort of Jutsice in the Pammer/Alpenhof judgment 
of 7 December 2010 (Joined cases C-585/08 and C-144/09). 
 
 64b)  EU consumer acqui s: The consumer contract acquis  consists of a number of Directives230 
mostly based on the principle of minimum harmoni sation. The Directives on consumer contract law 
cover the areas of doorstep selling,231 unfair contract terms,232 distance selling233 and sales and 
commercial guarantees.234 As these Directives were harmoni sed at a minimum level, MS, in 
implementing their provisions into national laws, were allowed to go beyond them (only) in favour 
of the consumer. As MS used this possibility to differing extents, the resu lt was an improvement of 
consumer protection in the EU, but also a patchy legal landscape.235 As this legal situation was 
fragmented along national frontiers, it did not achieve the internal ma rket integration that was also 
intended. 
The Commission addressed the differences in the MS consumer contract laws by its 2008 proposal 
for a Consumer Rights Directive (CRD).236 The CRD proposal was aimed at  facilitating cross-border 
shopping and sales and up-grading core  consumer rights by consolidat ing the existing legislation in 
the area of consumer contract law.  This w ould have been achieved on the basis of a fully 
harmonised set of key consumer contract provisions of interest for the func tioning of the internal 
market. To this end the initial proposal of 2008 aime d at revising the Directiv es on doorstep selling, 
unfair terms, distance contracts and consumer  sales and commercial guarantees. These four 
Directives would be merged into  a single horizontal instrument re gulating the common aspects in a 
systematic fashion, removing inconsistencies and closing gaps.  However, two years of intense negotiations in the Council and European Parliament led to a considerable reduction of the sc ope of the CRD. Firstly, its appl ication was generally limited to 
distance and off-premises contract s. Secondly, two out of the four  areas included in the initial 
proposal were ultimately excluded from the Directive's scope, namely the rules on sales and unfair terms. The impossibility to agree on fully harmonis ed rules on sales and unfair terms highlighted the 
limits of a full harmonisation approach in core areas of national contract law.  
In any case, even with these fully harmonised provisions in the CRD, there will be a need to apply 
them in conjunction with other nati onal provisions of gene ral contract law, for example on remedies 
for breach of information duties. Consequently, differe nces between the contract  laws of the MS will 
remain even after the adoption of the CRD.  
The Directive on electronic commerce limits it self to some contract law provisions,
237 which ensure 
that contracts concluded by electronic means ar e valid, that consumers are given certain pre-
contractual information and that providers acknowl edge receipt of the orders placed by electronic 
means.  
                                                 
230 Council Directive 85/577/EEC of 20 December 1985 on contracts negotiated away from business premises, Council Directive  90 /314/EEC on package travel, package 
holidays and package tours , Council Directive 1993/13/EEC of 5 April 1993 on unfair terms in consumer contracts; Directive 97/ 7/EC of the European Parliament of and 
the Council of 20 May 1997 on the protection of consumers in respect of distance contracts distance contracts; of the European Parliament and of the Council of 25 May 
1999 on certain aspects of the sale of consumer goods and asso ciated guarantees; Directive 2002/65/EC of the European Parliamen t and of the Council of 23 September 
2002 concerning the di stance marketing of consumer financia l services; Directive 2008/122/EC of the European Parliament and of the Council of 14 January 2009 on the  
protection of consumers in respect of certain aspects of timesh are, long-term holiday product, resale and exchange contracts; D irective 2008/48/EC of the European  
Parliament and of the Council of 23 April 2008 on credit agreements for consumers.  231 Council Directive 85/577/EEC of 20 December 1985 aims to protect the consumer in respect of contracts negotiated away from business premises. 
232 Council Directive 1993/13/EEC of 5 April 1993 on unfair terms in consumer contracts. 
233 Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of  distance contracts. 
234 Directive 1999/44/EC of the European Parliament and of the Co uncil of 25 May 1999 on certain aspects of the sale of consume r goods and associated guarantees 
235 The "EC Consumer Law Compendium"(up-dated version of 2007 coveri ng all 27 MS) shows to what extent MS have made use of mini mum clauses and options when 
transposing consumer acquis. The Consumer Law Compendium is a comparative study on the implementa tion of 8 consumer Directives in the legislation of MS, carried out 
by the University of Bielefeld, on request by the European Commission. The Green Paper  on the Review of the Consumer Acquis, C OM (2006) 744 final of 08.02.2007, 
acknowledges that the minimum harmoni
sation directives have led to a fragmentation of national laws, p.6.  
236 Proposal for a Directive of the European Parliament and of the Council on consumer rights,  COM(2008) 614, 8.10.2008. 
237 Article 9, 10 and 11 of Directive 2000/31/E C of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society  
services, in particular electronic co mmerce, in the Internal Market ('Di rective on electronic commerce'). 
 
 653. Legal framework for business-to-business (B2B) contracts  
The legal framework for B2B contracts lacks a comprehensive set of uniform rules and is 
characterised by the need to nego tiate applicable law in cross-bor der contracts. The negotiations 
often disadvantage SMEs, which frequently have  to apply an unfamiliar  law of their business 
partner. Even though the Vienna Convention, in troduced a uniform set of rules, it is not 
comprehensive and has several limitations which have led to its limited use.  
a) Conflict-of-law rules.  For B2B contracts, uniform choice of law rules stipulate that the parties 
are free to choose the app licable law, with a very  limited number of exceptions. In practice however, 
where there is a considerable difference in bargai ning power between the par ties to a contract (e.g. 
often between a big company and an SME) the appli cable law is generally im posed by the party with 
more bargaining power. If both par ties have a comparable negotiating power, for instance two small 
companies in a cross-border region, the negotiations  may be difficult for both of them. In contracts 
between SMEs of comparable barg aining power the need to negotiate  the applicable law may be a 
significant obstacle for both parties, as none of th em may be familiar and w illing to accept the law of 
the other partner.238 One in two respondents to  the SME panel survey i ndicated that they saw 
negotiations on applicable  law as an obstacle to cross-border trade. 239 
 
a. EU acquis substantive rules The Directive on electronic commerce contains some pre-
contractual information requirements for contracts concluded online.   
The Directive on combating late payments240 applies only in B2B transactions and harmonises the 
rules on the default interest rate which apply in cases  of late payment. It al so contains a test of  
unfairness of contractual terms rela ting to stipulated interest rates.  However, MS may continue to 
maintain or to bring into force rules which are mo re favourable to the credito r than the provisions of 
the new Directive. Experience with the predecesso r Directive on combating late payments has shown 
that MS made use of the possibilities to depart from the miniumum standards established and by 
consequence the implementing rules across the EU were not uniform.241 Thus, even though there are 
harmonised rules on late payments at the EU level, businesses still have to familiarise themselves 
with potential differences in the respective national laws.   
c. International substantive law. The Vienna Convention is an international convention which 
most of the MS have ratified. It is by default th e applicable law in B2B cross-border sales contracts 
whenever the parties have not  excluded its application.  
 However, the Vienna Convention does not apply unifo rmly in the EU. Firstly, it has not been ratified 
by Ireland, Malta, Portugal and th e UK. Secondly, there is no singl e court which would ensure its 
uniform interpretation. Furthermore, the Vienna C onvention covers only some issues of general 
contract law, notably the rules on formation of  contracts, as well as sale-specific provisions. 
Therefore, it leaves many potential  disputes relating to other matters  of general contract law to be 
solved by the national law applicable acco rding to conflict of law rules.    
 The UNIDROIT Principles of International Commer cial Contracts can be incorporated into B2B 
contracts. However, the non-binding nature of these principles as we ll as the absence of a 
                                                
 
238 See response to the Green Paper by the Scottish Law Commission, p. 5 
239 55% of the respondents to the SME Panel Survey indicated that "Difficulties in negotiating with the other contractual party  on applicable contract" were an obstacle in 
cross-border trade.  240 The Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in comm ercial transactions (recast)  
241 An analysis of the implementation of Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payments in commercial 
transactions showed that some Member States have gone beyond the minimum standards established by the Directive. For instance,  on the implementation of Article 3(1)(d) 
on the interest for late payment,  see: Study on the effectiven ess of EC legislation on combating late payment (2006), p.140-14 3 available at 
http://ec.europa.eu/enterprise/policies/single-market-goods/files/l ate_payments/doc/finalreport_en.pdf  and Impact Assessment a ccompanying the Proposal  for a Directive of 
the European Parliament on combating late payment in co mmercial transactions (recast) SEC(2009) 315, p. 6.  
 
 66mechanism of uniform interpretati on contribute to its limited success in day-to-day commercial 
transactions.   Among others, the abovementioned difficulties l ead to a situation, wh ere in practice these 
instruments are not frequently applied.
242  
 
4. Limitations of the current legal framework 
The current legal framework in the EU does not c ontain a single set of uniform and comprehensive 
contract law rules which could be used by cons umers and businesses in cross-border trade.  
 As illustrated in Table 1 , the current legal framework consists of a patchwork of contract law rules, introduced via different instruments limited only to some of the key areas of contract law. They 
include some fully harmonised rules, but also a nu mber of minimum standards and gaps in the EU 
acquis which allow for differences in the laws of MS to evolve.  Table 1 illustrates key areas of contract law covering the life-cy cle of a contract.
243 It shows that the 
existing acquis  and international rules are limited in scope: out of the 13 key contract law areas they 
only cover six for B2C (one only partially) and eight areas for B2B contracts ( one only partially). As 
demonstrated by Table 1 the current legal framewor k lacks a uniform set of rules that would cover 
the whole life cycle of a contract both for B2C a nd B2B cross-border transactions comprehensively. 
The remaining differences in contract laws continue  to generate obstacles to the smooth functioning 
of the internal market both on the demand and supply side.  
                                                 
242 In EB 320,  2011: only 9% of respondents said that their cr oss-border contracts are mainly covered by international instrum ents such as the Vienna Convention and  
UNIDROIT Principles.  243 The Expert Group created by the Commission identified these areas as key areas of contract law for cross-border contracts.   
 
 67 
Table 1: EU legal framework in the area of contract law 
 
Contract law 
area Consumer 
Rights 
Directive 
 Other 
relevant EU 
consumer 
legislation  Directive on electronic 
commerce
  Directive on 
electronic 
commerce  Directive on 
combating 
late 
payments  Vienna Convention  
on the 
international  
sale of goods
  
Pre-
contractual information 
and 
negotiation YES YES YES YES NO NO with 
 a few exceptions 
Conclusion 
of contract NO 
 NO 
 YES (partially) 
 NO 
 NO YES 
Rights to 
withdraw YES YES NO NO NO NO 
Defects in 
consent NO NO NO NO NO NO 
Interpretatio
n 
 NO  NO with one 
exception NO NO NO YES 
Contents 
and effects  NO NO NO NO NO NO with  
a few exceptions 
Unfair contract terms NO YES NO NO YES 
(partially) NO 
Obligations 
and remedies of 
the parties 
to a sales contract NO YES NO NO NO YES 
Delivery and 
Passing of Risk YES NO NO NO NO YES 
Obligations 
and remedies of 
the parties 
to a related 
service 
contract NO NO NO NO NO NO 
Damages, 
Stipulated 
payments for non-
performance 
and interest NO NO NO NO YES 
(partially) YES 
Restitution NO NO NO NO NO YES 
Prescription NO NO NO NO NO NO 
       
 
5. The added value of a Common European Sales Law  
A Common European Sales Law w ould add value to the current legal framework as it would 
introduce a uniform set of contract law rule s which cover the life cycle of a contract 
comprehensively. These rules would be the same for all economic operators  in the EU who use 
them, irrespective of the MS where they are ba sed. Common European Sales Law rules could be 
used both for B2C and B2B transactions within its scope.   
 
 68As these rules would cover the w hole life cycle of a cont ract they would addr ess the main problems 
which could practically affect  a cross-border transaction.  
 
The feasibility study developed by the Expert Group the Commission cr eated contains rules for the 
key contract law areas. They cove r the lifecycle of a contract an d the main contractual problems 
which may occur within a cross-bor der transaction. The f easibility study could serve as a basis for 
developing the substantive rules of a Co mmon European Sales Law instrument.  
 Table 2 illustrates how a Common European Sales Law (see respective colu mns) fits into and 
completes the gaps within the current legal fra mework. It shows that the scope of a Common 
European Sales Law will cover the whole li fe cycle of a contract comprehensively.  
 
Table 2: Common European Sales Law and the current legal framework 
 
B2C CONTRACTS B2B CONTRACTS 
Contract 
law area Consumer 
Rights 
Directive 
 Other 
relevant 
EU 
consumer 
legislation  Directive 
on 
electronic 
commerce Commo
n 
Europe
an 
Sales 
Law  
Commo
n 
Europea
n Sales 
Law  Directive 
on 
electronic 
commerce Directive 
on 
combating 
late 
payments Vienna 
Conventio
n on the 
internation
al sale of 
goods  
Pre-
contractual 
information and 
negotiation YES YES YES 
YES YES YES NO NO with a 
few 
exceptions 
Conclusion of contract NO 
 NO 
 YES 
(partially) 
 YES YES NO 
 NO YES 
Rights to 
withdraw YES YES NO YES YES NO NO NO 
Defects in 
consent NO NO NO YES YES NO NO NO 
Interpretatio
n  NO  NO with 
one exception NO 
YES YES NO NO YES 
Contents 
and effects  NO NO NO YES YES NO NO NO with a 
few exceptions 
Unfair contract terms NO YES NO 
YES YES NO YES 
(partially) NO 
Obligations 
and remedies of 
the parties 
to a sales contract NO YES NO 
YES  YES NO NO YES 
Delivery and 
Passing of 
Risk YES NO NO YES YES NO NO YES 
Obligations 
and 
remedies of 
the parties to a related 
service 
contract NO NO NO 
YES YES NO NO NO 
Damages, 
Stipulated 
payments for NO NO NO YES YES NO YES 
(partially) YES 
 
 69non-
performance 
and interest 
Restitution NO NO NO YES YES NO NO YES 
Prescription NO NO NO YES YES NO NO NO 
 
 
6. Consistency of the Common European Sales Law instrument with the existing legal 
framework  
A Common European Sales Law instru ment would be consistent with  existing Europe an legislation 
in the areas it covers. Consistency is achieved by taking into account the re levant existing rules of 
the EU acquis in the legal areas a Common Eu ropean Sales Law instrument would cover. 
 Fully harmonised rules of the EU acquis are taken over completely. For instance, a Common 
European Sales Law instrument would take ove r the fully harmonised rules on pre-contractual 
information for distance and off-premises contract s from the CRD. The benefit of this approach is 
that businesses would have to comply with the sa me rules they anyhow have to observe according to 
their domestic legislation. In addi tion, a Common European Sales Law instrument could not be used 
to circumvent otherwise applicable national rules implementing the respective Directives.  
 Rules of the EU acquis which have been harmoni sed at a minimal level are taken as a basis. 
However, in a number of cases the respective provisions of a Comm on European Sales Law 
instrument could go beyond the minimum standards of the acquis . For instance, the rules on sales 
remedies have been harmonised at a minimum le vel by the Consumer Sales Directive. A Common 
European Sales Law instrument could provide for a higher level of consumer protection by giving 
consumers a free choice of remedies for defective products (as opposed to the hierarchy of remedies 
established by the Consumer Sale s Directive. However, as oppos ed to the differing MS laws 
implementing the Directive, the ru les on sales remedies would be re gulated in a uniform way under a 
Common European Sales Law instrument. Consum ers would benefit from a higher level of 
consumer protection. The benefit for business would be that they could operate based on the same 
rules in all MS when using the Comm on European Sales Law instrument.  
 Consistency of a Common European Sales Law instru ment with all relevant legislative instruments 
would also be ensured in the long term. To this end, the review of the Common European Sales Law 
instrument would take into accoun t the potential future changes in relevant European legislation.  
 
The existing instruments of international law have also been taken into ac count in the process of 
developing a Common European Sale s Law instrument. For instance, the Vienna Convention and the 
UNIDROIT Principles were among th e sources which inspired the wo rk of the Expert Group created 
by the Commission. Based on the lessons learnt from  the use of the Vienna Convention, as well as 
other existing instruments of international law,  a Common European Sales Law instrument could go 
beyond or build upon the existing intern ational standards, to the extent  improvements are necessary.    
 
• Relationship with the Consumer Rights Directive  
 
A number of stakeholders, in par ticular business representatives, have pointed out the importance of 
ensuring the consistency244 between a Common European Sales Law instrument and the Consumer 
Rights Directive (CRD) and that the two instruments work in tandem.245 Indeed, a Common 
European Sales Law instrument and the CRD are interlinked, as they address similar problems and largely pursue the same objectives for B2C transact ions. Both instruments address the fragmentation 
                                                
 
244 Response to the Green Paper, for instance by UEAPME, p.2-3. 
245 Responses to the Green Paper, for instance by Business Europe, p. 2.    
 
 70of the legal framework in the area of B2C contract s and the resulting problems of the business' and 
consumers' reluctance to engage in cross-border trad e and reap the benefits of  the internal market.  
 However, a Common European Sales Law instrument  and the CRD have a different scope. A major 
difference is that the CRD only covers B2C c ontracts, while a Common European Sales Law 
instrument would also contain ru les on B2B contracts. Furthermore,  the CRD only covers three key 
areas of consumer contract law (pre-contractual informa tion, right of withdrawal and 
delivery/passing of risk). While a Common European  Sales Law instrument would also cover these 
areas, it would also contain rules in 10 additional areas of contract law. Finally, the CRD generally applies to distance and off-premises contracts,  while a Common European Sales Law instrument 
would apply to all transactions, irresp ective of the distri bution channel.  
 Consistency between the two instru ments has to be ensured in th e areas where the two of them 
overlap, i.e. the two instruments la rgely overlap in the ar eas of pre-contractual information, right of 
withdrawal and delivery and passing of risk.  
 
 71ANNEX III: CALCULATION OF OPPORTUNITY AND TRANSACTION COSTS 
 
 
1. Opportunity costs for intra-EU trade 
 
Eurobarometer surveys (EB) were used to find out if and to what extent  companies were dissuaded 
from exports due to contract law related barriers. In response to the question "how often contract law 
related obstacles deterred the company from conducting cross-bord er transactions", respondents 
could answer "always", "often", "not very often" "never", "do not know".246 The percentage of 
companies which were deterred from cross-border tr ade can be established based on these responses. 
However, in order to identify the frequency and number of failed tr ansactions more precisely, some 
assumptions need to be made. The cumulative amount  of failed transactions can be expressed as 
opportunity costs. It represents the forgone trade for the EU econom y due to contract law related 
barriers.   The calculation of opport unity costs in the main IA report  depends on the assumptions on the 
weighting of the qualitative answers indicating the frequency as "often" or "not very often" of failed 
transactions of the surveyed ente rprises which were dissuaded from trade due to contract law from 
various degrees. Table 1 presents the full range of  assumptions to quantify "often" and "not very 
often".  It shows the opportunity co sts for intra-EU trade which does not take place due to contract 
law related problems.  In order to  identify how often tran sactions fail due to this reason a frequency 
going from 0 to 100% is attributed to a "company often deterred due to c ontract law" and to a 
"company not very often deterred due to contract law". 0% means that the potential opportunity cost 
generated by enterprises which are not deterred in every transacti on, but only in some  ("often" and 
"not very often"), are not taken in to account. The table also reflects the theoretical values up to 100%  
as a weight (which would mean that all the trad e of those companies who were deterred "often" or 
"not very often" is considered as a missed opportunity), even though th is is not a real istic scenario.  
 
Table 1: Opportunity costs for businesses: intra-EU trade not made - different weights (€ 
billion) 
 
Weight for "not very 
often" (  β ) → 
Weight for "often" ↓( 
α) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 
0% 26 68.4 110.8 153.2 195.6 238 280.4 322.8 365.2 407.6 450 
10% 36.4 78.8 121.2 163.6 206 248.4 290.8 333.2 375.6 418 460.4 
20% 46.8 89.2 131.6 174 216.4 258.8 301.2 343.6 386 428.4 470.8 
30% 57.2 99.6 142 184.4 226.8 269.2 311.6 354 396.4 438.8 481.2 
40% 67.6 110 152.4 194.8 237.2 279.6 322 364.4 406.8 449.2 491.6 
50% 78 120.4 162.8 205.2 247.6 290 332.4 374.8 417.2 459.6 502 
60% 88.4 130.8 173.2 215.6 258 300.4 342.8 385.2 427.6 470 512.4 
70% 98.8 141.2 183.6 226 268.4 310.8 353.2 395.6 438 480.4 522.8 
80% 109.2 151.6 194 236.4 278.8 321.2 363.6 406 448.4 490.8 533.2 
90% 119.6 162 204.4 246.8 289.2 331.6 374 416.4 458.8 501.2 543.6 
100% 130 172.4 214.8 257.2 299.6 342 384.4 426.8 469.2 511.6 554 
 
When 0% is the weight for both "often" and "not very  often" the opportunity cost  is considered to be 
only the one generated by the 0.96%247 of involved or interested in cr oss-border trade companies that 
                                                 
246 EB 320, EB 321.  
247 EB 320 European contract law in business-to-business transactions, 2011: 3% of companies that consider contract law as a ba rrier in cross-border trade (out of 32 % of 
companies which see contract law as a barrie r to B2B transactions = 0.96% of all comp anies) are always deterred from cross-bord er trade for this reason . It is assumed that 
 
 72are "always" deterred from cross-bo rder transactions due to contra ct law. The opportunity costs for 
this group of companies amount to €26 billion.   However, this estimate does not take into acc ount the opportunity costs for companies who are 
deterred by contract law obstacles "often" or "not very often". The highlighted weights in the table 
are the most realistic assumptions for the values  of "often" and "not very often". Respectively, 
"often" is placed between 50% and 90%, of the cases and "not very often" between 0% and 40% of 
the cases. However, the table illustrates all pos sibilities between the minimum and maximum.   
 The calculation of opportunity costs for intra-EU trade is based on th e value of total intra-EU trade 
estimated by Eurostat at €2704 billion in 2008.
248 The value of forgone intr a-EU trade is calculated 
as a percentage of the actual  trade value, as follows:  
 
€2704 billion (total trade in goods in tra-EU in 2008) * 32% of companies  (exporting or interested in 
exporting) who see contract law as a barrier  to cross-border trade  * 3% of companies always249 
deterred from cross-border trade due to contract law (= €26 bn) 
+   α
250  €2704 billion * 32% of companies (exporting or interested in exporting) who see contract law 
as a barrier to cross-border trade * 12% of companies often251 deterred from cross-border trade 
due to contract law (= α *  €104 bn)   
+ β
252 € 2 704 billion *32% of companies (exporting or in terested in exporting) who see contract law 
as a barrier to cross-borde r trade * 49% of companies not very  often253 deterred from cross-border 
trade due to contract law  (= β *  €424 bn) 
 = opportunity costs  
 
Summarising the above:  €26 billion + α (€ 104 billion) + β (€ 424 billion) = opportunity costs.  
 
Each box of table 1 represents this  formula for different values of α and β
254. The most plausible 
ones are in bold.   The assumptions on the values of "often" and "not very often" underlying the calculations used in 
the IA report are: 
• For the high estimate:  α (the value for often)  = 70% and β (the value for not very often) = 
20%.  
• For the low estimate: α = 0 and β = 0, since only companies who were always deterred by 
contract law were considered and those who we re deterred partially were disregarded. This 
estimate is very conservative.  
 
                                                                                                                                                                   
 
companies deterred from trade due to contract law would represent the same share in exports. That  is, the calculations assume t hat the 0.96% of companies that are always 
deterred by contract law differences would, in the absence of these differences, account for 0.96% of exports. 
248 Eurostat Statistical Books, External and Intra-EU trade – a statistical yearbook, 2009 edition, p. 82. 
249 EB 320 European contract law in business-to-business transactions, 2011: 3% of companies that consider contract law as a ba rrier in cross-border trade (out of 32 % of 
B2B transactions) are always deterred fro m cross-border trade for this reason. 
250 Assumed numerical expression to quantify the frequency of "often", as illustrated by the figures in table 1. 251 EB 320 European contract law in business-to-business transactions, 2011: 12% of companies that consider contract law as a b arrier in cross-border trade (out of 32 % of 
B2B transactions) are often deterred from cross-border trade for this reason. 252 Assumed numerical expression to quantify the frequency of "not very often", as illustrated by the figures in table 1.  
253 EB 320 European contract law in business-to-business transactions, 2011: 49% of companies that consider contract law as a b arrier in cross-border trade (out of 32 % of 
B2B transactions) are not very often deterred from cross-border trade for this reason. 254 The weight for "always" is implicitly equal to 100%. 
 
 73The quality of the results does not change significantly, depending on whether the figures of 
companies deterred from B2B or B2C trade are used.255 For simplicity in the calculations, only the 
figures for B2B are used, as they are the decisi ve variable for the estim ate of opportunity costs.256 
 These opportunity costs show the lost value of  cross-border trade for companies which were 
dissuaded from cross-border trade due to contract la w. In part these costs will be reduced due to the 
domestic transactions which may take pl ace instead of the failed cross-border ones.
257 It is hardly 
possible to quantify the value of the domestic transactions which compensate for failed cross-border 
trade. This data is not available. However, it is plausible that the compensatory domestic trade most 
likely takes place at a higher price and is detrimental to consumers,  especially when they cannot 
purchase certain products at a higher price.  
 
2. Transaction costs at company level 
 
The average costs per company concluding a tr ansaction under a foreign applicable law are 
calculated on the basis of the results of about 1400 responses to  two independent surveys: the 
SME258 and European Business Test Panel259 surveys. The SME260 and the EBTP261 surveys were 
the most suitable data collection tools for obtain ing the necessary data, as they allow respondents 
sufficient time to prepare, before giving the an swers. Therefore, it was possible to ask precise 
questions, for instance on moneta ry ranges of costs savings. Th e Eurobarometer surveys (EB 320 
and EB 321) which could provide more representative  results than the SME and EBTP surveys, were 
not suitable for asking precise questions. Sin ce the EB 320 and 321 were conducted over the phone, 
the respondents did not have sufficient time to pr epare the answers in adva nce. Since, it was very 
likely that respondents would say they "did not know " the answer to a precise question, they were 
usually asked to give a general qualitative reply.  
Since the sample of responses to the SME panel wa s more representative than the one of the EBTP 
survey, the calculations of transa ction costs were carried out base d on the SME panel survey and the 
results were verified by calculations based on the EB TP. As indicated below, the findings of the two 
surveys are similar.    
2.1. Costs in B2B transactions 
 
The results of the SME panel survey on cost ranges are summarised in Table 2. Based on the 
responses of individual companies aver age transaction costs were estimated.  
 There are 136 companies which indicate the costs of cross-border transactions due to differences in 
contract law to be lower than €5,000; 109 companies indicate these costs as being in the range of €5,000 - €10,000; 45 companies in the range of €10,000-€15,000; 23 co mpanies in the range of 
€15,000-€30,000 and 27 companies estimate the costs to be more than €30,000.   
                                                
 
255 Based on EB 320 (Q3) and EB 321 (Q3), the percentage of expo rting of interested in exports companies deterred from cross-bo rder trade can be identified; always 
deterred: 0.96% of total trade for B2B, 0.72% for B2C; often deterred: 3.84% B2B and 5.04% B2C; not very often: 15.68% B2B and 14.76% B2C.  
256 B2C cross-border  trade represents only 0.44% of the overall EU trade, calculated based on figure on cross-border shopping under EB 298: 211.7 million of households 
* 25% purchasing abroad * € 800 average yearly expenditure = € 42.3 billion. 72% of this is purchased on holidays, business or shopping trips. The pure cross-border 
distance trade is € 12.1 billion.  So, out of the € 2,705 billion of international trade, B2C represents 0.44%. 257 The estimate does not reflect cross-border trade which failed for other reasons than contract law. It also does not take in to account the domestic transactions which could 
compensate the failed cross-border trade.   258 Results available at: http://ec.euro pa.eu/justice/policies/cons umer/docs/report_sme_pan el_survey_feb_2011_en.pdf 
259 Results available at: http://ec.europa.eu/yourvoice/ebtp/consultations/2010/european_contract_law/report_en.pdf 
260 The responses to the SME Panel survey are usually collected through face-to-face interviews or written questionnaires.   
261 The EBTP survey is conducted by means of a written questionnaire, which respondents are asked to fill in online; See brochu re on EBTP at 
http://ec.europa.eu/yourvoice/ebtp/docs/brochure/ebtp-brochure-a4_en.pdf  
 
 74Table 2: Businesses involved in B2B transactions – SME panel survey 
 
Question: If you could use a single European contract law in transactions across the EU, pleas e estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country?   
 Number  of firms involved 
only in B2B Number of firms involved 
in both B2B and B2C Total businesses involved 
in B2B transactions 
a. Less than € 5 000 
b. € 5 000-10 000 c. € 10 000-15 000 
d. € 15 000-30 000 
e.  More than €30 000 
f. Don’t know 85 
65 22 
16 
17 
159 51 
44 23 
7 
10 
110 136 
109 
45 
23 
27 
269 
Firms that gave an answer 
(other than "f") Number of firms 205 
 
364 135 
 
245 340 
 
609 
 
Based on these numbers the average costs associated with B2B transactions are calculated within a low and high estimate.  
• The low estimate:   
The costs are estimated at the average value
262 (i.e. €2,500, €7,500, €12,500, €22,500 and €30,000) 
of the indicated transaction costs by companies. 
(2 500*136 + 7 500*109 + 12 500*45 + 22 500*23 + 30 000*27)/340 = €8,963 
Thus, based on the low estimate the average transacti on costs for firms involved in B2B transactions 
(all businesses involved in B2B transactions)  amount to €8,963.  
• The high estimate: 
As evident from Table 2, 27 firms indicate that tr ansaction costs of entering one additional market 
are more than €30,000.  For the calculation of a hi gh estimate it is assumed that these costs are 
€50,000:  (2 500*136 + 7 500*109 + 12 500*45 + 22 500*23 + 50 000*27)/340 = €10,551  Thus, based on the low estimate the average transacti on costs for firms involved in B2B transactions 
amount to €10,551. 
 Based on these two estimates it is assumed th at B2B transaction costs range between €8,963 - 
€10,551. These costs are calculated on basis of the fourth column in Table 2 ( Total Businesses 
involved in B2B transactions) which covers all firms engaged in B2B transactions. Some of these 
firms however indicate that they are also involved in B2C transa ctions. For this reason, the same 
calculation of transaction cost s (as described above) is re peated for B2B considering only B2B 
transactions (column 2 in Table 2). For firms involved only in B2B transactions, transaction costs 
fall within a similar range of € 9,000 - €10,658. The latter
 range is used for the calculations in the 
report, as it reflects more accurately the cost s for companies involved in B2B transactions.263 
 
 
2.2. Costs in B2C Transactions  
 
Transaction costs for B2C are estimated in a similar way.  For B2C transactions (Table 3) transaction 
costs amount to €8,876-€10,268.264 For companies involved only in B2C transactions (Table 3, 
column 2) these costs are within a similar range and amount to €8,695 - €9,565265. The latter  range is 
                                                 
262 €30,000 is taken as a conservative figure for the low estimate  
263 This estimate deviates only marginally from the range between €8,963 - €10,551, which is based on the larger sample. 
264  8,876 = (2 500 * 62 + 7 500 * 51+12 500 * 23 + 22 500 * 11 + 30 000 * 11) / 158 or 10 268 = (2 500 * 62 + 7 500 * 51 + 12 500 * 23 + 22 500 * 11+ 50 000 * 11) / 
158 265  8 695 = (2 500 * 11+7 500 * 7 + 12 500 * 0 + 22 500 * 4 + 30 000 * 1) / 23 or 9 565 = (2 500 * 11 + 7 500 * 7 + 12 500 * 0  + 22 500 * 4 + 50 000 * 1) / 23 
 
 75used for the calculations in the report, as it is more conservative and reflects more accurately the 
costs for companies involved in B2C transactions.266 
 Table 3: Businesses involved in B2C transactions – SME panel survey 
 
Question: If you could use a single European contract law in transactions across the EU, pleas e estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country?   
 Number of firms 
involved only in B2C Number of firms involved in 
both B2C and B2B Total Businesses 
involved in B2C 
transactions 
a. Less than EUR 5 000 
b. € 5 000-10 000 
c. € 10 000-15 000 d. € 15 000-30 000 
e.  More than €30 000 
f. Don’t know 11 
7 
0 4 
1 
24 51 
44 
23 
7 
10 
110 62 
51 
23 11 
11 
134 
Firms that gave an answer (all rows except "f") 
Number of firms 
interviewed (a+b+c+d+e+f) 23 
47 135 
245 158 
292 
 
2.2.1.  Specific IT related costs in B2C transactions 
 
Furthermore, specific contract law related IT costs may occur for busin esses selling online to 
consumers in other EU countries. Business represen tatives assessed that the IT related costs stem 
from the need for a business to adapt its website to the legal requirements  of each Member State it 
directs its activity towards.267 
 This assessment can be verified by an estimate based on the SME Panel survey, which also shows that the transaction costs are higher in B2C tran sactions, when a business sells online. While the 
average transaction costs in B2C transact ions are estimated between €8,695 and €9,565 for 
companies selling online the av erage costs are €11,875 - €13,541. Ther efore, both in the high and 
low estimate the additional costs for e-comm erce amount to respectively €2,917 and €2,916.  The 
costs are estimated based on the formula:  
additional contract law related IT costs * % of  retailers exporting through e-commerce *  
average number of EU countries exported to. 
 
• The EBTP panel survey  
 
As already mentioned, the EBTP survey was used as  an additional independent data source, in order 
to verify the results of the SME panel.    The average transaction costs, based on Table 4, are similar to the cost s calculated based on the 
responses to the SME Panel surv ey and fall within the range of €11,132 – €14,704. However, since 
the EBTP survey attracted a smaller sample of res ponses, it is only used as an additional source in 
order to verify the reliability of the SME Panel figures.    
                                                
 
266 This estimate deviates only marginally from the range of €8,876-€10,268, which is based on the larger sample of companies ( 158) that declared doing business with 
both consumers and businesses. Furthermore it coincides with the estimates provided by the Federation of Small Businesses which  estimated that for an SME engaged in 
cross-border B2C trade the transaction costs amount to €9,120 pe r Member State. In order to verify the accuracy of this estimat e, the statistical standard error has been 
computed using a bootstrap analysis. It allowed drawing multiple samples from the sample that is actually available in order to  test the robustness of  the estimate. Computing 
30,000 re-samples, bootstrap shows that, within a 95% level of probability, B2C transaction costs cannot be lower than €5,181 o r higher than €1,4 292.  
267 The costs include adapting the web-site so that it can recognise the consumer's country of residence and retrieve the corre ct set of pages. See Federation of Small 
Businesses (FSB) in the UK, Response to the Green Paper on polic y options for progress towards a possible European contract law  for consumers and businesses, p.3; see 
FSB Position Paper on Rome I, p.3 for detailed breakdown of costs. 
 
 76 
Table 4: Businesses involved in B2B a nd B2C transactions – EBTP panel survey 
 
Question: If you could use a single European contract law in transactions across the EU, pleas e estimate the cost savings 
from saved transaction costs (for example legal fees, research and translation of foreign law) for expanding your activity 
in one additional EU country? 
 Number of firms involved in both B2B and B2C 
Less than € 1 000 15 
€ 1 000 – 5 000 42 
€ 5 001 – 10 000 36 
€ 10 001 – 15 000 9 
€ 15 001 – 30 000 13 
More than € 30 001 25 
Other 0 
Don't know 69 
  
Firms that gave an answer 140 
 
3. Number of Member States EU companies export to 
 
Eurobarometers 320 and 321 provide information a bout the number of EU countries where firms 
make cross-border transactions (EB 320, Q D6; EB 321, Q D5). It should be noted that the sample of 
EB 320 and 321 only includes companies with an intere st or experience in cro ss-border trade. Table 
5 and 6 present the results respectiv ely for B2B and B2C transactions.  
 Approximately 26% of companies involved in B2B trade are engage d in cross-border transactions 
with only one EU country; 38% with 2-3 EU countri es and 36% with four or more EU countries. A 
similar picture emerges from Table 6 on B2C tr ade. Approximately 86% of the interviewed 
managers indicate to be involved in cross-border  B2C transactions. Around 26% serve consumers in 
only one EU country, 35% in 2-3 EU countries  and 39% in four or more EU countries. 
 
Table 5: Firms involved in B2B transactions. 
D.6 Besides (your country), in how many other EU countries do you currently make cross-border transactions?  
 Number of all 
respondents  Share of all 
respondents (number of all 
respondents / f) 
 Share of all respondents 
exporting to a number of Member States (number 
of all respondents/g,, 
except rows a and e) 
a. Domestic transactions only 518 8% - 
b. Trading with 1 other EU countries 1 489 23% 26% 
c. Trading with 2-3 other EU countries 2 202 34% 38% 
d. Trading with at least 4 other EU countries 2 072 32% 36% 
e. Not answered 194 3% - 
f) Total number of interviewed firms 
(a+b+c+d+e) 6 475 100% - 
g) Total number of firms trading cross-
border (b+c+d) 5 763 89% 100% 
Source: Flash Eurobarometer 320. 
Note : The survey is based on a random sample of 6,475 managers in  27 EU Member States. The sample includes only enterprises that ar e currently 
involved in cross-border B2B transactions (sales/purchase of goods or services) or are planning to do this in the future. The s ample is randomly 
selected in each country within the follo wing activity sectors: manufacturing; whol esale and retail trade; accommodation and fo od service activities; 
information and communication; fina ncial and insurance activities.     
 
 77 
 
Table 6: Firms involved in B2C transactions . 
D.5 Besides (your country), in how many other EU countries do you currently make cross-border transactions? 
 Number of all 
respondents Share of all 
respondents (number of 
all 
respondents / f) Share of all  
respondents exporting to a number of  
Member States  
(number of all respondents/g, except 
rows a and e) 
a. Selling only to domestic consumers 517 8% - 
b. Selling to consumers in 1 other EU country 1 422 22% 26% 
c. Selling to consumers in 2-3 other EU countries 1 940 30% 35% 
d. Selling to consumers in at least 4 other EU countries 2 198 34% 39% 
e. Not answered 388 6% - 
f) Total number of interviewed firms (a+b+c+d+e) 6 465 100% - 
g) Total number of firms trading cross-border (b+c+d) 5 560 86% 100% 
Source: Flash Eurobarometer 321.  
Note: The survey is based on a random sample of 6,465 managers in  27 EU Member States. The sample includes only enterprises tha t are currently 
involved in cross-border B2C transactions (sales/purchase of goods or services) or are planning to do this in the future. The s ample is randomly 
selected in each country within the follo wing activity sectors: manufacturing; whol esale and retail trade; accommodation and fo od service activities; 
information and communication; financia l and insurance activities.       
 
   
An estimate of the number of Member States where exporting companies conduct cross-border 
transactions can be made on the basis of the above tables (considering points b, c and d.)   
 Thus, on average, companies involved in B2B tran sactions trade with 2.7-4.8 Member States:  
(1489*1+2202*2.5+2072*4) / (1489+2202+2072) = 2.7 (u sed in the low estimate) and  
(1489*1+2202*2.5+2072*10) / (1489+2202+2072) = 4.8 (used in the high estimate) 
 
Companies involved in B2C transaction trad e on average with 2.7-5.1 Member States.
  
(1422*1+1940*2.5+2198*4) / (1422+1940+2198) = 2.7 (u sed in the low estimate) and 
(1422*1+1940*2.5+2198*10) / (1422+1940+2198) = 5.1( used in the high estimate) 
 
4. Cumulative transaction costs for the EU economy 
 
In order to find out the total tran saction costs due to differences in  contract law for the EU economy, 
the cumulative transaction costs fo r all exporters must be identified. A distinction between sectors is 
made in order to take into account the differences  in B2C and B2B cross-border transactions for 
trade in goods. B2C transactions occur in the re tail trade sector; B2B transactions occur in the 
sectors of manufacturing and mining, ag riculture and wholesale trade.  
 
For B2C transactions  
 
The aggregate transaction costs in B2C transactions  are the costs incurred by companies exporting to 
consumers (exporting retailers) in other EU countri es. They include the tr ansaction costs (e.g. for 
legal advice and translation of foreign laws), but also the additional contra ct law related IT costs 
which occur in B2C cross-border e-commerce transactions.    However, realistically not all e xporters consult a lawyer on forei gn law. EB 321 found that 17.6% of 
retailers currently involv ed in cross-border trad e are not at all informed about the consumer 
protection provisions in the contract  laws of the EU countries where they sell or wish to sell to 
consumers. It is reasonable to a ssume that these exporte rs have not consulte d a lawyer on foreign 
law at all. Hence, only 82.4% (100% - 17.6%) of B2 C exporters are included in the computation of 
transaction costs.   
 
 78The cumulative transaction costs can be cal culated based on the following formula:  
 
82.4% of exporting businesses informed about fore ign law * (Transaction costs per company * 
number of exporting retailers in the EU * aver age number of EU countries European exporters 
trade with + contract law related IT cost s for retailer exporting through e-commerce).  
 
To compute the cumulative IT related transaction costs for B2C traders, the number of retailers exporting through e-commerce is considered. Eurostat Information Society Statistics
268 provide 
answers to the question "have you  done electronic sales to othe r EU countries?" for companies 
having more than 10 employees (small, medium and la rge), as well as a detail ed figure specific for 
small companies (10-49 employees). For retailers,  these figures are respectively 4.5% and 2.4%.269 
 However, as the above database does not cont ain data on micro comp anies (with less than 10 
employees) and this category of companies is notably the overwhelming majority of retailers
270, the 
following assumption has to be used. It is assume d that the ratio among micro and small retailers 
exporting through e-commerce is propor tional to the ratio of all e xporting micro and small firms 
(7/13)271. As the figure for small retailers exporting th rough e-commerce is available (2.4%), the one 
for micro firms is assumed to be 1.3% (= 2.4% x 7/13). The figure for micro firms and the one for 
the rest of the companies are weighted by the tota l number of firms in the respective categories, and 
the result is that 1.46%272 of all retailers export through e-comme rce, as it can be seen from table 7. 
 
Table 7: Contract law related IT costs in B2C transactions 
 
For B2B transactions  
 
For B2B transactions it should be taken into account that  in the case where an exporting company 
negotiates the applicability of its own law to the cont ract it may have no transaction costs at all. In 
this case, the company would not have to deal with a foreign law at all (as opposed to B2C 
transactions when a company still has to check  the level of mandator y consumer protection 
provisions in the consumers' legisl ation even if it applies its own la w). Therefore, it is assumed that 
in B2B trade transaction costs o ccur only when a company needs to apply a foreign law. EB 320, Q1 
asks exporting companies "Which contract law mo st often governs your business-to-business cross-
border transactions".  14.6% of th e respondents said that most often they applied the national law of 
their business partner; 9% applied international le gal instruments and 0.6% th e law of a third country 
(0.6%). All these percentages are likely to be higher  as 17% of the enterprise s were not able (or did 
not want) to answer the related question. 
                                                 
268 Comprehensive databases, statistics on ENT 2009_2010 (NACE Rev 2), variable e_aeseu, %ent. 
269 Comprehensive databases, statistics on ENT 2009_2010 (NACE Rev 2), variable e_aeseu, %ent. 270 4 364 674 out of 4 605 233, Eurostat Structural Business Statistics. 
271 EB 196, 2007 Observatory of SMEs, p.45 
272 [4.5% of e-commerce exporting retailers with more than 10 employees * 240 559 (number of retailers with more than 10 employ ees) + 1.3% of estimated e-commerce 
exporting micro retailers * 4 364 674 (number of micro retailer s)] / 4 605 233 (total number of retailers) = 1.46% (percentage of total retailers exporting with e-commerce).  IT related costs 
in billion euro    Average number of 
countries exported to 
= 2.7 * transaction 
costs per firm 
= € 2916 * 82.4% of 
informed exporters Average number 
of countries 
exported to 
= 5.1 * transaction 
costs per firm = € 
2917 * 82.4% of 
informed 
exporters 
 
Sector  
Firms Percentages exporting 
through e-commerce Exporters Low estimate High estimate 
Retail 
 4 605 233 
 1,46% 
 67 230 
 0.44 
 0.82 
 
 
 79 
For the purpose of calculating the total transactions  costs in B2B trade, based on a conservative 
assumption, only the companies appl ying the national law of their bus iness partner are considered. 
The use of this figure also guarantee s that all the costs that are cons idered are actually incurred, as 
companies had to become familiar with the foreign contract law. The costs for these companies are 
likely to grow proportionately to the numb er of EU countries they trade with.  
 The estimate is conservative as it does not take into account the companies which apply the law of a third country or international legal instruments, as it is assumed that  they bear the transaction costs 
only once even if they trade with multiple countr ies. Furthermore, a number of exporting companies 
may not even have consulted a lawyer before they started exports. EB  320 found that 14.9% of 
companies currently involved in cross-border B2B transactions did not even know which contract 
law most often governs their transact ions in the EU. However, this group of companie s is excluded 
from the estimate based on the formula below:  
 
Transaction costs per company * number of expor ting companies in B2B sectors (agriculture, 
manufacturing and mining, wholesale trade)* average number of EU countries exported to* 14.6% 
of cases when the national contract law of the business partner appl ies to the contract 
 
The number of exporters is  estimated on the basis of a Eurostat database
273 using data of 2007. More 
up-to-date data is not available in  the databases of Eurostat as of  2011. In order to  calculate an 
estimate for the whole EU, the average share of e xporters for each sector in these 18 countries is 
multiplied by the total number of ente rprises in the EU-27 in each sector.  
                                                 
273 DS-056329-1: Trade by activity an d enterprise size class, that provid es the number of enterprise s exporting intr a-EU in 200 7 in a sample of 18 Member States, divided 
by sector of activity (Czech Republic, Denmark, Germany, Estoni a, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary , Austria, Portugal, Romania, Slovenia, 
Slovakia, Finland and Sweden). In this database, data on wholesalers and retailers are not available for Luxembourg (estimate b ased on 17 countries), and data on agriculture 
are not available for Italy and Luxembourg (estimate based on 16 countries). 
 
 80 
Table 8: Cumulative transact ion costs for the EU economy  
 
Overall transaction costs (without IT related costs) in € billion     
Sector Number of 
Firms Percentages of 
exporting 
firms Number of 
Exporters Low 
estimate274 High 
estimate
275 
Agriculture 13 700 400 0.21% 28 771 0.10 0.21 
Manufacturing and Mining 2 344 213 15.50% 363 353 1.29 2.71 
Wholesale 1 752 154 15.32% 268 430 0.95 2.00 
Retail  4 605 233 4.01% 184 670 3.58 7.42 
Total 22 402 000 3.77% 845 224 5.92 12.34 
      
      
IT related costs in € billion       
Sector Number of 
Firms Percentages of 
exporting 
firms Number of 
Exporters Low 
estimate276 High 
estimate
277 
Retail 4 605 233 1.46% 67 230 0.44 0.82 
      
    Low 
estimate  High 
estimate  
Total transaction costs in € billion     6.36 13.16  
      
Annual costs in € billion 278    0.93 1.92 
  
 
Considering the agricultural sector, where the number  of companies is higher than in all other sectors 
combined, the percentage of European firms expor ting drops to 3.77%. If the agricultural sector is 
excluded from the estimate, th e figure rises to 9.3%.  
 
• Annual transaction cost s for the EU economy 
 
Annual costs are based on the estimate that 14.6% of  exporters enter cross- border trade in the EU 
every year.279 This is computed comparing the figures in  Table 7 (2007) with the equivalent ones for 
2006 obtained from the same database. Both the tota l number of firms and the percentages of firms 
exporting are lower in 2006. The results are shown in Table 9. 
                                                 
274 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the lower value of  €9,000 per  company *  14.6% of companies applying 
a foreign law * 2.7 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using th e lower value of €8,695 * 82.4% of informed 
exporting companies * 2.7 Member States companies export to * number of exporters 
275 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the higher value of  €10,658 p er company *  14.6% of companies 
applying a foreign law * 4.8 Member States companies export to * number of exporters;  For B2C (retail) the costs are calculated  using the lower value of €9,565 * 82.4% of 
informed exporting companies * 5.1 Member Stat es companies export to * number of exporters 
276 Average number of countries exported to = 2.7 * transaction costs per firm = € 2 916 * 82.4% of informed ex porting companie s * number of exporters in e-commerce 
277 Average number of countries exported to = 5.1 * transaction costs per firm = € 2 917 * 82.4% of informed ex porting companie s * number of exporters in e-commerce 
278 See Table 9, Table 10 and related explanation. 
279 Eurostat database DS-056329-1: Trade by activity and enterprise size class. Comparable data are only available for the peri od 2006-2007. Eurostat also contains 
statistics for the period of 2004-2005, but since a different me thodology was used for collecting the data, the figures contain  large discrepancies and are not comparable with 
the period 2006/2007. 
 
 81 
Table 9 – Number of exporting firms (2006-2007) and growth  
 
  2006 2007 
Manufacturing 333 927 360 039 
Wholesale 239 439 268 430 
Retail 139 154 184 670 
Total 712 520 813 139 
Annual increase in 
number of 
exporting firms 
2006-2007 14.59%  
 
This figure does not take into cons ideration the fact that  some of the new expor ters may have already 
exported in the past and previous ly incurred the one-off transacti on costs. However, this may be 
balanced by the fact that this estimate does not include companies which already export and want to 
expand their operations to more EU  countries. Therefore, we consid er that new exporters explore on 
average the same number of foreign markets (bet ween 2.7 and 5.1 Member Stat es) as exporters that 
are not new. Hence, in order to estimate the annua l transaction costs, a grow th rate of 14.59% in the 
number of companies is assumed in each sector. Table 10 shows the estimate of the total annual 
transaction costs. The low and high estimates are computed as above.  
Table 10: Annual transaction costs for the EU economy
 
 
Annual transaction costs (without  IT related costs) in € billion   
Sector Number of exporters 
(2007) Number of new exporters every 
year280 Low 
estimate281 High 
estimate282 
B2B283 660 554 96 375 0.34 0.72 
B2C284 184 670 26 943 0.52 1.08 
Total 845 224 123 318 0.86 1.80 
     
IT related costs in € billion    
Sector Number of exporters 
(2007) Number of new exporters every 
year285 Low 
estimate286 High 
estimate287 
B2C288 67 230 9 809 0.07 0.12 
     
   Low 
estimate  High 
estimate  
Annual costs in € 
billion   0.93  1.92 
 
€1 to €2 billion  is therefore the estimate for the incurred one-off cost for new exporters every year.   
 
                                                 
280 14,59% of number of exporters in 2007. 
281 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the lower value of  €9,000 per  company *  14.6% of companies applying 
a foreign law * 2.7 Member States companies export to * number of exporters; For B2C (retail) the costs are calculated using th e lower value of €8,695 * 82.4% of informed 
exporting companies *  2.7 Member States co mpanies export to * number of exporters 
282 For B2B (agriculture, manufacturing and mining and wholesale) the costs are calculated using the higher value of  €10,658 p er company *  14.6% of companies 
applying a foreign law * 4.8 Member States companies export to * number of exporters;  For B2C (retail) the costs are calculated  using the lower value of €9,565 *  82.4% of 
informed exporting compan ies *5.1 Member States companies export to * number of exporters 
283 Agriculture, Manufacturing and Mining, Wholesale. 284 Retail. 285 14,59% of number of exporters in 2007. 
286 Average number of countries exported to = 2.7 *  82.4% of informed exporting companies * transaction costs per firm = €2,91 6 * number of exporters in e-commerce 
287 Average number of countries exported to = 5.1 * 82.4% of informed exporting companies * transaction costs per firm = €2,917  * number of exporters in e-commerce 
288 Retail. 
 
 825. Implementation costs for options 4, 5a and 6 
 
The implementation of the different policy options  would generate costs, which depending on the 
option, would affect either exporting companies only, or all companies (including those who only 
trade domestically).   
Option 4 (optional Common European Sales Law) 
 
The one-off implementation costs would affect only those exporting companies, who decide to 
choose the optional Common European Sales Law. Under option 4, only a certain percentage of 
exporters would use it. The assumpti on is that realistically at the fi rst stage 25% up to 50% of new 
exporters would be willing to choose the opti onal Common European Sales Law. Thus, the 
aggregate implementation costs for the EU economy can be calculated based on the formula below:  
 
% using optional Common European Sales Law * num ber of exporting compani es * implementation 
costs per company 
 
Assuming that 25% use the OI, and using the transaction costs per company estimated in section 2 of 
this Annex, the implementation costs would be:  
 
B2C (low estimate): 25%* 184 670 * €8,695 = €0.4 bn  + B2B (low estimate): 25% * 660 554 * €9,000 = € 1.49 bn 
= €1.89 bn 
 Option 5a (Full harmonisation Directive) / Opti on 6 (Regulation establishing a mandatory 
Common European Sales Law) 
 
The one-off implementation costs under options 5a and 6 would affect both exporting companies and 
those who trade only in their domestic market, as the respective instrument would be binding for all 
companies. The aggregate implementation costs fo r the EU economy can be calculated based on the 
formula below:  
 
Companies that trade only domestically (17 136 213 in B2B and 4 420 563 in B2C) * 
implementation costs per company = €208.8 bn  +  companies that export * implemen tations costs per company = €8.18 bn 
= € 216.98 bn 
 
6. Savings for the EU economy 
 
6.1. Savings for new exporters 
 
The savings for new exporters would arise annually, as  a consequence of the reduction in transaction 
costs for cross-border trade as a result of a Common European Sales Law  instrument.  
 
Option 4 (optional Common European Sales Law) 
 
Exporters will benefit from savings when they expor t to more than 1 Member State. The companies 
using the optional Common European Sales Law will only incur the cost of familiarising themselves 
with the new law.  
 
 83If the current export level persists (on average about 2.7 – 5289 MS), the cost savings could be 
estimated as follows:  
Annual transaction costs under bas eline scenario – annual transac tion costs under the optional 
Common European Sales Law = Savings under the optional Common European Sales Law  
 
Therefore, under different assumptions for the pe rcentage of companies w ho would use the optional 
Common European Sales Law, the sa vings can be calculated as:   
 
(100% -% using the optional Common European Sal es Law) * annual transaction costs under 
baseline scenario + % using the optional Comm on European Sales Law * (annual transaction costs 
under baseline scenario / average number of count ries they export to) = annual transaction costs 
under the optional Common European Sales Law.   
For instance,  assuming that 25% of the new exporters w ill use the optional Common European Sales 
Law:  
• The annual costs would be: 
Low estimate: 75% * €1 bn + 25% *€1bn / 2.7 MS = € 0.85 bn 
High estimate: 75% * €2bn + 25%* €2 bn / 5 MS = €1.6 bn  
• The annual savings would be: 
Low estimate:  €1bn – €0.85 bn = € 0.15 bn 
High estimate: €2 bn – € 1.6 bn  = €0.4 bn  
 The more companies that use the optional Common European Sales Law, th e higher the savings will 
be.    In a longer term, these annua l savings could be discounted
290 to €3.9-€10bn and the net benefit for 
the EU economy would be €2-€8.11bn (€3.9-€10bn minus €1.89bn). 
 
Option 5a (Full harmonisation Directive) / Opti on 6 (Regulation establishing a mandatory 
Common European Sales Law)  
The savings for new exporters unde r option 5a would amount to €0.63 – €1.6 bn  (computed under 
the formula used for option 4).
291  
 However, this estimate is simplified and does not consider that, particularly in B2B transactions, companies would continue to benefit from the fr eedom of choice of law under international private 
law rules. The percentage of companies that would have a preference for international law 
instruments or laws of third countri es in a scenario where a Directive was put in place is difficult to 
determine. It would partially depend on the cont ent of the Directive and whether companies would 
see it as a more beneficial choice  compared to other alternatives. In any case, the Vienna Convention 
would continue to apply on an opt-out basis and would therefore govern th e transactions where no 
choice of law was exercised. Furthermore, companie s which would have specific preferences for the 
law of third countries, such as Swiss law, c ould continue to exerci se this choice.   
 These savings would however not outweigh the init ial one-off adaptation cost of €216.98 bn even in 
the longer time frame.
292 
                                                 
289 4.8 in B2B and 5.1 in B2C 
290 Discount rate of 4% as recommended in the European Commission IA Guidelines, Annex XI. 
291 It is important to note that these savings only represent a situation under which the new ex porters trade with the same num ber of MS as under the BS. 
292 In a longer term, these annual savings could be discounted to €15.75 - €40 bn and the net loss for the EU economy would be (- €201.23) – (- €176.98) bn (i.e. €15.75 - 
€40 bn minus €216.98 bn). 
 
 84 
6.2. Potential savings for current exporters 
 
Current exporters that would expand  their cross-border sale s to new countries w ould also benefit as 
they would incur only a one-off adaptation cost in  order to begin trade to a new EU country. 
 It is assumed that 25% of the companies wo uld use the optional Comm on European Sales Law 
(46,168 companies).
293 The expected increase in number of  new countries the companies would 
trade with if the Common European Sales Law wa s available is based on the results of EB 321.294 
 The potential avoided transaction costs for the EU economy are illustrated in the table below. The 
table takes as a basis the low estimate of transact ion costs i.e. €8,695 for each new MS into which a 
company exports.   
Table 11: Savings for the EU economy, B2C
 
 
Companies Would trade to    
Currently trading to 1-2 new countries 
(=1.5) 3-5 new countries 
(=4) 6 or more new countries 
(=6)  
1 country 40% 31% 8% PERCENTAGES 
2-3 countries 31% 33% 17%  
4 or more 17% 35% 27%  
     
1 country 4 723 3 660 945 COMPANIES295 
2-3 countries 4 994 5 316 2 738  
4 or more 3 103 6 388 4 928  
     
1 country 20 533 394 95 480 283 41 066 788 SAVINGS (€) 
2-3 countries 21 710 238 138 665 390 119 056 143  
4 or more 13 488 938 166 628 061 214 236 078  
 
Total savings (low estimate) 830 865 313 
 
The table is divided into three horizontal parts. The first part (percentages) shows the share of 
exporters (currently trading to 1, 2-3, or "4 or more" countries) that  declared they would expand their 
cross-border sales.   The second part of the table (compa nies) shows the absolute number of current exporters that would 
expand their cross –border to a certain number of new countries (1-2, 3-5, "6 or more").  
 For example, 40% of current expo rters trading with 1 country i. e. 4,723 companies, would expand 
their cross-border sales to 1-2 new countries.  In order to estimate the potential savings (third part of the table), the number of companies are 
multiplied by the number of additional MS these co mpanies would export to and by the cost per MS 
that they avoid when using the Common European Sales Law.
296   
                                                 
293 According to EB320 and EB321 40% of companies in B2C and 34% in B2B would increase their cross-border operations if they we re able to choose a single Common 
European Sales Law for transactions. These figures give an indication on the number of companies that expect their cross-border  trade to expand under option 4.  However, 
as the sample of the EB surveys covered also non-exporters that are interested in cross-border trade, the more conservative est imate of 25% of exporters using the optional 
Common European Sales Law is used. 
294 EB 321, p.36. 295 Data on number of current exporters and their level of cross–border trade a taken from Table 6 of this Annex.  
 
 85 
Under the low estimate, total savi ngs amount to €0.8 bn. If the high es timate of transaction costs i.e. 
€9,565 (per company per MS) is used, tota l savings would amount to around €0.9 bn. 
 
For B2B transactions, it has been assumed that 25% of the companies would use the OI (165,139 
companies)297. 
The expected increase in number of new countri es the companies would trade to if the Common 
European Sales Law was available is based on the results of EB 320. 298 
The potential avoided transaction costs for the EU economy are illustrated in the table below. The 
table takes as a basis the low estimate of transact ion costs i.e. €9,000 for each new MS into which a 
company exports.  The calculations are developed similarly as described for the previous table. 
 
Table 12: Savings for the EU economy, B2B
 
 
Companies Would trade to    
Currently trading to 1-2 new countries 
(=1.5) 3-5 new countries 
(=4) 6 or more new countries 
(=6)  
1 country 54% 27% 5% PERCENTAGES 
2-3 countries 31% 37% 14%  
4 or more 24% 37% 21%  
     
1 country 23 040 11 520 2 133 COMPANIES299 
2-3 countries 19 560 23 346 8 834  
4 or more 14 250 21 968 12 468  
     
1 country 103 681 360 311 044 081 96 001 260 SAVINGS (€) 
2-3 countries 88 022 001 630 351 105 397 518 715  
4 or more 64 122 910 593 136 917 561 075 462  
     
Total savings (low-
estimate) 2 844 953 811    
 
Under the low estimate, total savings amount to €2.84 bn. If the high estimate of transaction costs 
i.e. €10,658 (per company per MS) is used, total savings would amount to around €3.4 bn. 
 The total savings for the EU economy for B2B and B2C transactions considering the extra number 
of MS in which companies would trade under an OI would be €3.7 – €4.3 bn .  
 The total savings under option 5a  (full harmonisation Directive) would be at least of the same scale 
as option 4, as the level of expor ts is likely to increase similarl y to the scenario under option 4. 
However, it is difficult to  estimate the precise scale of the in crease and the law wh ich would govern 
those transactions in particular in B2B trade. It is not certain what percen tage of businesses would 
choose, as their preferred choice,  the national law afte r the implementation of  the Directive under 
option 5a. Companies would cont inue to benefit from the freedom of choice of law under 
international private law rules. Thus, their prefer ence for the Directive woul d partially depend on its 
                                                                                                                                                                   
 
296 e.g. for companies currently trading to 1 country that would trade to 6 or more new countries, the savings would be 6*€8,69 5 – €8,695 of implementation = €43,475, 
multiplied by 945 companies = €41 million. 297 According to EB320 and EB321 40% of companies in B2C and 34% in B2B would increase their cross-border operations if they we re able to choose a single Common 
European Sales Law for transactions. These figures give an indication on the number of companies that expect their cross-border  trade to expand under option 4.  However, 
as the sample of the EB surveys covered also non-exporters that are interested in cross-border trade, a more conservative estim ate of 25% of exporters using the optional 
Common European Sales Law has been taken forward. 
298 EB 320, p. 34 299 The number companies currently trading with 1 to "4 or more" MS comes from Table 5 of this Annex. 
 
 86content, compared to other altern atives. In any case, the Vienna C onvention would continue to apply 
on an opt-out basis and would govern  transactions where no choice of law was exercised. Another 
alternative to the Directive would be the law of th ird countries, such as Swiss law. As B2B trade 
accounts for the larger share of aggregate transacti on costs, it would also largely determine potential 
costs savings.  
 
 87ANNEX IV: ECONOMIC MODEL APPLIE D TO THE ASSESSMENT OF POLICY 
OPTIONS  
 
1. The Global Trade Analysis Project (GTAP) 
 
The macro-economic analysis has been carried out using the Global Trade Analysis Project (GTAP) 
model.300 GTAP is a static general equilibrium m odel analysing changes in production, trade and 
consumption as a consequence of change s in such exogenous variables as costs.301 The model 
includes all countries in the EU27 and 57 produc ts among which 24 are manufactured goods. GTAP 
is able to calculate the impact of a new policy on GDP, trade, intra-EU trade, consumer prices and 
expenditure and consumer welfare.  For each country, GTAP identifies demand fo r the 57 products by households (consumers), 
businesses and governments. For each type of cu stomer, product demand is split into demand for 
domestic products and demand for imported products .  For each country, product supply depends on 
the use of domestic and imported products and domestic production factors such as capital, land, labour and natural resources.   The model identifies prices at different levels of  the supply chain from the production costs to the 
customer prices i.e. producer prices, market pri ces, export prices, import prices, consumer prices. 
Prices diverge due to taxes and subsidies, tran sport costs and wholesale and retail margins.  
 The labour market is assumed not to be in equili brium. Wages are fixed a nd employment grows with 
demand and production.   Data is collected and processed by a consortium of 27 agency members including the European 
Commission, FAO, OECD, World Bank, three US agencies and WTO.  
 
2. Assumptions for impact calculation 
 
The Flash Eurobarometer surveys 320 and 321
302 provide data on the attitudes of companies trading 
and interested in cross-border trade, among others  on their willingness to use the European contract 
law and impacts it could have on the level of their cross-border trade.  More specifically, the 
companies were asked to indicate whether they woul d use the European contra ct law if it was made 
available and whether they would expand their trade to more Member States.  The respondents were asked to provide a qualitativ e assessment of the impact the European contract 
law would have on their cross-border sales i.e. to  indicate whether their cross border sales would 
increase a lot, a little or decrea se. Therefore, assumptions had to be made on the numerical value of 
these qualitative answers.  The follo wing assumptions have been made:  
- "small decrease/increase in trade": the assumed value for "small" is within the range of 
1%-4% where 1% is the low, 2% is the medi um and 4% is the high estimate. Under the 
low estimate it is assumed that the cro ss-border operations of a company would 
increase/decrease by 1% and under the high estimate by 4%. 
- if a respondent indicated that he expected  a "large increase", the assumed value for 
"large" is within the range of 5%-20%, wher e 5% is the low, 10% the medium and 20% 
the high estimate. Under the low estimate it is assumed that the cross-border operations of a company would increase/decrease by 5% and under the high estimate by 20%. 
 
                                                
 
300 See www.gtap.agecon,purdue.edu and Hertel et al. (1997),  Global trade analysis; Modelling and applicati ons, Cambridge Univ ersity Press.  
301 The model has an Input-Output structure for all the economies included. Trade is identified at the bilateral level.  302 Flash Eurobarometer 321, European contract law in consumer transactions and Flash Eurobarometer 320, European contract law in business-to- business transactions 
 
 88The above assumptions underlie the es timates of impacts of each option.  
 Options 5 and 6 would apply to all Member States and all traders and therefore have the most significant impact. The impact of option 4 would only be  a fraction of the impact of option 5 and 6, 
as only a part of companies would choose the new optional Common European Sales Law. The 
impact of option 3 is likely to be much more limited than the one of option 4, as not only the 
companies, but also the Member States will have th e possibility to choose if they want to apply the 
optional Common European Sales Law and in which form.  
Assumed impact of policy option 5 and 6 
 
Based on the above assumptions, the impact on trade could be estimated at 0.8%-3.1% for B2B transactions and 0.9%-3.5% for B2C transactions. Option 5 and 6 are li kely to increase cross-border 
trade by 0,8% in B2B and 0,9% in B2C under the low estimate and up to 3,1% in B2B and 3,5% in B2C under the high estimate. 
 
 89 
Table 1 – Assumed impact on trade303 
 
B2B transactions: EB 320, question 5 
If companies were able to choose one single European contract law for their B2B cross-border 
transactions in the EU, would their cross-border operations… 
Impact expected Share of firms 
indicating expected impact 
on cross-border 
trade  Assumptions 
  Low estimate Medium estimate High estimate  
Decrease 1,20% -1% -2% -4%
Remain the 
same 54,30% 0% 0% 0%
Increase a little 24,60% 1% 2% 4%
increase a lot 8,90% 5% 10% 20%
Don’t know 11,00%    
   
Impact on trade 
Weighted average   0.76% 1.53% 3.05%
 
B2C transactions: EB 321, question 6:  
 If companies were able to choose one single Eu ropean contract law in all transactions with 
consumers from other EU countries, would their cross-border operations… 
Impact 
expected Share of firms 
indicating expected impact on cross-border trade Assumptions 
  Low estimate Medium estimate High estimate  
Decrease 0,60% -1% -2% -4%
Remain the 
same 48,70% 0% 0% 0%
Increase a little 30,10% 1% 2% 4%
increase a lot 9,50% 5% 10% 20%
Don’t know 11,00%    
     
Impact on trade 
Weighted average  0.87% 1.73% 3.46%
 
The price elasticity of import demand is a measure of how the volume of cro ss-border trade reacts to 
a change in prices i.e. it shows how the demand decr eases as the result of a one percentage increase 
in price. The value of price elastici ty of import demand is equal to -2.8%.304  
                                                 
303 In all MS for options 5 and 6. For option 4, these impacts are proportionally reduced according to the fraction of companie s using the optional Common European Sales 
Law. Option 3 has the same characteris tic and the trade increases only in MS incorporating th e Recommendation. 
304 GTAP model 
 
 90 
As indicated above, the impact of policy options 5 and 6 is an increase in trade of 0,76% (low estimate) to 3,05% (high estimate). In order to achieve this level of  the trade growth, import prices 
would need to fall by 0.27% under the low esti mate, 0,55% under the medium estimate and 1,23% 
under the high estimate.
305  
These values have been used to compute economic impacts in the GTAP model.306  
In order to have the desired change in trade,  import prices (and not trade itself) are manually 
adjusted at the right level in the model. 
 
Assumed impact of policy option 4 
 
In case of option 4 all Member St ates will have to implement th e optional Common European Sales 
Law in their national law. Therefore, assumpti ons need to be made only for the number of 
companies who would be willing to use it.   The most optimistic assumption is that 70% of exporting companies in all Member States would use 
the optional Common European Sales Law. It is based on the responses to EB 320 (on B2B 
transactions) and EB 321(on B2C transactions ) in which respectively 70% and 71% of the 
respondents indicated that they were likely or very likely to use a single European contract law in 
cross-border transactions.   However, considering that only a fraction of these respondents indicated an optional instrument as 
the preferred option, respectively 38% EB 320 ( on B2B) and 37% in EB 321 (for B2C), more 
conservative assumptions could be that 50% or 25% of the exporters us e the optional Common 
European Sales Law. These conservative assumpti ons have been taken forward in the analysis 
below.
307 
 
Assumed impact of policy option 3 
 
The assumptions on the take-up of an optional Common European Sales Law by companies used for 
option 4 also apply for option 3. In addition, for option 3 a furt her assumption on the number of 
Member States who would incorporate the Co mmission Recommendation introducing an optional 
Common European Sales Law needs to be made.   It is likely that not all Member States woul d incorporate the Commissi on Recommendation. It is 
however assumed that the Recommendation could be followed by large and small, old and new 
Member States located in different parts of the EU, at a different level of economic development. 
Based on this criterion a represen tative selection of  EU countries is made. It includes Denmark, 
Lithuania, Germany, Netherlands, Hungary, Pola nd, Portugal, Italy, Romania and the UK.  
 For an estimate of the most positive impacts possible,  it is assumed that the countries incorporating 
the Recommendation do this entirely and without ch anges. The willingness to expand trade is the 
same as under option 4, at least for the countries incorporating the Recomme ndation. It seems likely 
that an instrument available only in  a number of countries would be less attractive to companies than 
an instrument available in the whole of the EU . Therefore the low assumption on the number of 
companies using the optional Common European Sales Law
 i.e. 25% is used for the estimates of 
impacts of policy option 3.   
                                                
 
305  0.76% divided by -2.8%, 1.53% divided by -2.8% and 3.46% divided by -2.8%. 
306 In order to have the desired change in trade, import prices (and not trade itself) are manually adjusted at the right level  in the model. 
307 For the impact on administrative costs the assumption of 70% of exporters using the optional Common European Sales Law was considered in order to show the 
maximum magnitude of costs. 
 
 91In fact, businesses in countries  not incorporating the Recommendation could still use the new 
instrument when trading into a country having implemented it (B2C transacti ons). In B2B 
transactions when the Recommendation is incorpor ated by at least one Member State, companies 
also from other Member States could choose the in corporated law as appli cable law. The economic 
impact of this on countries not applying the Re commendation is shown in the column "Impact on 
other Member States" in the tables below and applies only to option 3. 
 
3. Estimates of specific impacts 
 
Following the requirements of the Commission Impact Assessment Guidelines only the most 
significant impacts have been quantified.   The following tables are generated through the app lication of GTAP based on the assumptions made 
in section 2.   
3.1.  Impact of policy options on export 
As import prices fall
308 there would be a shift in demand fr om domestic supply to import supply 
(imported products become more attractive in terms of their prices). At the same time, businesses 
would shift supply from domestic customers to fore ign customers i.e. businesses have more foreign 
customers.  
 
As import prices fall, domestic prices would be under pressure as  well. As a result, aggregate 
demand would go up as a consequence of which production would go up. The price decrease would 
benefit both domestic and import supply.  
Table 2 - Impact on exports by EU Countries : intra- and extra-EU trade (€ millions) 
 
 Option  Companies  
participating Impact on 
countries  participating Impact on 
other Member States Total 
Option 3 25% Companies 2,100 298 2,398
Option 4 25% Companies 4,915  4,915
 50% Companies 9,831  9,831 
 
Low 
estimate Options 5 
& 6  
19,662 19,662
Option 3 25% Companies 4,115 580 4,695
Option 4 25% Companies 9,585 - 9,585
 50% Companies 19,070 - 19,070 
 Medium estimate  Options 5 
& 6  
38,341- 38,341
Option 3 25% Companies 8,397 1,190 9,587
Option 4 25% Companies 19,498 - 19,498
 50% Companies 38,996 - 38,996 
 High  estimate  Options 5 
& 6  
77,993 77,993
 
With option 4, exports increase by approximately €5-€19 billion. 
                                                 
308 This variable does not depend from other ones and it is set manually in the model, based on the assumptions described above . 
 
 92 
   
3.2. Impacts on consumers  
 3.2.1. Impact on consumer prices 
 
The decrease in import prices would lead to a decrease of consumer prices. For instance, a decrease 
in import prices by 0.27% under the low estimate (s ee section 2) under opti ons 5 and 6 leads to a 
decrease in consumer prices by 0.14% (see table 4). This is lower,  because import prices are only a 
fraction of consumer prices and because prices of  domestically supplied products would decrease 
less.   Under option 3, consumer prices  would decrease by 0.03% under th e low estimate (if 10 countries
309 
incorporated the Recommendation and 25% of companies used the instrument).  
 Consumers would consume more imported goods as they become relatively cheaper. In the low 
estimate, consumption of imported goods woul d go up by 0.8% under options 5 and 6 and 0.2-0.4% 
under option 3 and option 4 (see table 3).  
Table 3 - Impact on consumer price and co nsumption of imported household goods (% 
changes) 
 
 Option  Companies  
participating Consumer price  
  Consumption of 
imported goods 
 
   Participat
ing  countries Other  
countries Participat
ing  countries Other 
countries 
Option 3 25% 
Companies -0.033 -0.002 0.181 0.026 
Option 4 25% 
Companies -0.035-0.208 - 
 50% 
Companies -0.070-0.415 -  
 
Low 
estimate 
Options 
5 & 6  
-0.140-0.830 - 
Option 3 25% 
Companies -0.064-0.0030.355 0.05 
Option 4 25% 
Companies -0.070-0.410 - 
 50% 
Companies -0.140-0.820 -  
 
Medium 
estimate 
Options 
5 & 6  
-0.280-1.640 - 
Option 3 25% 
Companies -0.131-0.0060.724 0.103  
 
High 
estimate Option 4 25% 
Companies -0.143-0.835 - 
                                                 
309 See country selection in section 2. 
 
 93 50% 
Companies -0.285-1.670 - 
Options 
5 & 6  
-0.570-3.340 - 
 
3.2.2. Impact on consumer welfare 
 
The decrease in consumer prices increases consum er welfare. Consumers would get the same value 
at lower prices. This would increase consumer su rplus, i.e. the difference between the price the 
consumers are willing to pay and the amount they actually pay. Under the low estimate consumers would have a surplus of €18 billion if a full ha rmonisation Directive (option 5) or Regulation 
establishing a mandatory Common European Sales Law (option 6) was adopted. A percentage of this 
value would measure the surplus for consumers unde r option 4: if 25% comp anies use the optional 
Common European Sales Law, consumers will enj oy an extra €4.5 billion. Option 3 with the same 
percentage of companies using the optional Commo n European Sales Law, will give a consumer 
surplus of €1.5 billion. 
 
Table 4 - Impact on consumer welfare (€ millions) 
 
 Option   Companies  
participating Impact on 
countries  Participating Impact on  
other  Member States Total 
Option 3 25% Companies 1,483 449 1,932
Option 4 25% Companies 4,575 - 4,575
 50% Companies 9,150 - 9,150 
 
Low 
estimate Option 5  18,300 - 18,300
Option 3 25% Companies 2,911 882 3,793
Option 4 25% Companies 8,980 - 8,980
 50% Companies 17,961 - 17,961 
 Medium estimate  Option 5  35,922 - 35,922
Option 3 25% Companies 5,392 1,797 7,729
Option 4 25% Companies 18,300 - 18,300
 50% Companies 36,599 - 36,599 
 High  estimate  Option 5  73,199 - 73,199
 
3.3. Macro-economic impacts  
 3.3.1. Impacts on GDP  
GDP grows because of changes in consumption ∆C, investment ∆I, government spending ∆G, 
exports ∆X and imports ∆M. 
The change in GDP equals ∆GDP = ∆C + ∆I + ∆G + ∆X - ∆M 
All these variables have been co mputed in the GTAP model based on the assumptions in section 2. 
 
 94 
Table 5 - Impact on GDP (€ millions)   
 Option   Companies  
participating Impact on 
countries  participating Impact on  
other  Member States Total 
Option 3 25% Companies 1,817 363 2,180
Option 4 25% Companies 5,008 - 5,008
 50% Companies 10,017 - 10,017 
 
Low 
estimate Option 5  20,034 - 20,034
Option 3 25% Companies 3,567 712 4,279
Option 4 25% Companies 10,017 - 10,017
 50% Companies 20,034 - 20,034 
 Medium estimate  Option 5  40,069 - 40,069
Option 3 25% Companies 7,268 1,451 8,720
Option 4 25% Companies 20,329 - 20,329
 50% Companies 40,658 - 40,658 
 High  estimate  Option 5  81,316 - 81,316
 
For instance, for option 4, under the low estimate,  the GDP grows by € 5-10 billion and under the 
high estimate grows by €20- €40 billion.  
3.3.2. Impacts on Employment  
 
Table 6 - Impact on employment (persons) 
 Option  Companies  
participating  Impact on 
countries  Participating Impact on  
other  Member States Total 
Option 3 25% Companies 63,667 10,083 73,751
Option 4 25% Companies 159,300 - 159,300
 50% Companies 318,600 - 318,600 
 
Low 
estimate Option 5  637,200 - 637,200
Option 3 25% Companies 124,977 19,793 144,770
Option 4 25% Companies 315,900 - 315,900
 50% Companies 631,800 - 631,800 
 Medium estimate  Option 5  1,263,600 - 1,263,600
Option 3 25% Companies 254,670 40,332 295,002
Option 4 25% Companies 637,200 - 637,200
 50% Companies 1,274,400 - 1,274,400 
 High  estimate  Option 5  2,548,800 - 2,548,800
 
For instance, for option 4, under the low estimate, there would be approximately 160 000 – 320 000 
new jobs. 
 
   95 ANNEX V: DETAILED ANALYSIS310 OF IMPACTS OF POLICY 
OPTIONS311 
  1. Policy option 1: Baseline Scenario  
 
ECONOMIC IMPACTS  
Transaction costs:
 The baseline scenario (BS) transaction costs312 (one off) for trading with one 
other Member State (MS) amount to: in B2C transactions: on average €9,100 ( €8,695- €9,565, 
plus €2,900 for e-commerce oriented enterprises sell ing to consumers that face additional contract 
law related IT costs) and in B2B transactions €9,800 (€9,000-€10,658).  
The overall transaction costs stemming from cont ract law for EU business currently involved in 
B2C and B2B transactions range between €7 billion and €15 billion.313 These figures represent 
sunk costs that are not recoverable. But, in add ition to these sunk costs we can compute an annual 
cost for the EU economy as ne w traders enter the market.  
This cost can be estimated based on the percentage  of new exporters within the EU on a yearly 
basis, (estimated at 14.6%).314 Using this estimate, the annual aggregate trans action costs are 
approximately €1-2 billion. This is the maximum incurred annual cost due to the differences in 
contract law. If we assume these costs cont inued, by the year 2020, e xporting firms would face 
transaction costs of €9-18 billion  due to differences in contract laws.  
For a micro enterprise in the reta il sector the cost of trading in  one additional MS amounts to 6.5% 
of its average annual tur nover and for trading in the whole of  the EU exceeds its average annual 
turnover by almost twice. For a small enterprise in  the same sector the cost of trading in one 
additional MS would amount 0.25% of its annual tur nover. For trading in the whole of the EU this 
would be 6.4% of its annual turnover.  If a medium enterprise wished to trade with the whole of the 
EU it would have to invest 2.22% of its annual tu rnover, for a large enterp rise it would cost 0.06% 
of its annual turnover.  (see problem definiti on for calculation of costs and more detail). 
Administrative costs (included in the overall figure of transaction costs):  To trade in another MS, 
companies need to familiarise themselves with foreign law, adapt their terms and conditions and 
meet requirements (such as information provision to  potential customers) set out in the law of this 
MS. With no EU action, the average administrative costs
315 per company per MS with which it trades 
would amount to: in B2C €2,500, in B2B €1,500. Th ese are mostly one-off costs but accumulate 
as the number of MS a company trades with incr eases. For example, for trade with 2 MS these 
figures would be €3,000 for B2B and €5,000 for B2C and for 5 MS it would be €7,500 for B2B and €12,500 for B2C.
316  
Opportunity costs of foregone trade:  As set out in the problem definition, the transaction costs in 
some cases deter some businesses from tradi ng, and in others limit their trade. Businesses 
                                                 
310 The economic impacts in this section have been calculated us ing the Global Trade Analysis Project (GTAP) model. (See www.gt ap.agecon,purdue.edu and Hertel et al. 
(1997),  Global trade analysis; Modelling and applications, Cambr idge University Press.)  GTAP is a static general equilibrium model analysing changes in production, trade 
and consumption as a consequence of changes in such exogenous variables as costs. The model has an Input-Output structure for a ll the economies in cluded. Trade is 
identified at the bilateral level.   The model includes all countries in the EU27 and 57 products among which 24 are manufactur ed goods. GTAP is able to calculate the 
impact of a new policy on GDP, trade, employment, intra-EU tr ade, consumer prices, expenditure and consumer welfare.  
311 Unless otherwise stated the analysis in this section applies to both B2B and B2C transact ions in a cross border only contex t. In addition, unless otherwise stated, all data 
in this section comes from EB 320 and 321. (EB surveys 320 and 321 provide data on the attitudes of export oriented companies, in particular, on their willingness to use the 
European contract law and the impacts it could have on the level of their cross-border trade. More specifically, the respondent s indicated to what extent they would use 
European contract law if it was made available and whether they would expand their trade to more  Member States. The impacts on all considered macro-economic variables 
are computed based on the companies' exp ectations for cross-border expansion of their trade if European contract law existed.)   
312 See Annex III. 313 See Annex III. 314 See Annex III. 
315 See Annex VII. Per company per MS for B2C this would be €2,500 and for B2B €1,500. 
316 See Annex VII for more details on how these costs are calculated.  
 
 96therefore miss out on potential trade. The cost s for these missed oppor tunities are €26 billion– 
€184 billion for sales not made (B2B and B2C). Competition in internal market and impact on consumer prices:
 With no EU action, competition in 
the internal market would remain limited. Due to th e remaining legal differences and related costs, 
many businesses would not be encouraged to trad e cross-border. Without this extra trade taking 
place, a number of businesses would not act compet itively, which if they were to, would drive 
down prices.317 As a result without an increase in co mpetition in the market place, consumers 
would continue to face a restricted choice of products at a higher price 
Impact on consumer protection:  This option includes the adoption of the CRD which, due to its 
nature (a large element of full harmonisation) ensu res that within its scope, consumers have rights 
which are harmonised across the EU. Therefore divergences between the consumer protection 
rules of different MS remain. Many Green Paper respondents stated that action should only be 
taken if a previously adopted instru ment has proven to be inefficient.318  However the text adopted 
does not harmonise important areas of consumer contract law, for instance sales remedies and 
unfair contract terms would remain fragmented across the EU. In addition, the CRD does not 
cover the full life cycle of a contract or B2B contracts. Therefore differences between the 
consumer protection rules of different MS rema in. Not to take EU action would allow these 
differences to continue. 
Impact on SMEs:  For those performing B2B contracts, where parties are of a similar size, 
negotiating the applicable law is a time consumi ng factor which could otherwise be spent in the 
business. In the SME Panel Survey, 55% of SMEs  responded that the nego tiation of applicable 
law was an important obstacle  to cross border trade.   
In addition, it is normally the str onger (usually larger) party whic h imposes their country’s law on 
the smaller party319 as the law applicable to the contract. The smaller party then has to bear the 
transaction costs of finding out about the foreign c ontract law which applies to their contract. If 
the SMEs concerned in both scenarios are micro or small enterprises, then these costs would 
weigh, in relative terms, more heavily upon them. 
Impact on law firms:  No impact.  
Public authorities: MS:  No impact.  
Judiciary:  Litigation costs would result from the need fo r courts to investigate and apply different 
national laws than their own wh ich are relevant for cross-border contracts would remain. Judges 
would either need to investigate the foreign ap plicable law themselves or obtain the necessary 
knowledge through the advice of legal experts or the evidence submitted by lawyers. In these 
instances, time of the judges and ex perts/lawyers would be taken to research the foreign applicable 
law. The cost of this time and research would be borne by either the c ourts or parties involved. 
Analysis of provisions of instrument:320 No impact.  
SOCIAL IMPACTS 
No impact.  
ENVIRONMENTAL IMPACTS Without EU action there would not be an increase in cross border trade and therefore no impact 
upon the environment (via for example an increa se in delivery of goods which would increase 
CO2 and other emissions, or an increase of costs to control pollution due to  the binding EU rules) 
would not be felt. 
                                                                                                                                                                    
317 Thereby not contributing towards the Commission policy towards increasing competitiveness 'An Integrated Industrial Policy for the Globalisation Era Putting 
Competitiveness and Sustainability at Centre Stage', COM (2010) 614.  
318 E.g. BEUC's response to the Green Paper consultation, p. 4; UEAPME's position on the EC Green Paper, p. 2; EuroCommerce's r esponse to the EC consultation, p.1-2. 
319 It is recognised that SMEs are not always in a weaker barg aining position; this example only applies to those who are. 
320 This analysis is only applicable to those options which describe the impacts of a legal instrument. 
 
 97ONLINE ENVIRONMENT 
With no EU action, the trend of domestic sales being far greater than cross border ones would 
continue. 
OVERALL ASSESSMENT 
This option would not remove the additional trans action costs for cross-border trade identified in 
the problem definition. The subsequent opportunity  costs would continue; the level of legal 
complexity for businesses wishing to trade cross border would not be reduced. This option would 
also mean that the complexity consumers expe rience regarding their ri ghts in a cross-border 
context would remain and the practice of refu sal to sell across border would not decrease.  
Even though this option takes account of full ha rmonisation of some consumer protection rules 
due to the adoption of the CRD, this harmonisation is  restricted to only a few selected areas of 
consumer contract law. Most aspects of this law such as sales remedies and unfair contract terms 
would remain fragmented across the EU. This fr agmentation would not give consumers the full 
confidence on all their consumer rights fo r when they purchase across border.  
 
 
2. Policy option 2 
 
2.1. Policy option 2a: Toolbox as a Commission document 
 
The toolbox itself would only have an indirect  impact upon businesses and consumers because 
concepts from the toolbox would be used for the de velopment of future contract law legislation or 
the revision of existing EU legisla tion. The legislation itself would have the direct impact. As such a 
Commission instrument would not be agreed by the Council and EP, the EU le gislator could always 
deviate from the parts on Commission proposal s implementing the toolbox. Because of the 
uncertainty of its implementation, th e impact of this option would not only be indirect but also very 
limited.321 For this reason it is difficult to quantify wh at this impact would be. In addition, there 
would not be any immediate impact of this  option upon businesses as negotiations for new 
legislation or an amendment to existing legislation would take time to achieve.  
 
ECONOMIC IMPACTS   
Transaction costs:  In the longer term this opt ion could lead to a small re duction in the transaction 
costs due to the limited convergen ce of certain contract law concep ts, but the extent of this is 
unknown as one cannot predict when and how these concepts would be used. 
Administrative costs (included in the overall figure of transaction costs):  This option could create 
indirect administrative costs associated with futu re contract law requirements. For example if a 
future law based upon the toolbox oblig ed a trader to provide informa tion not previously required, it 
could mean that the trader would have to  bear the associated administrative costs . The use of the 
toolbox would have an indirect imp act on these costs only as far as th e concepts used from it impose 
an administrative burden on businesses in future le gislation compared to th e BS. These costs would 
depend on the potential future use of the toolbox.  Competition in internal market and impact on consumer prices:
 There would be little changed from 
the BS. Impact on consumer protection:
 Where rules from the toolbox (which  are not in the current acquis or 
domestic legislation) are adopted in EU legislatio n, they could raise the leve l of consumer protection 
in the laws of some MS. Having common rules in the toolbox, in the longer term could improve and 
harmonise to some extent the legal protection of consumers compared to the BS, however the 
impacts on consumer protection would only be felt if the EU legislator agrees  to use the rules from 
the toolbox.  
                                                 
321 European Small Business Alliance response to the Green Paper, p2 also supports that the Toolbox does not have the substance  'to deliver real benefits to businesses 
engaged in transactions across the wider European market.' 
 
 98Impact on SMEs:  Very little change compared to the BS. Initially national contra ct laws would still 
apply and therefore so would the BS transaction costs. In the l onger term there could be some 
limited convergence of Common European Sales La ws that could lead to a small reduction in 
transaction costs, however th e extent of this is unknown. 
Impact on law firms:  No change from the BS. 
Public authorities: MS:  Very little change compared to the BS . An indirect impact felt only where 
new contract law concepts based on the toolbox would be included in  future legislation and would 
need to be implemented/transposed by MS.  Judiciary:
 Very little change compared to the BS. A lim ited indirect impact could also be felt by the 
judiciary who, depending on the extent of the change, would need to train for new concepts in future 
legislation. 
Analysis of provisions of instrument:322 No impact.  
SOCIAL IMPACTS 
No change from the BS. With very little likely im pact on facilitation of cr oss border trade, social 
impacts such as job creation would not occur.  
ENVIRONMENTAL IMPACTS 
No change from the BS. Without an increase in cross border trade there would not be an impact 
upon the environment (via for exam ple an increase in delivery of  goods which would increase CO2 
and other emissions). 
SIMPLIFICATION POTENTIAL 
This option could create some convergence of the rele vant contract law legisl ation and result in a 
small level of simplification as national laws would in time begin to develop similarities.  
ONLINE ENVIRONMENT 
No change from the BS as this impact would only be applicable to those options which describe a 
legal instrument.  
OVERALL ASSESSMENT 
Compared to the BS this option may to a very small extent help to facilitate  the expansion of cross-
border trade in the internal market. It may also to a small extent indi rectly lead to an increased level 
of consumer protection in national contract laws.  
However, since the contract law related transa ction costs would largely remain unchanged, the 
positive impacts of this option on businesses and cons umers would be minimal and in turn so would 
any subsequent impacts upon trade, competition and the internal market. Moreover, any impacts of 
this option would not be felt immediately as nego tiations for new legislation or amendments to 
existing legislation would take time to achieve. Ov erall, as there is no wa y of knowing whether and 
how widely this option would be used and accept ed by the Council and EP, the impacts of this 
option would not differ greatly compared to the BS  and any impacts felt would be very small and 
would take place in the longer term. 
  
2.2. Policy option 2b: Tool box as an inter-institutional agreement  
 
As per policy option (PO) 2a, the toolbox itself woul d not have a direct impact upon businesses and 
consumers. As an inter-institutional agreement w ould bind the three EU institutions to make use of 
the toolbox concepts when drafting and negotiating legislative proposals related to contract law 
(except when overriding sector-spe cific reasons would lead to anot her result) there would be less 
                                                
 
322 This analysis is only applicable to those options which describe the impacts of a legal instrument. 
 
 99deviation from the use of the toolbox concepts co mpared to PO2a and more certainty in its 
implementation.   However, despite this increased certainty, the impact s of this option would remain indirect. For this 
reason it is difficult to quantify wh at these impacts would be. In addition, there would not be any 
immediate impacts of this option upon businesses as negotiations for agreeing new legislation or an 
amendment to existing legislation would take time to achieve.  
 
ECONOMIC IMPACTS   
Transaction costs:
 In the longer term this opt ion could lead to some re duction in transaction costs 
due to the convergence of certain contract law concepts. Although the extent of this use is unknown, 
there is a greater likelihood of this taking pla ce as all three EU Ins titutions would agree on 
application of the toolbox concepts  rather than just the Commission as would be the case in PO2a. 
Administrative costs (included in the overall figure of transaction costs):  This option could create 
indirect administrative costs associ ated with future contract law requirements as set out under PO2a. 
Competition in internal market and impact on consumer prices:  There would be little changed from 
the BS. Impact on consumer protection:
 Where rules from the toolbox are adopted in EU le gislation, they 
could raise the level of consumer protection in the laws of some MS .  The impact would be the same 
as set out under PO2a with one difference. As unde r this option there the t oolbox concepts would be 
accepted by the Council and EP, the impacts would be felt to a greater extent than those felt under 
PO2a. 
Impact on SMEs:  Very little change compared to the BS. Initially national contra ct laws would still 
remain and therefore so would the baseline transac tion costs. In the longer te rm there would be some 
limited convergence of Common European Sales La w that could lead to a small reduction in 
transaction costs, however th e extent of this is unknown. 
Impact on law firms:  No change from the BS. 
Public authorities: MS:  Very little change compared to the BS . An indirect impact felt only where 
new contract law concepts based on the toolbox would be included in future legislation and need to 
be implemented by MS.  Judiciary:
 Very little change compared to the BS. This  limited indirect impact would also be felt by 
the judiciary who, depending on the extent of the ch ange would need to train for new concepts in 
future legislation. 
Analysis of provisions of instrument:323 No impact.  
SOCIAL IMPACTS 
No change from the BS. With very little likely im pact on facilitation of cr oss border trade, social 
impacts such as job creation would not occur.  
ENVIRONMENTAL IMPACTS 
No change from the BS. Without an increase in cross border trade there would not be an impact 
upon the environment (via for exam ple an increase in delivery of  goods which would increase CO2 
and other emissions).  
SIMPLIFICATION POTENTIAL 
This policy option could create a greater convergence of the relevant  contract law legislation than 
PO2a and result in a small level of simplification as national laws would in time begin to develop 
similarities to each other.    
                                                 
323 This analysis is only applicable to those options which describe the impacts of a legal instrument.  
 
 100ONLINE ENVIRONMENT 
No change from the BS as this impact would only be applicable to those options which describe a 
legal instrument.  
OVERALL ASSESSMENT 
As this option involves all three Institutions agreeing to make use of the toolbox, this option would, 
to a somewhat greater extent compared to PO2a, reduce the differences between national contract 
laws which would help to facilitate the expansion of  cross-border trade in the internal market. This 
option could to a limited, but greate r extent than PO2a indirectly l ead to a higher level of consumer 
protection and legal certainty  about consumer rights.  
However, since the toolbox would only be used fo r the amendment of existing or preparation of 
future sectoral legislation, contra ct law related costs stemming from differences of national contract 
laws would largely remain and in turn so woul d any subsequent impacts upon trade, competition and 
the internal market. Moreover, there would not be any immedi ate impacts of this option upon 
businesses and consumers as negotiations for ne w legislation or an amendment to existing 
legislation would take consider able time to achieve. As this option would only concern national 
contract law rules which are modified following re vised or new EU legislat ion and would only have 
an impact at the earliest at a medium term, th e overall positive impacts of this option would be, 
albeit greater than PO2a, still rather limited. 
 
3. Policy option 3:  Recommendation on a Common European Sales Law  
 
This option would encourage MS to incorporate voluntarily into their domestic law a Common 
European Sales Law instrument as  a 'second regime'. This second re gime would not replace existing 
legal traditions, but sit alongside a relevant sp ecific national regime. The rules of the Common 
European Sales Law could be voluntarily chosen by the parties as the law applicable to their cross-
border contracts. Therefore businesses would have the choice to continue to use their national law in 
their cross border transactions or to use the Common European Sales Law.   
 
ECONOMIC IMPACTS   
Transaction costs:  The impacts of this option would very much be dependent upon: 
• Whether and how many MS decide to in corporate a Common European Sales Law 
instrument as an optional regime and to what extent 
• How many businesses decide to us e the Common European Sales Law 
On a qualitative basis the impacts would reduce transaction costs to some degree as for those MS 
who decide to incorporate the Common European Sales Law without  any changes, the differences 
between national cross border laws would cease. Ther e are several variants of the incorporation of 
the Common European Sales Law under this option and its subsequent outcomes:  
Scenario 1:  In the ideal scenario all MS would implement the Common European Sales Law 
completely without changes and at the same time. If this occurred then the im pacts of this scenario 
would be the same as those listed under th e analysis of impacts of policy option 4. 
Scenario 2 : If only some of the MS (for example 10 ), implemented the Common European Sales 
Law completely, without changes and at the same  time a differentiation would be necessary for 
those traders performing a B2B contract and those performing a B2C contract . This scenario would 
be of benefit to traders who perform B2B cont racts, because even where MS decide not to 
incorporate the Common European Sales Law, trader s would have the freedom to decide on the law 
applicable to their contract. This would mean th at traders who performed B2B contracts would have 
the opportunity to reduce their tr ansaction costs through the use of the Common European Sales 
Law. This reasoning would also apply to B2C c ontracts but only for trade with consumers from 
those MS which implement the Common European Sales Law entirely and without changes. For 
 
 101those MS who do not do this, scen ario 3 (below) would apply.  
Scenario 3:  Some MS could decide to incorporate th e Common European Sales Law not completely, 
with changes, not at the same time, or a combina tion of these factors. For B2B contracts the same 
situation as scenario 2 would apply. For B2C c ontracts the situation would become even more 
complicated as under scenario 2. First, like under scenario 2 the Co mmon European Sales Law 
could only be applied if the law of a MS whic h has incorporated the Recommendation would be 
applicable. However, businesses w ould have to research whether and where MS have changed the 
drafting of the Common European Sales Law with regards to mandatory cons umer protection rules. 
This means that businesses could not be sure to sell across borders on the basis of one single law 
and would therefore have similar tr ansaction costs as in the BS. (This risk of an increase in legal 
complexity was raised in several responses to  the Green Paper and particularly by business 
representatives.)  
This analysis applies scenario 2 to the impacts be low as it would allow some quantification for these 
impacts as well as simplicity in their presentation;  in reality though scenario  3 would be the most 
likely one to occur. However, scenario 3 is not applied to the impacts because the piecemeal way of incorporation of the Common European  Sales Law (if at all) would ma ke it very difficult to quantify 
the exact impacts upon both B2B and B2C contracts.  One could assume that there may be some 
benefits for traders with B2B contracts, but for those with B2C contracts the likelihood is that the majority of BS impacts would st ill apply (although the extent of the impacts would be unknown). To 
apply scenario 3 to the analysis would mean th at every impact would reflect the reasoning given 
above without giving possible quantification.  
Administrative costs (included in the overall figure of transaction costs):
 Some administrative costs 
would occur for B2C traders usi ng the Common European Sales La w. Otherwise BS administrative 
costs would apply.  
Opportunity costs of foregone trade:  The costs for missed opportuni ties of trade costs are not 
possible to calculate, howe ver one could assume that they would be  less than those set out in the BS 
(for both B2B and B2C).   
Competition in internal market and impact on consumer prices:  Compared to the BS, the impact 
would be greater the more MS in corporate it without ch anges and at the same time. For those MS 
who decide not to incorporate it at all/or with changes the impact  would be similar to the BS. A 
more harmonised legal system would incentivise more businesses to trade cross border and would 
result in increased competition between them. An in crease in cross border tr ade would therefore lead 
to a rise in imports, which would be likely to increase the competition in the importing MS. To be 
able to compete in the market, businesses would be  encouraged to either by improve the quality of 
their products or reduce prices.  This would contribute towards th e Commission policy on increasing 
competitiveness324 and would be of particular relevance in B2B transactions which include the 
manufacturing industry. This would have a pos itive impact upon consumers and would allow them 
to further benefit from the internal market; as an increase in the numb er of traders and more 
competition between them would give consumers an increased choice of product at a lower price.  
For scenario 2, the prices ar e estimated to fall by 0.03-0.06%.325 
Impact on consumer protection (Applicable to B2C contracts only): The extent of the impact would 
depend upon the number of MS incorporating the Common European Sales Law entirely and 
without changes and the number of  businesses using it. Depending on the degree of implementation, 
this option could provide a high le vel of consumer protection (in lin e with Article 38 of the Charter 
of Fundamental Rights of the EU)326 giving consumers confidence that they would have similar 
rights when using the Common European Sales Law in  their own country as they would in all MS 
                                                 
324 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage,' COM  (2010) 614. 
325 See Annex IV. 326 See Annex VI. 
 
 102applying the Common European Sales Law.  
Impact on GDP:  Under scenario 2, GDP of the EU is expected to increase by €1.8 to €3.6 billion 
(0.015% - 0.03%).327 
Impact on SMEs:  SMEs which perform B2C c ontracts would still incur tr ansaction costs to find out 
about the level of consumer protection provisions in another country and would incur administrative 
costs where new information provisions were re quired. Although difficult to quantify, it is assumed 
that these costs would have a greater impact upon micro and small enterprises. For SMEs 
performing B2B contracts, the negotiation of an a pplicable law between similar sized companies are 
likely to become easier.328 
Impact on law firms:  There would be a new demand for legal a dvice from new expor ters, as well as 
from existing exporters who would need to become  familiar with the Common European Sales Law. 
This would create an opportunity for law firms to tap into the new market and expand their business 
on giving advice on contra ct law. However as contract law di fferences would still remain, this 
option could add a level of comple xity as law firms would need to  ensure they fully understand the 
differences of the Common European Sales Law be tween the MS. In their responses to the Green 
Paper several practitioner re presentatives mentioned that there woul d be a cost for law firms to train 
and familiarise themselves with the Common Eur opean Sales Law, as with all new legislation. 
However unlike the BS, a very small share of thes e costs would be relieved given that the Common 
European Sales Law would be available in all offi cial languages in the EU, and would therefore be 
more accessible.  
Some stakeholders were concerned that busin esses would no longer choose to use domestic 
legislation and as a result the law firms that a dvise on specific national laws for international 
transactions would move their bus iness to outside of the EU. Ho wever, a Common European Sales 
Law would not replace national la ws and businesses could contin ue to choose their preferred 
national law in B2B contracts. (B usiness that choose a particular law compared to other legal 
systems tend to do so because of its specificities and it would be unlikely that these businesses which already choose it for these reasons would cease to do so.)   
Public authorities: MS:  The national laws of MS would not be  affected. However, MS would bear 
costs which accompany the implementation of EU legi slation (such as consu ltation of stakeholders, 
printing of new legislation, educ ating the public about the new le gislation, time and cost of 
legislative process, etc.) 
Judiciary:  For those MS who choose to  incorporate the Common Eur opean Sales Law into their 
national laws, there would be a cost  for the judiciary to train and familiarise themselves with the 
new system However this cost would also apply to  the judiciary of MS who have not incorporated 
the Common European Sales Law as businesses in their B2B contracts may choose to apply the law 
of a third country (i.e. the Co mmon European Sales Law).   
Analysis of provisions of instrument:  The analysis of impacts of the main provisions of the 
instrument are described in Annex VIII. 
SOCIAL IMPACTS 
Compared to the BS, the more that MS incorporat e it entirely and without changes the greater the 
facilitation of cross border trade and increase in employment.  U nder scenario 2 it is estimated that 
there would be 74,000-145,000 new jobs in the EU.329 
ENVIRONMENTAL IMPACTS 
Compared to the BS, the more that MS incorporat e it entirely and without changes the greater the 
                                                                                                                                                                    
327 See Annex IV. 
328 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross bo rder trade. In response to a similar 
question in the EB 320 (p.16) 25% of respondents said that diff iculties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-
border. However, as the sample in the EB al so included large companies, the results of  the SME Panel survey are more relevant f or the SME test.  
329 See Annex IV  
 
 103increase in the use of transport.  This would have an adverse im pact upon the environment as the 
increase in use of transport for delivery would lead to an increase in CO2 and other vehicle 
emissions and, would increase the cost to cont rol pollution due to the binding EU rules.  
SIMPLIFICATION POTENTIAL 
Compared to the BS, using scenario  2 this option could create some  simplification to the regulatory 
environment. However this would only apply to those MS which have incorporated the Common 
European Sales Law entirely and without change s and for those businesses that choose it.  
ONLINE ENVIRONMENT 
The extent of this impact would depend upon the number of MS who incorporate the Common 
European Sales Law entirely and without changes a nd the number of businesses who use it. If for 
instance, compared to the BS, if scenario 2 applied to an online cross border and domestic 
environment only it would allow businesses the c hoice to trade under the same law regime for a 
cross border sale as they would with a domestic  one. This would mean businesses that use the 
Common European Sales Law in those MS which ha ve implemented it entirely and without changes 
would not need to adapt their terms and conditions and IT platforms to a great degree to trade in 
another country – this could provide  an incentive to businesses to increase their online cross border 
sales (or commence them). If there were an incr ease in the number of businesses who used this 
instrument to trade cross border, then compar ed to the BS, this option would help towards 
narrowing the gap between domestic and cross border online sales.  
However, an instrument dedicated to e-commerce only could lead to increased legal complexity. 
Companies using distribution channels other than e-commerce would have to  apply different legal 
rules depending on the distribution channel used which would create a fragmentation of the market 
and distort competition. Furthermore, as mentioned by business representatives in their Green Paper 
consultation responses,330 it would not be technologically neutral and thus may generate legal 
uncertainty should new forms of di stance sales occur in addition to e-commerce, for instance mobile 
telephony commerce. On the other hand, some bus inesses who responded favoured a scope limited 
to cross-border online sales only.331 Such a scope could create additional legal complexity for 
consumers who could be subject to different rules depending on whether they make a purchase 
online, at a distance using another method (i.e. post or telephone) or face-to-face. 
IMPACT IF THIS OPTION APPLIED IN A DOMESTIC CONTRACT AS WELL AS 
CROSS BORDER 
The extent of this impact would depend upon th e number of MS which incorporate the Common 
European Sales Law entirely and wit hout changes. Using scenario 2: 
Domestic and cross border : Between those MS who incorporat e the Common European Sales Law, 
the legal environment for businesses which trad e both cross-border and domestically would be 
facilitated; if businesses chose to operate under th e Common European Sales Law for all contracts. 
However, for businesses who wish to trade with businesses in those MS who do not incorporate the 
Common European Sales Law, transa ction costs woul d still occur. 
 
Cross border only : Between those MS who incorporate the Common European Sales Law , traders 
could use one contract law (the Common European Sales Law) for cross border trade with multiple 
MS (both in B2C and B2B transactions). Thus, they could reduce transaction costs and legal 
complexity. Those businesses who wished to con tinue to use their national contract laws for 
domestic trade would be free to do so; whilst at the same time they  would also be able to export 
using the Common European Sales Law. Therefore,  business could save costs when trading cross 
                                                 
330 Eurochambres Position Paper on the Green Paper on policy Options for Progress towards a European Contract Law for Consumers  and Businesses, European contract 
law, January 2011 p.3, European Small Business Alliance response to the Green Paper on policy Options for Progress towards a Eu ropean Contract Law for Consumers and 
Businesses, p.4. 331 Eurocommerce response to the Green Paper on policy Options for Progress towards a European Contract Law for Consumers and B usinesses, 27 January 2011, p. 3. 
 
 104border and continue to enjoy th eir current arrangements under domes tic legislation. However, for 
businesses who wish to trade w ith businesses in those MS w ho do not incorporate the Common 
European Sales Law, transaction costs would still occur (both in B2B and B2C contracts).  
OVERALL ASSESSMENT 
This option would only be effective if the Co mmon European Sales Law was incorporated by a 
number of MS entirely and without amendmen t to the original version attached to the 
Recommendation. If this occurred,332 the transaction costs for cross border trade would be reduced, 
there would be more trade and co mpetitiveness in the internal ma rket and consumers would benefit 
by having an increase in choice of products at a lower price as well as an increased level of 
consumer protection when they buy abroad using the Common European Sales Law.  
 However, it is highly unlikely that this option woul d be incorporated entirel y or without amendment. 
This would not greatly affect trad ers performing a B2B contract (as they would have the freedom to 
decide on the law applicable to their contract ) and therefore, these traders would have the 
opportunity to reduce their transa ction costs by using the Common Eu ropean Sales Law of one MS 
which has best implemented it. The same woul d not be the case for traders performing B2C 
contracts, as they would have to research whet her and where MS have changed the drafting of the 
Common European Sales Law with regards to manda tory consumer protection rules. This means 
that businesses would not be able  to sell across borders  to consumers on the ba sis of one single law 
and would therefore incur transactio n costs of the type indicated in the BS. Consequently this option 
would only to a limited extent remove the hindrances  to cross-border trade identified in the problem 
definition. The voluntary nature of the incorporati on would mean that the instrument would not be 
legally binding and there would be no jurispr udence mechanism to ensure its coherence.  
Overall, because of the piecemeal way in wh ich the Common European Sales Law could be 
incorporated, if at all, this option would further complicate th e regulatory environment for both 
consumers and businesses as both parties in B2C c ontracts would be subject to differing degrees of 
the Common European Sales Law in  different MS and the divergen ces in national contract laws 
would remain.  Many respondents to the Green Paper consultation (business groups, consumer 
organisations and legal practitioners rejected th is option). Because this option would add to the 
issues set out in the problem definition it is hi ghly unlikely to be suitab le as a solution.   
 
 
4. Policy option 4: Regulation/Directive settin g up an optional Common European Sales Law  
The optional Common European Sales Law would insert  a set of clear and practical rules into each 
of the different national laws of a MS as a 'sec ond regime'. This second regime would not replace 
existing legal traditions, but sit alongside a releva nt specific national regime. These rules could be 
voluntarily chosen by the parties as  the law applicable to their cr oss-border contracts. Therefore 
businesses would have the choice to continue to use their national law in their cross-border 
transactions or to use the opti onal Common European Sales Law.  
 
                                                 
332 In order to estimate the impacts of PO3 assumptions on the number of exporting companies taking up the optional Common Euro pean Sales Law have been made. EB 
320 and 321 show that 70% of businesses would be likely to use a new Common European Sales Law instrument.  Businesses would ho wever need to agree this choice with 
their business partners. Therefore the more conservative assumptions i.e. 25% and 50% of companies using the Common European Sa les Law are applied  throughout in the 
report. This allows demonstrating a range of possible economic impacts. 
 
 105ECONOMIC IMPACTS  
Transaction costs:  This option would greatly reduce tran saction costs because it would allow 
businesses to use one set of rules for cross border tr ade irrespective of the nu mber of countries they 
trade with in the EU. In practice, this means that businesses using the optional Common European 
Sales Law may only have to pay one transaction cost for trade with multiple MS.333 For example, a 
business exporting to between 1 and 26 MS may onl y have to pay on average €9,800 for B2B and 
€9,100 for B2C (plus €2,900 for e-commerce oriented en terprises selling to consumers that face 
additional contract law rela ted IT costs), (see BS).  
For businesses that already export an d decide to expand their sales but  decide not to use the optional 
Common European Sales Law, the costs for e xporting to 5 MS could amount to €49,100 for B2B 
and €45,600 for B2C if the business applied the law of the country traded to in each case. A 
company applying the optional Common European Sale s Law to the same contracts with all 5 MS 
would save €39,300 and €36,500 respectivel y. Costs for exports to 10  MS using the law of the 
country traded to could amount to €98,300 for B2B and €91,100 for B2C.  If the trader used the 
optional Common European Sales Law the cost s saved would be €88,500 and €82,000 respectively.  
Assuming that initially only 25%334 of current exporters decide  to use the optional Common 
European Sales Law, one-off implemen tation costs would amount to €1.89 billion.335 However a 
business stakeholder noted, the initial cost of the optional Common Europ ean Sales Law would be  
acceptable when compared to continuing potentially high transaction costs.336  The estimate of 
transaction costs does not  include the potential higher compliance costs for companies in some 
Member States where the level of consumer prot ection would increase (see section on analysis of 
provisions of instrument).  
 These costs would however be outbalanced on on e hand by costs savings fo r new exporters and on 
the other hand by potential savings for current exporters that woul d expand their cross-border sales 
to new countries. Using a conservative assumpti on of 25% of new exporte rs using the optional 
Common European Sales Law and the current average level of exports, the annual savings
337 for 
new exporters would be €150-400 million.338 In addition, if 25% of the current exporters decide to 
use the optional Common European Sales Law and st art trading with additi onal EU countries the 
potential saving would be between €3.7bn and €4.3 bn.339 (i.e. costs if they were to expand their 
sales to new countries under the BS  €5.6- €6.2 mi nus one-off cost of implementation €1.89 billion). 
 
These cost savings would have the biggest imp act upon SMEs (in particular on micro and small 
companies) and this is where the optional Comm on European Sales Law would add the most value 
for such traders.  However the optional Common Eu ropean Sales Law would al so save costs (albeit 
on a relatively lesser scale)340 for big businesses who want to use the optional Common European 
Sales Law to trade with other big businesses. (To ensure all businesse s have the opportunity to take 
                                                 
333 This would facilitate the freedom to c onduct a business in line with Article 16 of the Charter on Fundamental Rights of the  EU. See Annex VI. 
334 EB 320 and 321 show that 70% of businesses would be likely to 334. 38% of all the companies surveyed would prefer to use a single European contract law as an 
alternative to their national law. Businesses would need to agree the choice of using the instrument with their business partne rs. Therefore assuming that some business 
partners would not wish to use the Common European Sales Law, the more conservative assumption i.e. 25% of companies using the Common European Sales Law are 
applied throughout the report. 
 
335 25% of current exporters in B2B and B2C multiplied by the respective costs-see Annex III. 336 ESBA response to the Green Paper consultation, p. 2. 337 Number of new exporters annually multipli ed by the average saving – see Annex III. 
338 In a longer term, these annual savings could be discounted to €3.9-€10 bn and the net benefit for the EU economy would be € 2-€8,11bn  (€3.9-€10 bn minus €1.89bn), 
See Annex III 
339  Number of current exporters that decide to use the optional Common European Sales Law (25%)  multiplied by the saving depe nding on the number of additional 
countries they w ould make cross-border sales to - see Annex III. 
340 The amount a big business spends to trade to the whole of the EU is 0.06% of their average annual turnover (see problem def inition). 
 
 106full advantage of the optional Common European Sales Law and to ensure non exclusivity of the use 
in terms of application of scope of the instrument , it may be prudent to allow MS to make the choice 
as to whether big businesses could use the optiona l Common European Sales Law to contract with 
other big businesses.) 
 
The reduction in transaction costs would also fac ilitate intra EU trade by removing obstacles for 
those companies which currently experience difficu lties in either conducting cross-border trade or 
transferring, for example, propert y by way of cross border sales a nd would therefore facilitate the 
exercise of these rights in line with Articles 16  (Freedom to conduct a business) and 17 (Right to 
property) of the Charter on Fundament al Rights of the EU, respectively.341   
 Administrative costs (include d in the transaction costs):
 This option would requi re traders to provide 
consumers with information about the choice of  using the optional Comm on European Sales Law. 
For example, companies trading via e-commerce would need to create  for example a pop-up 
window informing a consumer about the applica tion of the optional Comm on European Sales Law 
and companies trading via post woul d need to add similar informa tion, for instance, in a brochure 
format. This would cost a business approximately €500.342 However, the application of the optional 
Common European Sales Law would be voluntary a nd need only be used by the contractual parties 
if it offered them a commercial advantage compared  to the BS. This is one of the instances where 
the optional Common European Sales Law safeguards th e principle of 'freedom of contract', which 
was a concern raised by business representa tives in response to the Green Paper.  
 Exporters could achieve cost savings if trading with  more than 1 MS as they would be able to use 
one set of information, available in all EU la nguages. If a business us ed the optional Common 
European Sales Law the administrative costs woul d amount to (on averag e) for B2C contracts 
€2,500 and for B2B €1,500.
343 Compared to the BS if a company traded with 2 MS the cost saving 
per company would amount €1,500 in B2B and €2,000 B2C transactions. Under an extreme 
scenario, when a company trades across the whol e of the EU, the cost saving per company would 
amount to €37,500 in B2B transactions and €62,000 in B2C transactions.344  
Competition in internal market and impact on consumer prices:  This option would increase 
competition in the internal market and lead to  a decrease in prices. For B2C contracts 40%345 of the 
above mentioned businesses surveyed said that if they were able to choose a single Common European Sales Law they would increase their cross border trade in the internal market. For those performing B2B contracts, this figure was 34%.
346 These surveys have also indicated that 14% of 
those performing B2B contracts would trade with 6 or more additional c ountries if they were able to 
choose a single Common European Sales Law, 34% said they woul d trade with 3-5 new countries 
and 35% said they would trade with 1– 2 new c ountries. For those performing B2C contracts these 
figures were: 18%, 32% and 32% respectively. 
An increase in cross border trade would therefore lead  to a rise in imports, which would be likely to 
                                                                                                                                                                    
341 See Annex VI.  
342 Explained further in Annex VII. 343 See Annex VII for more details on how these costs are calculated.   
344 See Annex VII for more details on how these costs are calculated. 
345 EB 321, p. 36. 
346 EB 320, p.33. 347 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage,' COM  (2010) 614. 
348 The impacts are computed using the GTAP (see Annex IV). 349 See Annex VI. 
350 According to data from EB 342, p. 122-125, most consumers either do not read the terms and conditions (27%) or do not read them carefully and completely (30%). 
According to Allen and Overy, Online consumer research, 2011: 52 % of the consumers in the 6 largest EU MS never (5%) or only oc casionally (47%) r ead the terms and 
conditions when purchasing online. 
 
 107increase the competition in the importing MS. To be able to compete in the market, businesses 
would be encouraged to either by improve the quality of their produc ts or reduce prices. This would 
contribute towards the Commission policy on increasing competitiveness347 and would be of 
particular relevance in B2B tr ansactions which include the ma nufacturing industry. Consumers 
would benefit from an increased ch oice of product at a lower price. Prices are expected to decrease 
around 0.04-0.07% if 25% of EU companies used  the optional Common European Sales Law.348 
The more companies that make use of the optional Common European Sales Law, the greater the probability that companies who do not use the optional Common European Sales Law would need to remain competitive by improving the quality of their products or reducing prices. 
 
Impact on GDP: Overall EU GDP is expected to incr ease by €5- €10 billi on (0.04-0.08%) (see 
Annex IV). 
Impact on third countries: if third countries could choose th e optional Common European Sales 
Law, they would benefit from an easier access at lower transaction costs to the whole EU market 
and may be able to expand exports to more EU  countries. If they c ould not use the optional 
Common European Sales Law, some negative impact  could be possible, provided that trade would 
grow more between EU countries at the expense of potential partners fr om third countries.  
 
Impact on consumer protection  This option would provide a high level of consumer protection (in 
line with Article 38 of the Charter of Fundamental Rights of the EU)349 by increasing consumer 
protection in certain areas which are currently harmonised at minimum level, by creating a high 
level of consumer protection in ar eas in which the Union has not previously acted by integrating the 
fully harmonised provisions of the CRD and by taking the other minimum harmonisation provisions 
of the acquis as a benchmark.   
 The optional Common European Sales Law would stre ngthen rights on some points of particular 
concern to consumers compared to  the existing acquis. For instance,  the consumer could choose the 
type of remedy if the goods did not conform to the contract; these remedies would also be  available 
to consumers who bought digital content products wh ich also did not conform to the contract. These 
and other consumer protection prov isions would give consumers conf idence that they would have a 
very high level of consumer protection whenever  they used the optional Common European Sales 
Law. 
 
To strengthen certainty  about their rights and thereby cons umer confidence, businesses would 
provide consumers with a sta ndardised information notice whenever the optional Common 
European Sales Law was chosen for use. This  information notice would explain that Common 
European Sales Law applied and would set out in formation about the key rights consumers would 
enjoy under the optional Common European Sales Law.  The provision of this information responds 
to some concerns (i.e. increase of the legal complexity, inability for the consumer to make an informed choice for the application of the op tional Common European Sales Law) raised by 
consumer and legal practitioner representatives in their responses to the Green Paper. Within this setting the optional Common European Sales Law c ould encourage more consumers to shop across-
border, as they would have the same rights at a high level of protection everywhere in the EU, 
whenever the optional Common European Sales Law would apply. Moreover, the information 
notice would be beneficial for the large percentage  of consumers who do not always read terms and 
conditions, as it would present thei r key rights in a concise and prom inent way before they agree to 
the contract.
350 If this information is not provided to th e consumer, then the consumer would have 
the right to terminate the contract without bearin g any costs. In addition, the agreement would only 
be valid if the consumer cons ented - in a separate statemen t - to using the optional Common 
European Sales Law. A business would therefore not be allowed to include the choice of the 
optional Common European Sales Law as only a term in his standard terms and conditions. 
 
 
 108The optional Common European Sales Law could become a 'trustmark' for consumers: once they 
have become familiar with their rights under the optional Common Eu ropean Sales Law, they would 
become more certain and theref ore confident in purchasing pr oducts across the EU under the 
optional Common European Sales Law's uniform  rules. Additionally, the optional Common 
European Sales Law could be of an advantage to th e economic interests of consumers, as they could 
gain access to more and better o ffers at a cheaper price, which w ould not have been made available 
by foreign businesses if the optional Comm on European Sales Law had not existed. 
 Thus, the information notice and the explicit separate statement of consent the consumer will have to provide would also eliminate th e fears of several MS and consum er associations who have some 
concerns about the optional Common European Sale s Law, as they think businesses could take 
advantage of the weaker position of the consumers, as the latter  would not be fully able to 
understand the consequences of choosing an  optional Common European Sales Law. 
Impact on SMEs:  There would be a positive impact upon SMEs trading with more than 1 MS. Micro 
and small companies would benefit in particular as the cost savings of using the optional Common 
European Sales Law would be dispropor tionately high compared to the BS.  
For B2C contracts, if the optional Common Europ ean Sales Law were chosen, it would be the only 
applicable law in the area covere d by its scope. Therefore,  the trader would ha ve to consider only 
one set of rules – those of the optional Comm on European Sales Law. It would no longer be 
necessary to consider other national mandatory pr ovisions as they would normally have to when 
concluding a contract with a c onsumer from another MS. There w ould be some administrative costs 
where provision of information would be required.351 However these costs would be unlikely to 
outweigh the cost savings, especially for those co mpanies trading in multiple MS. The standardised 
information notice for the optional Common Eur opean Sales Law would limit the administrative 
costs: Businesses will not be required to provide individual explanations of the consequences of the 
use of the optional Common European Sales Law to  the consumer, as the information notice would 
fulfil this purpose. For SMEs concluding B2B c ontracts the negotiation of  an applicable law352 
would not be so burdensome anymore.353 Two SMEs could be more willing to agree on the optional 
Common European Sales Law as a 'neutral' contract law. As both parties woul d have equal access to 
this law as part of their national system, neither of  them would be in a weak er position compared to 
the situation where one of them would be as the appl icable law would be unknown to that party. 
Evidence shows that a law which is considered 'neu tral' and is available in multiple languages such 
as the Swiss law, is more likely to become the preferred choice of law.354  
Impact on law firms:  There would be a new demand for legal advice from new expor ters, as well as 
from existing exporters who would need to beco me familiar with the optional Common European 
Sales Law. This would create an opportunity for law firms to tap into the new market and expand 
their business on giving advice on contract law.   In their responses to the Green Paper several prac titioner representatives me ntioned that there would 
be a cost for law firms to train and familiarise  themselves with the optional Common European 
Sales Law, as with all new legislation. Howeve r unlike the BS, some of these costs would be 
                                                 
351 See Annex VIII. 
352 Article 16 of the Charter of Fundamental Rights of the EU. See Annex VI. 353 In the SME Panel Survey, 55% of SMEs responded that the negotiation of applicable law was an important obstacle to cross bo rder trade. In response to a similar 
question in the EB 320 (p.16) 25% of respondents said that diff iculties on agreeing on the foreign applicable contract law had an impact on their decision to trade cross-
border. However, as the sample in the EB al so included large companies, the results of  the SME Panel survey are more relevant f or the SME test.  
354 Stefan Voigt, Journal of Empirical Legal Studies, Volume 5, Issue 1, 1–20, March 2008, "Are International Merchants Stupid?  Their Choice of Law Sheds Doubt on the 
Legal Origin Theory", p. 17. 
 
 109relieved given that the optional Common European  Sales Law would be user-friendly, clear and 
available in all official langua ges in the EU, and would theref ore be more accessible. Moreover 
there would be public funding availabl e for training on new EU legislation.355  
 In time, there could be a chance that law firms c ould advise less, which would mean less billable 
hours for them. However this would be mitigated by the increased flow of new businesses entering 
the 'cross-border-trade' market and the expansion of existing client advice to a wider range of cross-
border transactions covering all MS.   The simultaneous application of  the optional Common European Sales Law by national courts 
would allow case law to build up quickly. The unif orm application would be ensured firstly by the 
ultimate interpretation of the optional Common Eu ropean Sales Law through the ECJ. A database, 
accessible to judges and legal practitioners and cont aining translated summaries of national rulings 
applying optional Common European Sales Law provisi ons would ensure transp arency and de-facto 
convergence of relevant case-law.  This would allevi ate concerns related to legal certainty raised by 
some Green Paper respondents.   Legal stakeholders were mostly positive toward s this option. Some stak eholders from the UK 
expressed views
356  that this option would make the UK, and in particular London, a less attractive 
place for, in particular, large companies (who ar e advised to use common law as their preferred 
choice of law for international transactions) to obtain legal advice from English law firms. These stakeholders maintain that as a re sult, the expenses  for legal advice
357 made by these businesses 
would be lost to the UK as companies would obtai n legal advice in the US. While these submissions 
are relevant for PO5/6, they do not really apply to PO4.  
 An optional Common European Sa les Law would not replace national laws. It would become a 
second regime existing alongside domestic legislati on, which could be chosen as an alternative to 
the national law, only when businesses see fit. Sin ce English law is chosen by companies because of 
its specificities, compared to ot her legal systems it is unlikely that companies which already choose 
it for these reasons would cease to do so.   Thus companies could continue to use common law and the services of English law firms if they 
choose to do so. In this context it is important to note that the number of EU exporting companies 
using the law of a 3rd country (for instance English law or Swiss law) is at any rate only 0.6% of EU 
exporters.
358 SME from non Common law practising count ries would not be likely to apply 
Common law to their contracts (e.g. a Swedish SME trading with an Italian SME would be more 
likely to use Swedish or Ita lian law). However a UK based SM E trading with a non-Common law 
country would still have the choice to use common law.  
 
Public authorities:  
There would be a cost concerning a data-base which would be created and maintained by the 
                                                                                                                                                                    
355 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser e xtent) to train on EU new legislation. The 
cost per trainee was about €1,400. The Commission will continue to finance training and will publish a Communication on this to pic by the end of 2011 in which the training 
on a Common European Sales Law instrument will be mentioned as a priority. 
356 Law Society of England and Wales Response to the Green Paper, p.17 – 20; Bar Council of England and Wales response to the G reen Paper p.20 and p.21; COMBAR 
response to the Green Paper p.3; City of London Law So ciety response to the Green Paper on contract law p. 2. 
357 According to the Bar Council of England and Wales Response to Green Paper p.20 and p.21  "Currently the annual fee income o f the 100 largest law firms is 
approaching £15bn, with over half of that revenue being generate d by London – based law firms." According to the Law Society of  England and Wales Response to the 
Green Paper  p.18. "The City Business series Report on Legal Services in 2007 valued the contribution of legal services to the UK economy at £14.9bn in 2004". However it 
would need to be noted that the income mentioned above seems to refer to the contributions of all legal services, not just on c ontract law. Therefore income solely due to the 
areas of contract law as defined under section 4.2.3. of the IA report in a cross border scenario would be a relatively small p ercentage of this overall income. 
358 EB 320, p. 57 
 
 110Commission. This database would c ontain summaries of rulings of the application of the optional 
Common European Sales Law provisions (as submitted by national courts). This cost would fall upon the Commission and would be broken down as follows: - one-off approximately €100,000
359 for creating the we bsite and database; 
- annually approximately €100,000360 for maintaining the website and database; 
- €160.56 for summarising a ruling submitted by a MS' c ourt (assuming that it will take 4 hours to 
read and summarise one ruling a nd a documentalist is paid €321.12361 a day), and  
- €117 for the translation of a summary in Eng lish, French and German (assuming that each 
summary will be one page and the translation cost will be €39362 per page).  
 Member States:
 The national laws of MS would not be a ffected. However, MS would bear the costs 
which would accompany the implementation of EU legi slation (such as consultation of stakeholders, 
printing of new legislation, educating the public a bout the new law, time and cost of legislative 
process, etc.) 
 
Judiciary:  As raised in the Green Pape r consultation, there would be a need for some initial training 
for judiciaries familiarise themselves with a new system.  However this cost would be mitigated by 
public funding available for traini ng on the new EU legislation.363 All legal practitioners across the 
EU would have access to a database containing summaries of rulings on the application of the 
optional Common European Sales Law. This would allow them to view the application of the 
optional Common European Sales Law and ensure the consistency of it s future use. The use of this 
option, i.e. a consistent reference to a single body of rule s, would remove the necessity for judges to 
investigate foreign law and compare several laws d ecreasing litigation costs compared to the BS. In 
the longer term, this would alleviate the administra tive load on a MS judicial system. Moreover, the 
database would also reduce the ri sk of a different application a nd interpretation of the optional 
Common European Sales Law mentioned by several responden ts to the Green Paper.   
 
European Court of Justice (ECJ ): In the first inst ance national courts w ould rule upon cases and 
submit summaries which would be entered into th e Commission created database. These summaries 
are likely to lead to a defacto c onvergence of rulings by national courts which national judges would 
be able to access when needing to refer to how provisions of the optional Common European Sales 
Law have been ruled upon. There may be a limited number of cases which may need to be referred 
to the ECJ,364 which would increase the caseload. There w ould be a financial co st of referral of a 
case which would need to be borne  by the parties to the trial. 
 
Analysis of provisions of instrument : The analysis of impacts of the main provisions of the 
instrument is described in Annex VIII. 
                                                                                                                                                                    
359 In 2002 a database (JURE data-base) was created for summarie s of judgemen ts concerning the Brusse ls I Regulati on no 44/2001  of 22 December 2000 on jurisdiction 
and the recognition and enforcement of judgements in civil and commercial matters, the Brussels II Regulation no 1347/2000 of 2 9 May 2000 on jurisdiction and the 
recognition and enforcement of judgements in matrimonial matters and in matters of parental responsibility for children of both  spouses, the new Brussels II Regulation no 
2201/2003 of 27 November 2003 on jurisdiction and the recognition and enforcement of judgements in matrimonial matters and in m atters of parental responsibility for 
children of both spouses, repealing Regulation no 1347/2000 and the Convention of 16 September 1988 on jurisdiction and the enf orcement of judgements in civil and 
commercial matters (Lugano Convention). The  creation of this database cost at that time almost €80.000. 
360 In the past four years the maintenance of the JURE data-base has cost on average €117.500. As the new data-base will likely  be linked with the system of an existing 
data-base – e.g. the data-bases on the e-justice portal – the cost will  assumable be lower. 
361 Annex 1 of amendment №4 to Framework contract noJLS/2008/A5/01/lot 21 "Websites, we b content management systems and other computer services". 
362 Price list in the Framework contract noJLS/2008/A5/01/lot 21 "Websites, web content management systems and other computer s ervices". 
363 In 2010 the European Commission made available €12 million of funding for judges and prosecutors (and lawyers to a lesser e xtent) to train on EU new legislation. The 
cost per trainee was about €1.400. The Commission will continue to finance trainings and will publish a Communication on this t opic by the end of 2011 in which the 
training on a Common European Sales Law instrument will be mentioned as a priority. 364 This increase of caseload would form a minor part of the ongoing overall institutional and bu dgetary discussion of the of t he resources and responsibilities of the ECJ. 
 
 111SOCIAL IMPACTS 
The more businesses that use this option, the great er the extent of the positive impact on trade and 
growth. Compared to the BS, this option would help  to facilitate cross bor der trade and as a result 
would create 159,300-315,900 new jobs in the EU if 25% of comp anies use the optional Common 
European Sales Law.365  
With regard to impacts on fundame ntal rights, this option would not  lead to discrimination, as it 
would apply across the EU without any distinction on the basis of na tionality, in line with Article 
21(2) of the Charter of Fundamental  Rights of the EU. Moreover, it would be effective in removing 
the contract law related barriers, wh ich may be a reason for the traders' practice of refusal to sell to 
consumers resident in other Member States. It may also contain a rule provi ding that contract terms 
which restrict privacy rights are unfair and th erefore non-binding on the c onsumer (in line with 
Article 8 of the Charter). 
ENVIRONMENTAL IMPACTS 
This would be dependent upon the number of bu sinesses who use the optional Common European 
Sales Law, as an increase in use of transport for delivery would lead to an increase in CO2 and other 
vehicle emissions and would increase the cost to control pollution due to the binding EU rules. 
  
SIMPLIFICATION POTENTIAL 
For business: Compared to the BS, this opti on would simplify the regulatory environment, 
eliminating the need for research of different na tional laws as only one regulatory framework need 
be used. 
For consumers: While they could be subject to a new unfamiliar system,366 the standardised 
information notice would aid consumer understandi ng of the optional Common European Sales Law 
by explaining in a concise and prominent way th e use and implications of an optional Common 
European Sales Law. 
ONLINE ENVIRONMENT 
Compared to the BS, this would be a more simple367 way to conclude a cont ract and give a trader 
cost savings. The additional transaction costs woul d no longer apply: Businesses would not need to 
adapt their terms and conditions and IT platforms to take into account the laws of all Member States 
they trade with. This could provi de an incentive to businesses to increase their online cross border 
sales (or in some cases to commence them). If th ere were an increase in the number of businesses 
who used this instrument to trade cross border, then compared to the BS, this option would help 
towards narrowing the gap between dome stic and cross border online sales. 
 
However, an instrument dedicated only to e-comme rce could lead to increased legal complexity. 
Companies using distribution channels other than e-commerce would have to  apply different legal 
rules depending on the distribution channel used. This would create a fragmentation of the market 
and distort competition. Furthermore, as mentioned by business representatives in their Green Paper 
consultation responses,368 it would not be technologically neutral and thus may generate legal 
uncertainty should new forms of distance sales occur in addition to e-commerce, for instance mobile 
telephony commerce. A scope limited to cross-border online sales only could however also create 
additional legal complexity for consumers who c ould be subject to different rules depending on 
whether they make a purchase onlin e, at a distance using another method (i.e. post or telephone) or 
face-to-face.  
                                                 
365 The calculation of this impact can be found in Annex IV. 
366 BEUC's response to the Green Paper, p.15. 
367 Allen and Overy, Online Consumer Research, found that a relati ve majority of 46% of the surveyed consumers in the 6 largest  MS would be more likely to buy online 
from another EU country if an EU-wid e contract law was put in place. 
368 Eurochambres response to the Green Paper, p.3, European Small Business Alliance response to the Green Paper, p.4. 
 
 112 
IMPACT IF THIS OPTION IS APPLIED IN  A DOMESTIC CONTRACT AS WELL AS 
CROSS BORDER 
Domestic and cross border: An optional Common European Sales Law would facilitate the legal 
environment for businesses which tr ade both cross-border and domestical ly, if they chose to operate 
under the optional Common European Sales Law for a ll contracts. On the one hand, if the optional 
Common European Sales Law also applied in a do mestic context it would go beyond what would be 
necessary to resolve the problem of additional transaction costs and legal complexity. It would 
therefore not be a proportionate solution to the problem. On the other hand, several respondents to 
the Green Paper favoured this scope.369 However as many respondents who favoured this scope, also 
favoured a cross border only scope. Therefore a more  pragmatic solution may be to allow MS the 
choice as to whether they would also like the optional Common European Sales Law to apply in 
domestic contracts too. 
 
Cross border only : Traders could use one contract law (the  optional Common European Sales Law) 
for cross border trade with multiple MS (both in  B2C and B2B transactions). Thus, they could 
reduce transaction costs and legal complexity. Bu sinesses could continue to use their national 
contract laws for domestic trade, whilst at the same time they would also be able to export using the 
optional Common European Sales Law if they wish to do so. Theref ore, business could save costs 
when trading cross border and continue to en joy their current arrangements under domestic 
legislation. A cross border only scope is in accord ance with the principle of proportionality as the 
instrument does not go beyond what is necessary to achieve the objectives . Several respondents to 
the Green Paper,370 who commented on this, favoured an in strument which was limited to cross 
border contracts (in some cases as a first step).   
OVERALL ASSESSMENT 
This option would not replace ex isting domestic regimes, but comp lement the national law of MS, 
as it would be inserted into thei r national laws as an optional set of contract law rules which could 
be used for trading across borders. It need only be  chosen by parties voluntarily only when it suits 
their interests.   The main advantage of this option is that it would eliminate the tran saction costs which are incurred 
by businesses when trading with more than one MS . On a relative scale in  comparison to annual 
turnover, this advantage would benefit trade fo r businesses performing B2C contracts and those 
B2B contracts which are between SMEs.  As it w ould also offer cost savi ngs to large businesses 
which contract with other large businesses, this co mbination for the application of the scope of the 
optional Common European Sales Law should not be ruled out.  It coul d be left to MS to decide 
upon. The decrease in costs would provide incentives  to increase trade which would result in more 
competition in the internal market.  The increase in trade and competition would benefit consumers 
by giving them more product c hoice at a lower price.  
 There could be some administrative costs which arise from the need for businesses to provide information to consumers not previously requir ed. These costs are howev er by far outweighed by 
the savings and the potential savings which are made from not paying the additional transaction 
costs for when a business trades with more than  1 MS. This option would create opportunities for 
                                                 
369 Member States: EE, LT and NL.  Stakeholders (business): BIPAR, EMOTA, UPSI, Eurochambres, EFBS, ICAEW, UEL,  I.A.N.U.S., Al lianz SE, Audi AG, LVMH, 
Nokia. Legal practitioners: CCBE, Bundesrech tsanwaltskammer, Sc ottish Law Commissi on,  Ordre des Barreaux Francophones et Germo nophone de Belgique, Deutscher 
Richterbund, Scottish Law Commission, Law Society of Scotland,  Law Society of Ireland.   
370 Member States: AT, BG, EL, FI,  DE, PL. Stakeholders (business): AMICE, FEDSA, APCMA, BdB, EuroCommerce, FAEP, CCIP, Bundes verband der Deutschen 
Industrie. Legal practitioners: CLLS, CNUE, Bundesnotarkammer, Österreich ische Notariatskammer, DBF,  Association of Spanish Pr operty and Commercial Registrars, 
ELRA, UNCC. Stakeholders (consumer): VZBV, Belgian Consumer Organisation.  
 
 113legal practitioners to cater for new clients as law firms would experience an increase in demand by 
those expanding their cross-borde r trade and existing exporters wi shing to use th e optional Common 
European Sales Law.   Overall, this policy option meets the policy objectives  as it reduces costs for businesses and offers a 
less complex legal environment for those who wish to trade cross border to more than one MS and 
at the same time it provides a high level of cons umer protection, whilst simplifying the regulatory 
environment.   
 
5. Policy option 5 and policy option 6371 
 
5.1. Policy option 5a: Full harmonisation Directiv e on a mandatory Common European Sales 
Law and policy option 6: Regu lation establishing a mandatory Common European Sales 
Law 
 
The end result of a full harmonisation Directive ( once it has been implemented) and a Regulation 
replacing national laws would be very close in  their outcome (although not exactly the same); 
therefore both these options are assessed together.372 The instrument would allow businesses to use 
one set of rules in B2B and B2C contract s for both domestic and cross border trade373 irrespective of 
the number of countries they trade with in the EU.  It would also remove the necessity for businesses 
to investigate, compare and possibl y adapt to several foreign laws.   
ECONOMIC IMPACTS   
Transaction costs:  The instrument would considerably increase costs as it would also affect 
companies which do not wish to trade cross bor der. Companies that trade only domestically 
(17,136,213 in B2B and 4,420,563 in B2C) would face a on e off instant cost of implementation of 
€208.8 billion374 to use the new legislation. They would be  required to pay these costs with no real 
financial gain, as the advantages would only be realised for those co mpanies trading across a border.  
 All current exporters would face a one-off cost of implementation of €8.18 billion  in order to use the 
new law.
375 The estimate of transaction costs do not in clude the potential higher compliance costs 
for companies in some Member States where the le vel of consumer protection would increase. There 
would not be an additional cost if a business were to export to more than 1 MS.     
 The cost for a micro firm to enter the whole of  the EU market would be on average only 6.5% of 
their turnover
376 which would be the same as it would have cost to trade with only 1 MS in the BS. 
This option would result in costs savings for ne w exporters and for current exporters who would 
expand their cross-border sales to new countries . The annual savings for new exporters would be 
between €0.63-1.6 bn.377 In addition, similarly as  under option 4 th e current exporters that would 
start trading with additional countries would sa ve at least between €3.7 billion and €4.3 billion.378 
The potential benefits of this option would however not outweigh th e initial one-off adaptation cost 
even over a longer time span. 
                                                 
371 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 
372 For simplicity the Directive and Regulation are referred to collectively as the 'instrument' 373 Article 16 of the Charter of Fundamental Rights of the EU. See Annex IV. 374 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  375 All exporters in B2B and B2C multiplied by the respective costs. Per business this would be €9,100 for B2C (plus €2,900 for  e-commerce oriented enterprises selling to 
consumers that face additional contract law related IT costs) and €9,800 for B2B as in the BS. 
376 See section 2.3.2 on problem definition 
377 Number of new exporters annually multipli ed by the average saving – see Annex III  
378 -See Annex III. 
 
 114 
The reduction in transaction costs would also fac ilitate intra-EU trade by removing obstacles for 
those companies which currently experience difficu lties in either conducting cross-border trade or 
transferring, for example, propert y by way of cross border sales a nd would therefore facilitate the 
exercise of these rights in line with Articles 16  (Freedom to conduct a business) and 17 (Right to 
property) of the Charter on Fundament al Rights of the EU, respectively.379    
Administrative costs (these are incl uded in the transaction costs above) : The instrument would 
create an additional burden for all companies to ad apt to the new legislation and would be especially 
costly for those companies that do not want to trad e cross border but would have no choice but to 
apply the instrument to a domestic contract wit hout any economic advantages  or cost savings. The 
instrument would create an additional cost for 22 million companies (including for those who trade 
only domestically) in the EU with an average one-off cost per company amounting to €2,500 for those performing a B2C contract and €1,500 for thos e performing a B2B contr act. Compared to the 
BS, to trade with 2 MS the cost saving per company would amount to €1,500.
380 
Competition in internal market and impact on consumer prices : The instrument would increase 
competition in the internal market and lead to  a decrease in prices. For B2C contracts 40%381 of the 
above mentioned businesses surveyed said that if they were able to choose a single Common European Sales Law they would increase their cross border trade in the internal market. For those performing B2B contracts, this figure was 34%.
382 These surveys have also indicated that 14% of 
those performing B2B contracts would trade with 6 or more additional c ountries if they were able to 
choose a single Common European Sales Law, 34% said they woul d trade with 3-5 new countries 
and 35% said they would trade with 1– 2 new countries.  
For those performing B2C contracts these figur es were: 18%, 32% and 32% respectively. An 
increase in cross border trade woul d lead to a rise in imports, whic h would be likely to increase the 
competition in the importing MS. The higher comp etition would encourage businesses to become 
more innovative and improve the qua lity of their product s or to reduce prices  in order to stay 
competitive. This would contribute towards the Commission policy on increasing competitiveness383 
and would be of particular rele vance in B2B transactions which include the manufacturing industry. 
Consumers would benefit from an increased choice of product at a lower pri ce. The reduction for the 
average consumer price level w ould range between 0.14% - 0.28%.384 
 
Impact on GDP : Overall EU GDP is expected to increase by €20- €40 billion (0.17-0.33%).385  
 
Impact on third countries : Third countries trading with th e EU would bear some one-off 
implementation costs, but could benefit from an eas ier access to the EU market as a whole in the 
long term. Third countries may be able to expand exports to more EU countries.  
 
Impact on consumer protection    The instrument would provide a high level of consumer protection 
(in line with Article 38 of the Charte r of Fundamental Rights of the EU)386 and would also increase 
                                                                                                                                                                    
379 See Annex VI.  
380 See Annex VII for more details. 
381 EB 321, p.36 
382 EB 320.,p.33 383 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage,' COM  (2010) 614. 
384 GTAP model, see Annex IV. 385 See Annex IV. 
386 See Annex VI. 
387 Allen and Overy, Online Consumer Research, found that a relati ve majority of 46% of the surveyed consumers in the 6 largest  MS would be more likely to buy online 
from another EU country if an EU-wid e contract law was put in place.  
 
 115consumer certainty and therefore confidence, as  consumers would have the same rights when 
shopping cross border.387However, it would also replace national laws and could lead to changes to 
the level of protection consumers in certain MS enjoy. While the consumer would benefit from an 
increase in the protection for a number of provisions, some cons umers could lose protection in 
specific cases compared to their existing nationa l law as their national law would have to be 
changed.   
Impact on SMEs : For businesses trading cross border, this  impact would be the same as PO4.  
However the instrument would also place admini strative costs on domestic businesses who do not 
wish to trade cross border. This would have a particular impact upon micro and small enterprises 
and comparative to their turnover, would weigh mo re heavily (compared to the BS).  These SMEs 
would be required to pay these cost s with no real financ ial gain, as this a dvantage would only be 
realised for those companies trading across a border.  
Impact on law firms : There would be an increase in the demand for legal services, as more 
businesses would need to understand how to use th e instrument even for those advising on domestic 
transactions. There would be training costs for la w firms as they familiarise themselves with the 
changes in their national law. The concerns highli ghted by legal stakeholde rs in the UK in PO4 are 
most relevant here as the contract laws among MS would be harm onised and comparative 
advantages of a specific law like common law as  a popular option for choice of law would be 
fundamentally diminished.  
Impact on Public authorities: Member States : The national laws of MS w ould be affected as this 
instrument would require a comple te overhaul of the domestic legisl ation.  MS would bear the costs 
which would accompany the implementation of EU legi slation (such as consultation of stakeholders, 
printing of new legislation, educating the public a bout the new law, time and cost of legislative 
process, etc.) MS' governments are likely to find th e instrument (to change domestic legislation for 
contract law in such a fundamental way) to be politically sensitive. In the Green Paper consultation, 
almost all MS responses to the Green Paper consu ltation rejected both options  5 and 6, stressing that 
to solve the problem of differences in contract laws , this type of instrument was not consistent with 
principle of subsidiari ty or proportionality. 
 
Judiciary : The judiciary of MS would need to familiarise themselves with the new instrument, this 
would mean a substantive financial cost for tr aining. . A single body of rules would remove the 
necessity for judges to investigate foreign law and compare several laws. This would decrease 
litigation costs (compared to the BS) and could in time alleviate the administrative load on a MS 
judicial system.   
 
European Court of Justice (ECJ) : In the first instan ce national courts woul d rule upon cases and 
submit summaries which would be entered into th e Commission created database. These summaries 
are likely to lead to a de facto  convergence of rulings by nationa l courts which national judges 
would be able to access when needing to refer to  how provisions of the optional Common European 
Sales Law have been ruled upon. There may be a limited number of cases which may need to be 
referred to the ECJ,388 which would increase the caseload. There would be a financial cost of referral 
of a case which would need to be borne by the parties to the trial. 
 
Analysis of provisions of instrument : The analysis of impacts of the main provisions of the 
instrument is described in Annex VIII. 
SOCIAL IMPACTS 
This option would help to facilitate cross border trad e and as a result would be expected to increase 
                                                 
388 This increase of caseload would form a minor part of the ongoing overall institutional and bu dgetary discussion of the of t he resources and responsibilities of the ECJ. 
 
 116output and employment. The inst rument is expected to creat e between 650,000 and 1.3 million new 
jobs.389 However this positive impact of job creati on is likely to be counteracted by the costs 
incurred by all companies and may lead to some initial decrease in empl oyment, which only at a 
later time would be compensated due to the po sitive effects on the economy stemming from the 
raise in intra-EU trade. 
With regard to impacts on fundame ntal rights, this option would not  lead to discrimination, as it 
would apply across the EU without any distinction on the basis of na tionality, in line with Article 
21(2) of the Charter of Fundament al Rights of the EU. It woul d be effective in removing the 
contract law related barriers, whic h may be a reason for the traders' practice of refusal to sell to 
consumers resident in other Member States. It may also contain a rule provi ding that contract terms 
which restrict privacy rights are unfair and th erefore non-binding on the c onsumer (in line with 
Article 8 of the Charter). 
ENVIRONMENTAL IMPACTS 
This instrument would have an adverse impact upon the environment as an increase in trade would 
increase the use of transport for delivery. This woul d lead to an increase in CO2 and other vehicle 
emissions and would increase the cost to cont rol pollution due to the binding EU rules. 
SIMPLIFICATION POTENTIAL 
Compared to the BS, this instrument would simplif y the regulatory environment as the differences 
between the contract laws of MS would be eliminated.   
ONLINE ENVIRONMENT 
If the instrument applied to an online cross bord er and domestic environment only, it would allow 
businesses applying the instrument to offer thei r products online and across the EU based on the 
same set of contract law rules. This would mean businesses would not  need to adapt their terms and 
conditions and IT platforms (the la tter to a great degree) to trade in another country – this could 
provide an incentive to businesses to increase their online domestic and cross border trade. 
Compared to the BS, this option could help to wards narrowing the gap between domestic and cross 
border online sales as businesses would be encourag ed by the use of one contract to offer their 
products in more MS.  
However, an instrument dedicated to cross border and domestic e-commerce only may lead to 
increased legal complexity. Companies using dist ribution channels other than e-commerce would 
have to apply different legal rules depending on th e distribution channel they use. Furthermore, it 
would not be technologically neutral and thus may generate distortion of competition should new 
forms of distance sales occur in addition to e- commerce, for instance ‘mobile telephony commerce’. 
Such a solution could also create additional legal co mplexity for consumers who could be subject to 
different rules depending on whether they make a purchase online, at a distance using another 
method (i.e. post or telephone) or face-to-face.   
IMPACT IF THE INSTRUMENT IS  APPLIED CROSS BORDER ONLY  
Traders could use one contract law for cross bord er trade with multiple MS (both in B2C and B2B 
transactions) and reduce transaction costs. With a cross border scope only, the instrument would 
comply with the subsidiarity principle as the problem of additional transaction costs arises when businesses export.   However, the instrument would not comply with the proportionality principle as it would go beyond 
what is necessary to solve the problem. The instru ment would replace all nati onal contract laws in 
relation to cross border contract s.  All exporting firms would have  to use the instrument in their 
                                                                                                                                                                    
389 See Annex IV, the GTAP model. 
  
 
 117cross border contracts (rather than having a choice to). Those firms who ar e already exporting would 
mandatorily have to adapt their contracts to the new instrument – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion for all current exporte rs) above would apply to all  exporting firms. In the Green Paper 
consultation, almost all MS respons es to the Green Paper consultatio n rejected both options 5 and 6, 
stressing that to solve the problem of differences in contract laws, this type of instrument was not 
consistent with principle of s ubsidiarity or proportionality. 
 
OVERALL ASSESSMENT 
Compared to the BS, the instrument would remove obstacles to cross border trade in the internal 
market as the transaction costs for cross border trade would be diminished. The instrument would 
facilitate trade and could make it easier for busin esses to expand across borders, as they would only 
need to use one set of ru les. There would be an increase in the level of consumer protection allowing 
consumers to have more confidence to purchase across border and give them increased access to goods. In the longer term, legal prac titioners would benefit as they would experience an  increase in 
demand by new clients who would need to understan d the instrument for domestic and cross-border 
contracts. However, it is likely to lead to a loss of income for UK law firms in the area of provision of legal advice on Common law to businesses if thes e companies chose to obt ain legal advice in the 
United States.   The instrument would have very substantial costs attached to it: Although the transaction costs for 
cross border trade would no longer exist, businesse s which only trade domestically would face a 
very substantial cost to use the new instrument without an adde d value. A cross border only scope 
would not be a proportionate soluti on as businesses who do not want to use it would have to adapt 
their contracts and incur transaction costs. MS would be likely to find this option politically very 
difficult to agree and to implement as it would eliminate domestic laws and legal traditions.  The 
majority of MS who responded to the Green Pape r consultation rejected this option outright. 
Overall, although the instrument would harmonise ex isting contract law le gislation and eliminate 
transaction costs, it would creat e other substantive costs – which would not only be of monetary 
value. Therefore from a holistic perspective, ta king all the costs (monetary or otherwise) into 
account, these costs outweigh by far th e benefits of the instrument.  
 
  
5.2. Policy option 5b: Minimum harmonisat ion Directive on a mandatory Common 
European Sales Law390 
 
As this option is in the form of a minimum harmonisation Directive, MS would not have to 
implement it at the same time and could implemen t legislation beyond the c onsumer protection level 
of the Directive. The differences in timing of th e implementation could restrict for some time the 
usability of the instrument.  As experience with  existing minimum harmonisation Directives shows, 
the level of implementation is likely to maintain a considerable number of differences in national contract laws.   
 
ECONOMIC IMPACTS   
Transaction costs
: This option would increase costs as it would affect domestic  companies who do 
                                                 
390 The analysis takes account of several suggestions put forward by the majority of the respondents to the Green Paper concern ing the scope of application and the material 
scope of an instrument, as well as other suggestions on scope including an instrument applicable in an online environment only and in a domestic and cross border setting. 
 
 118not wish to trade cross border. Companies th at trade only domestically (17,136,213 in B2B and 
4,420,563 in B2C) would face a one off cost of €208.8 billion391 to use the new legislation. All 
current B2B exporters would have to pay the same costs set out in  Policy Option 5a (PO5a) (€6.47 
billion, per business this  would be €9,800). Because of the mi nimum harmonisation character of the 
Directive, the levels of consum er protection would vary from MS  to MS. To comply with the 
Directive, these differences would need to be res earched by businesses that carry out B2C contracts. 
Therefore the costs for business th at perform B2C contract s would be (at the very  least those set out 
in the BS) between €4.6 billion and € 8.7 billion392 (per business this would be €9,100 as in the BS). 
The exact costs would depend upon the extent to wh ich a MS has implemented the Directive. The 
more changes that exist between MS laws the more  the level of costs would increase to match the 
differences in existence between the MS.  
The Directive could facilitate intra EU trade by removing obstacl es for those companies which 
currently experience difficu lties in either conducting cross-border trade or transferring, for example, 
property by way of cross border sales and would theref ore facilitate the exercise of these rights in 
line with Articles 16  (Freedom to conduct a business) and 17 (R ight to property) of the Charter on 
Fundamental Rights of the EU, respectively.393    
Administrative costs (these are incl uded in the transaction costs above ): To a large extent the impact 
would be the same as PO5a, however because of the necessity to research the differences in national 
contract laws for B2C contracts, in addition to the costs set out in  PO5a, the BS administrative costs 
for exporters would remain largely unchanged. See Annex VII for more details on how these costs 
are calculated. 
Competition in internal market and impact on consumer prices : For B2B contracts the use of a 
Directive could increase trade (as set out in policy option 5a PO5a) as transactions costs would be 
eliminated. For B2C contracts, there may be a less of  an increase in trade as the differences between 
the mandatory consumer protection rules of MS woul d still need to be researched and therefore the 
BS would apply. Where trade does in crease, it would be likely to  increase the competition in the 
importing MS. The higher competition would encour age businesses to become more innovative and 
improve the quality of their products or to reduce prices in order to stay competitive. This would 
contribute towards the Commission policy on increasing competitiveness394 and would be of 
particular relevance in B2B tr ansactions which include the ma nufacturing industry. Consumers 
would benefit from an increase choice of product at a lower price. For this option, as the impact on 
consumer prices are dependent upon the extent of  the implementation of the Directive they are 
difficult to quantify.   
Impact on GDP : The actual impact upon EU GDP is difficult to quantify as transactions costs would 
still occur.  
Impact on consumer protection : As per PO5a although the instrume nt would provide a high level of 
consumer protection (in line with Article 38 of  the Charter of Fundamental Rights of the EU)395 it 
would also replace national laws and could lead to changes to the level of protection consumers in certain MS enjoy. While the consumer would benefit from an increase in th e protection for a number 
of provisions, some consumers could lose protecti on in specific cases compared to their existing 
national law as their national law would have to be  changed.  In addition to  this, because of the 
minimum harmonisation character of the Directive, the levels of consumer protection would vary 
from MS to MS. These differences could increas e consumer uncertainty and decrease consumer 
                                                                                                                                                                    
391 Businesses who trade only domestically, multiplied by the relative individual one off costs for B2B and B2C.  
392 No of B2C exporters (184,670) multiplied by €9,100, multiplied by 2.7 and 5.1 (low and high estimates of average numbers of  countries exported to.  Further details of 
calculations can be found in Annex III. 393 See Annex VI.  
394 'An Integrated Industrial Policy for the Globalisation Era Pu tting Competitiveness and Sustainability at Centre Stage' http ://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0614:FIN:EN:PDF (last visited: June 2011) 395 See Annex VI. 
 
 119confidence as the same situation as the BS would in effect still apply. 
Impact on SMEs : For B2B cross border contracts this im pact would be the same as PO4, for B2C 
cross border contracts this impact would be the sa me as the BS.  However the Directive would also 
place administrative costs on domestic businesses who do not wish to trade cross border. This would have a particular impact upon micro and small ente rprises and comparative to their turnover, would 
weigh more heavily (compared to the BS).  Thes e domestic trading SMEs would be required to pay 
these costs with no real financial gain, as this ad vantage would only be realised for those companies 
trading across a border. 
Impact on law firms : There would be an increase in the demand for legal services, as more 
businesses would need to understand how to use th e instrument even for those advising on domestic 
transactions. There would be training costs for la w firms as they familiarise themselves with the 
changes in their national law. The concerns highli ghted by legal stakeholde rs in the UK in PO4 are 
most relevant here as the contract laws among MS would be harm onised and comparative 
advantages of a specific law like common law as  a popular option for choice of law would be 
fundamentally diminished. 
Impact on Public authorities: Member States : The national laws of MS w ould be affected as this 
instrument would require a comple te overhaul of the domestic legisl ation.  MS would bear the costs 
which would accompany the implementation of EU legi slation (such as consultation of stakeholders, 
printing of new legislation, educating the public a bout the new law, time and cost of legislative 
process, etc.) MS' governments are likely to find th e instrument (to change domestic legislation for 
contract law in such a fundamental way) to be politically sensitive. In the Green Paper consultation, almost all MS responses to the Green Paper consu ltation rejected both options  5 and 6, stressing that 
to solve the problem of differences in contract laws , this type of instrument was not consistent with 
principle of subsidiari ty or proportionality.  
Judiciary
: The judiciary of MS would need to familiarise themselves with the new instrument, this 
would mean a substantive financial cost for training. In the longer te rm, a consistent reference to a 
single body of rules would remove the necessity for judges to inve stigate foreign law and compare 
several laws. This would decrease litigation costs (compared to the BS) and could in time alleviate 
the administrative load on a MS judicial system.   
 
European Court of Justice (ECJ) : In the first instan ce national courts woul d rule upon cases and 
submit summaries which would be entered into th e Commission created database. These summaries 
are likely to lead to a de facto convergence of rulings by nationa l courts which national judges 
would be able to access when needing to refer to  how provisions of the optional Common European 
Sales Law have been ruled upon. There may be a limited number of cases which may need to be 
referred to the ECJ,396 which would increase the caseload. There would be a financial cost of referral 
of a case which would need to be borne by the parties to the trial. 
 
Analysis of provisions of instrument: The analysis of impacts of the main provisions of the 
instrument are described in Annex VIII. 
SOCIAL IMPACTS 
This option would help to facilita te cross border trade and its use would be expected to increase 
output and employment. The number of jobs created  by this option is diffi cult to quantify (as it 
would depend upon the extent of the implementation of the Directive), one could expect an increase, 
although not as high as the increase for policy option 5a. 
With regard to impacts on fundame ntal rights, this option would not  lead to discrimination, as it 
would apply across the EU without any distinction on the basis of na tionality, in line with Article 
21(2) of the Charter of Fundamental Rights of th e EU. It may also contai n a rule providing that 
                                                 
396 This increase of caseload would form a minor part of the ongoing overall institutional and bu dgetary discussion of the of t he resources and responsibilities of the ECJ. 
 
 120contract terms which restrict pr ivacy rights are unfair and therefor e non-binding on the consumer (in 
line with Article 8 of the Charter). 
ENVIRONMENTAL IMPACTS 
This option would increase the us e of transport. This would ha ve an adverse impact upon the 
environment and would lead to an increase in CO 2 and other vehicle emissi ons and would increase 
the cost to control pollution due to the binding EU rules. 
SIMPLIFICATION POTENTIAL 
Compared to the BS this option would simplify the regulatory environment to a certain extent as a 
number of differences between th e contract laws of MS would be  eliminated. However, as MS 
would still have differing levels of implementation of the Directive, quite a number of differences 
between contract laws would remain.  
ONLINE ENVIRONMENT 
If the Directive applied to an online cross bor der and domestic environm ent only, it would allow 
businesses performing B2B contracts to offer thei r products online and acro ss the EU based on the 
same set of contract law rules. This would mean  these businesses would not need to adapt their 
terms and conditions and IT platforms (the latter to a great degree) to  trade in another country – this 
could provide an incentive to bus inesses to increase their online domestic and cross border trade. 
Compared to the BS, this option could help to wards narrowing the gap between domestic and cross 
border online sales as businesses would be encourag ed by the use of one contract to offer their 
products in more MS. 
However this would not be the case for businesse s who perform B2C contracts and for them, the BS 
situation would largely remain the same. In addition, a Directiv e dedicated to cross border and 
domestic e-commerce only may lead to increased legal complexity. Companies using distribution 
channels other than e-commerce would have to  apply different legal rules depending on the 
distribution channel they use. Furthermore, it w ould not be technologically  neutral and thus may 
generate distortion of competition should new fo rms of distance sales occur in addition to e-
commerce, for instance ‘mobile telephony commerce’ . Such a solution could also create additional 
legal complexity for consumers who could be subj ect to different rules depending on whether they 
make a purchase online, at a distance using another method (i.e. post or telephone ) or face-to-face.   
IMPACT IF THIS OPTION IS APPLIED CROSS BORDER ONLY  
 
Although businesses using B2B contracts would be ab le to use one contract law for cross border 
trade with multiple MS and reduce transaction co sts, the same would not be true for those 
businesses who perform B2C contract s as they would still need to  research where MS have gone 
beyond the mandatory consumer protection rules se t out in the Directive – thereby incurring 
transaction costs.  In addition, the Directive would not comply with th e proportionality principl e as it would go beyond 
what is necessary to solve the problem. The Dir ective would replace all na tional contract laws in 
relation to cross border contract s.  All exporting firms would have  to use the Directive in their cross 
border contracts (rather than having a choice to ). Those firms who are already exporting would 
mandatorily have to adapt their contracts to the new Directive – even if they have no desire to enter 
a new market - and incur once again the additional transaction costs. These transaction costs (€8.18 
billion for all current exporte rs) above would apply to all  exporting firms. In the Green Paper 
consultation, almost all MS respons es to the Green Paper consultatio n rejected this option stressing 
that to solve the problem of differences in contract  laws, this type of Directive was not consistent 
with principle of subsidia rity or proportionality. 
 
 
 121OVERALL ASSESSMENT 
Compared to the BS, this option would to a certain  extent reduce transaction costs and increase the 
level of consumer protection. In the longer term, legal practitioners would benefit as they would 
experience an increase in demand by new clients w ho would need to understand the instrument for 
domestic and cross-border contracts.  However, it could also lead to a loss of income for law firms in 
the area of provision of legal advice of a specifi c law if companies chose to obtain legal advice 
elsewhere.   However, as set out in options 5a and 6, there woul d be a very substantial one off cost borne by all 
traders (both domestic and cross border) as they w ould have to adapt their contracts to use the new 
law. This cost would affect all companies, irrespec tive of their desire to trade cross-border. A cross 
border only scope would not be a proportionate solution as businesse s who do not want to use it 
would have to adapt their contract s and incur transaction costs.   
 In addition, due to the nature of minimum harmoni sation, there would still be some extra costs for 
businesses when trading cross border to consumers, these would arise from the necessity to research 
the levels of consumer protection in other MS . Therefore, whilst ther e may be a worthwhile 
investment for B2B cross border tr ansactions, those performing B2C cross border cont racts as well 
as trading only domestically would have to pay ve ry substantial additional costs without a clear 
added value. There would also be administrati ve costs which would arise from the need for 
businesses to comply with the Directive these costs would affect all companies. MS would be likely 
to find this option politically very difficult to ag ree and to implement as it would eliminate domestic 
laws and legal traditions.  The majority of MS who responded to the Green Paper consultation rejected this option outright.   Overall, although this option would minimally harmonise existing cont ract law legislation and civil 
codes and reduce transaction costs for some traders, it would add to the issues set out in the problem 
definition as some costs for researching the law would still remain. Therefore from a holistic perspective, taking all th e costs (monetary or otherwise) into account these costs outweigh by far the 
benefits of the instrument. 
 
6. Effectiveness of poli cy options in meeting policy objectives 
 
6.1. Policy option 1: Baseline Scenario   
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade The differences in national contract la ws would remain, so would additional 
transaction costs for cross border trade.  
Reduce legal 
complexity  in 
cross-border 
trade Companies would continue to deal with multiple national laws.  In the absence of 
EU action, MS would be likely to continue to take initiatives in an uncoordinated 
manner (for example future implementati on/transposition of contract law related 
concepts at the EU level would be diffe rent between MS). This would allow the 
legal complexity to further increase. However, the publication of the Expert 
Group work could facilitate some sh ared understanding of the commonalities 
between the EU legal systems (such a scen ario has previously been demonstrated 
by the EP who have used the Draft Co mmon Frame of Reference when making 
amendments to the CRD), but this would not occur in a coordinated and 
 
 122Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
predictable manner. In addition, the work of  the Expert Group could also be used 
by businesses when drafting their standa rd terms and conditions provided the 
rules developed by the Expert Group are not contradictory to the applicable law. 
Despite these possibilities, any convergence in national la ws would appear in the 
long term as concepts to be agreed in future laws would take time to embed. 
CONSUMER OBJECTIVES 
Reduce 
uncertainty 
about consumer rights in cross-
border shopping The BS includes the adoption of the CRD, which, due to its nature (full 
harmonisation) ensures that consumers ha ve certain rights which are harmonised 
across the EU. However, a level of uncerta inty would still exist as MS would be 
free to implement domestic legislation accord ing to their own inte rpretations, this 
in turn would lead to some differences  between the national laws. Because of 
these differences, in some cases cons umers would be dissuaded from shopping 
cross-border. 
Increased  consumer 
protection As set out above the adoption of the CRD  ensures that consumers have certain 
rights which are harmonised across the EU. However there are some elements of consumer protection in contract law wh ich are not covered by the CRD. With no 
EU action, these would remain. 
 
6.2. Policy option 2 
 
6.2.1.  Policy option 2a: Toolbox as a Commission document 
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade This option could go a little way towards m eeting this objective as in the longer 
term there could be some minimal reduc tion in transaction costs due to the 
convergence of certain contract law concepts , but the extent of this is unknown as 
we cannot predict when and how these concepts would be used. 
 
Reduce legal complexity  in cross-border 
trade In the longer term, there is likely to be a small convergence in national legislation 
in the area of contract law. This w ould mean fewer differences between the 
contract law legislation in a trader's country compared to the country they 
intended to trade with and effectively re duce the level of complexity in cross 
border trade. However, despite this small convergen ce, this option would not prevent some 
differences in future contract law con cepts/rules. At the EU level, the co-
legislators could depart from the t oolbox by amending Commission proposals in 
negotiations. At MS level th is option would not ensure that MS adopt identical 
rules as set out in the toolbox when  implementing Union legislation. As 
differences among national laws resulting from the transposition of Directives 
cannot be avoided, in comparison to the BS legal complexity currently 
experienced by businesses would not  decrease to a great extent. 
CONSUMER OBJECTIVES 
Reduce 
uncertainty about consumer rights in cross-Compared to the BS, there is likely to be a small c onvergence in the area of 
Common European Sales Law in the longe r term. Because of this convergence, 
this option would provide for some, albeit  rather limited, improved legal certainty 
with regards to future contract law concepts.     
 
 123Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
border shopping 
Increased  
consumer 
protection Compared to the BS, this option would onl y go a very small way to meeting this 
objective as the impact would be limited and only felt when all three institutions 
use the toolbox concepts when passing EU  contract law related legislation.   
 
6.2.2.  Policy  option 2b: Toolbox as an in ter-institutional agreement  
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce legal 
complexity  in cross-border 
trade The same concepts set out in PO2a would apply here, however the use of an inter 
institutional agreement (IIA) would commit the institutions to use the toolbox as 
a basis for future contract law concepts ; therefore, unless there was a justified 
reason not to, the instituti ons would always use the toolbox for future contract 
law related concepts. This would lead to  a greater convergence and coherence in 
future EU legislation and a greater reduction in comp lexity for businesses.  
However despite this increased level of  convergence, this option cannot fully 
prevent the existence of differences in national contract law concepts in the 
future. This is because if there were ju stified reasons for th e Council and EP to 
depart from the IIA they would be able to. If this happened then differences in 
contract law concepts between the three Institutions (as highlighted in PO2a) 
would be created. As described in PO2a, differences in legislation between MS 
could also remain because this option would not ensure that MS adopt identical rules as set out in the toolbox when impl ementing Union legislation. In the longer 
term, reduction in legal complexity is likel y to be of a greater magnitude than in 
the case of PO2a, but still limited compared to the BS. 
CONSUMER OBJECTIVES 
Reduce 
uncertainty about consumer rights in cross-border shopping 
 In the longer term, this option is likely to lead to some convergence in the area of 
Common European Sales Law, and as a result would provi de greater legal 
certainty for consumers with regards to future contract law concepts compared to PO2a. However, as described under the 'business objectives,' despite this convergence, this option is likely to only  remedy the current problem to a small 
extent. 
Increased  
consumer 
protection This option would go a small way to mee ting this objective as the impacts felt 
would be of a greater magnitude becaus e all three institut ions would use the 
toolbox concepts when pa ssing EU legislation.   
 
6.3. Policy option 3: Recommendation on a Common European Sales Law 
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade Compared to the BS this option would only reduce transaction costs if MS who 
incorporate the Common European Sale s Law entirely and without changes 
(scenario 2 under the relevant impact anal ysis). For B2C traders in MS who have 
not incorporated the Common European Sa les Law as above, when trading with 
consumers from MS who have also not  incorporated the Common European 
 
 124Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
Sales Law, the differences in contract laws would remain and the BS transaction 
costs would still apply. 
Reduce legal complexity  in cross-border 
trade As the Recommendation would not be  legally binding, it would allow MS 
discretion on timing, method and extent of implementation. Therefore (unless 
many MS incorporate the Common European Sales Law at the same time, entirely and without changes as attached to the Recommendation) this option would allow for differences between c ontract laws of MS and the legal 
complexity experienced by traders would not change from the BS. 
CONSUMER OBJECTIVES 
Reduce uncertainty about consumer rights in cross-
border shopping This option would not reduce the level of uncertainty that consumers experience 
about their rights as MS would have di scretion on timing, method and extent of 
implementation thereby creating differences  between the contract laws of MS. 
However, if many MS incorporated th e Common European Sales Law at the 
same time, entirely and wit hout changes as attached to  the Recommendation then 
this option could also build confidence in consumers and increase their legal 
certainty as they would be subject to one similar core set of rules and would 
become familiar with a similar contract being used in their purchases which would not vary greatly between the MS who use it. 
Increased  consumer 
protection Applicable to B2C contracts only and only where a MS has incorporated the 
provisions of the Common European Sale s Law into its national laws. When 
compared to the BS, this option woul d meet this objective as the Common 
European Sales Law would provide for a high level of consumer protection (see 
annex VIII.).  
 
6.4. Policy option 4: Regulation/Directive se tting up an optional Common European 
Sales Law 
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade Compared to the BS (for B2B and B2C) this option would reduce additional 
transaction costs for those businesses th at choose to use the optional Common 
European Sales Law for cross borde r trade with more than 1 MS. 
Reduce legal 
complexity  in cross-border 
trade This option would reduce the legal comple xity as it would offer businesses the 
choice of using one legal system for cro ss border trade across the whole of the 
EU instead of the current twenty six.  
CONSUMER OBJECTIVES 
Reduce uncertainty about consumer rights in cross-
border shopping This option would build confidence in consumers and increase their certainty 
about their rights as they w ould be subject to one similar core set of rules for 
when they purchase cross border from traders who use the optional Common European Sales Law.  
 
 125Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
 
Increased  
consumer 
protection Applicable to B2C contracts only. This op tion would meet this objective as the 
optional Common European Sales Law woul d provide a high level of consumer 
protection. See annex VIII for more details. 
 
6.5.  Policy option 5 and policy option 6 
 
6.6. Policy option 5a: Full harmonisation Directiv e on a mandatory Common European Sales 
Law and policy option 6: Regu lation establishing a mandatory Common European Sales 
Law 
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade Compared to the BS for B2B and B2C cont racts, the instrument would meet this 
objective as it would eliminate transacti on costs for those businesses that trade 
with more than 1 MS.  
Reduce legal complexity  in cross-border 
trade The instrument would reduce legal comple xity as the same system between the 
contract laws of the MS would exist.  
CONSUMER OBJECTIVES 
Reduce level of 
uncertainty about consumer rights in cross-border 
shopping The instrument would subject  consumers to the same set of rules in their sales 
contracts across the EU. This would redu ce the level of uncertainty consumers 
experience about their rights which in turn  could increase th eir confidence when 
shopping cross border. 
Increased  consumer 
protection Applicable to B2C contracts only. This objective would be met as the instrument 
would have a high level of consumer protection provisions (see Annex VIII for further details).  
 
6.6.1.  Policy option 5b: Minimum harmonisation Directive on a mandatory 
Common European Sales Law 
 
Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
BUSINESS OBJECTIVES 
Reduce 
transaction costs for cross-border trade For B2B contracts this option would meet this objective. However for those 
traders who perform B2C contr acts there would still be a necessity to research the 
mandatory consumer protection rules of a country as MS could transpose the 
Directive into their national laws beyond those rules which are minimally 
harmonised. Therefore trans action costs would remain. 
 
 126Policy 
Objectives Effectiveness in meeting the obj ectives/addressing the problems  
Reduce legal 
complexity  in cross-border 
trade For B2B contracts this option would meet this objective. For B2C contracts there 
would be some reduction in legal complex ity as a more consistent and convergent 
system between the contract laws of the MS would exist, however due to possible differences in consumer protection rule s between MS, some legal complexity 
would remain. 
CONSUMER OBJECTIVES 
Reduce 
uncertainty 
about consumer rights in cross-border 
shopping This option would go some way towards meeting this objective as it would 
subject consumers to a more similar set of rules in their sales contracts.  This 
would reduce the level of uncertainty consumers expe rience about th eir rights, 
which in turn could increase their confidence when shopping cross border. 
Increased  
consumer 
protection Applicable to B2C contracts only. This option would meet this  objective as the 
Directive would have a high level of c onsumer protection pr ovisions (see annex 
VIII for further details).  
 
  
 
 127ANNEX VI: IMPACTS OF THE CO MMON EUROPEAN SALES LAW ON 
FUNDAMENTAL RIGHTS  
 
EU legislation must fully comply with the provi sions of the EU Charter of Fundamental Rights, 
which has become legally binding following the entry into force of the Lisbon Treaty. All legislative 
proposals of the Commission are subject to a system atic check to ensure their compliance with the 
Charter.397 This annex assesses in detail the impact on the relevant fundamental rights embodied in 
the Charter. They include: Articl e 38 on consumer protection, Artic le 16 on the freedom to conduct a 
business, Article 17 on the right to property, Ar ticle 21(2) on non-discrimination on the basis of 
nationality and Article  8 on data protection.     
  
Irrespective of the legal form it may take, the Common European Sales Law instrument would not 
have a negative impact on any of the abovementi oned rights and would facilitate the exercise 
particularly of the freed om to conduct a business and consumer protection. It would also have a 
positive impact on the right to property (by facilitating the disposal thereof) and to non-discrimination of consumers on the basis of nationality.   
 
The scale of the positive impact on fundamental right s may vary and is in some way connected to the 
effectiveness of specific policy options in achievi ng the policy objectives, as stated above. As 
discussed in the section on comparison of policy op tions in the impact assessment report, the most 
effective options in achieving the business an d consumer objectives are the optional Common 
European Sales Law (policy option - PO 4), the full harmonisation Directive on a mandatory 
Common European Sales Law (PO 5a) and a Regulation establishing a mandatory Common 
European Sales Law (PO 6). The least effectiv e ones are the toolbox (PO 2) and Recommendation 
on a Common European Sales Law (PO 3b). 
 
• Article 38 on consumer protection
398  
 
The instrument of Common European Sales Law will contribute to ensuring a high level of 
consumer protection by the following means: Firstly, it will increase consumer protection in certain 
areas which are currently minimally harmonised (e .g. pre-contractual statements binding the seller, 
no hierarchy of sales remedies, increased warranty  period). Secondly, it will create a high level of 
consumer protection in areas in which the Union has not previously  acted (e.g. obligation of business 
to take back faulty products). Thirdly, it will take the fully harmonised provisions of the Consumer Rights Directive and the other minimum harmonisation provisions of the acquis as a benchmark. 
 A Common European Sales Law instrument, irrespect ive of the form, would have a positive impact 
on consumer protection, as it would ensure a high  level of protection on a number of key consumer 
protection rules (examined in detail in Annex VIII ). The positive impact of different policy options 
on consumer protection would diffe r, depending on the effect that the respective legal instruments 
would have on existing national laws.   The Recommendation introducing an optional Co mmon European Sales Law (PO 3(b)) and a 
Regulation/ Directive introduci ng an optional Common European Sales Law (PO 4) would not 
deprive consumers of any rights they currently enj oy, as they would not repl ace or necessitate any 
changes in national laws. Therefore, consumers who wish to rely on their national law could 
continue to do so. Alternatively, those who ar e willing to accept an optional Common European 
Sales Law to govern their contracts could even gain  more protection compared  to their national law. 
                                                
 
397  Communication from the Commission Strategy  on the effective implementation of the Charter, COM(2010) 573 final, available at: 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0573:FIN:EN:PDF  
398 Union policies must ensure a high level of consumer protection. The Explanations clarify that this right is based on Articl e 169 TFEU, according to which "the Union 
shall contribute to protecting the … economic interests of consum ers, as well as to promoting their right to information [and] education".  
 
 128As illustrated by the analysis of impacts of key substantive consumer protection provisions (e.g. pre-
contractual information, remedies for non-performa nce, burden of proof, damages) in Annex VIII, 
the level of protection ensured by the Common European Sales Law rules could overall be higher 
than the level of protec tion in most national laws of Member States.  
 On the other hand, the options of a full harmoni sation Directive on a mandatory Common European 
Sales Law (PO 5a) and Regulation (PO 6) would repl ace national laws and could lead to changes to 
the level of protection consumer s in certain Member States en joy. While any Common European 
Sales Law instrument would ensure  a high level of consumer protec tion, it would no t be politically 
feasible to adopt an instrument which would take over all rules wh ich ensure the highest level of 
protection out of the existing national laws of Me mber States. While the consumer would benefit 
from an increase in the protecti on for certain provisions, some c onsumers would be likely to lose 
protection in some specific cases compared to thei r existing national law. Therefore, the consumers 
in those Member States would lo se protection for those selected provisions, as their national law 
would be changed.  The same problem could occur in the case of a toolbox (PO 2), provided any of 
the rules it contains would be at a lower level than  the respective rules in the national law of a given 
Member State.  
 
• Article 16 on the freedom to conduct a business  
 
The instrument of Common European Sales Law woul d facilitate the exercise of the freedom to 
conduct business, in particular with  regards to cross-border transa ctions in the EU. By creating a 
single set of contract law rules wh ich businesses could choose to appl y in transactions across the EU, 
it would remove obstacles for those companies wh ich currently experience difficulties to conduct 
cross-border business. The instrument of Common Eu ropean Sales Law contains  no restrictions on 
the freedom of the parties to c onclude contracts and to subjec t them to any applicable law .   
 
The policy options of an opti onal Common European Sales La w (PO 4), a full harmonisation 
Directive (PO 5a) and a Regulation replacing national laws (PO 6) w ould be the most effective in 
facilitating the exercise of this right, particularly in a cross-border context. However, PO 5a and PO 
6 would have the disadvantage of imposing cost s on all (both domestic and exporting) companies 
(including those which are not intere sted in cross-border trade) in or der to adapt to the changes in 
their national laws.  
 
• Article 17 on the right to property  
 
The instrument of Common European Sales Law c ontains no restrictions on the freedom of the 
parties to exercise their property rights. Moreover, it can facilitate the exercise of this right as 
regards to the transfer of propert y by way of cross-border sales.  
 
The policy options of an opti onal Common European Sales La w (PO 4), a full harmonisation 
Directive (PO 5a) and a Regulation (PO 6) would be most effective in facilitating the disposal of 
property by way of cross-border sales as they woul d introduce a set of uniform  rules. While PO 5a 
and PO 6 would ensure that the same rules appl y both domestically and cross-border, they would 
also have the disadvantage of generating costs for ad aptations to the change in national law for those 
economic operators who are not inte rested in cross-border sales.  
 
• Article 21(2) on non-discrimina tion on the basis of nationality399 
 
                                                 
399 Article 21 of the Charter of Fundamenta l Rights does not crea te powers on the Union to enac t anti-discrimination measures. It only addresses acts of discrimination by 
the institutions and bodies of the Union themselves, when exerci sing powers conferred under the Treaty. In particular, EU measu res must not discriminate on the basis of 
nationality. 
 
 129The instrument would not lead to discriminati on, as it would apply across the EU without any 
distinction on the basis of nationality.400  Moreover, the content of the instrument is likely to 
diminish indirect discrimination on grounds of nati onality by private parties.  More specifically, it 
would diminish the practice of refusal of cross-bor der sales to consumers in certain Member States. 
Consumers in countries such as Romania, Bulgar ia, Latvia, Belgium, Malt a, Ireland and Poland are 
particularly affected.401 This will be achieved by removing objective contract-law related obstacles, 
which pose obstacles to cross-border  transactions for businesses.  
 The policy options of an opti onal Common European Sales La w (PO 4), a full harmonisation 
Directive (PO 5a) and a Regulation replacing national laws (PO 6) w ould be the most effective in 
reducing the number of consumers who experien ce the refusal to sell. These options would 
effectively remove the contract law related barriers, which may be a reason for the traders to refuse cross-border sales.   
• Article 8 on data protection  
 
The instrument of Common European Sales La w does not contain specific provisions on data 
protection. However, it may contain a rule providing th at contract terms which restrict privacy rights 
are unfair and theref ore non-binding on the consumer . In contractual relations, personal data may be 
affected to the extent that they have to be exchanged during the conclusion of a contract (name 
address, credit card details). Particularly in e-commerce situations personal data may be put at risk, as it could be used for instance for commercial  purposes without the person's consent. However, 
specific rules of Directive 95/46 on Data Protection provide adequa te protection concerning the use 
of this information.      
                                                
 
400 The only exception is the option 3b (a Commission Recommendation) under which the application may be limited only to the Me mber States which will follow  
the Recommendation and could therefore use the instrument.  401 Communication on Cross-Border Business to Consumer e-Commerce in the EU, COM (2009) 557 final, 22.10.2009, p.6. 
 
 130 
ANNEX VII: ADMINISTRATIVE COSTS 
 
1. Identification and classificati on of obligations requirements  
 Contract law covers both pre- contractual and contractual in formation requirements. Legal 
obligations to provide information will mostly refer to B2C contracts. The consumer contract acquis consists of a number of Directives. They are mostly based on the principle of minimum 
harmonisation and Member States are allowed to introduce more stringent provisions including 
additional information requirements. There are also  contract law related information requirements 
that are not regulated at the EU level.  The contract law related information requirements could be classified as non-labelling information. 
 2. Identification of required actions 
 
 The information requirement involves the following actions:   Table 1: Identification of required actions  
Action Applicability  
1. Familiarising with information obligations   Yes 
2. Training members and employees No 
3. Retrieving relevant informa tion from existing data  No 
4. Adjusting existing data  No 
5. Producing new data  No 
6. Designing information material Yes 
7. Filling in forms No 
8. Holding meetings  No 
9. Inspecting and checking  No 
10. Copying  Yes 
11. Submitting information to the relevant actor Yes 
12. Filing the form No 
13. Buying equipment and supplies No 
14. Other No 
 
In order to meet the information requirement co mpanies wishing to trade cross-border have to 
familiarise themselves with information requireme nts of the foreign law (action 1), adapt their 
general terms and conditions or other information materials accordingly and submit it to the other 
contractual party (actions 6, 10 and 11).  3. Classification by legal origin and impact of different options
 
 
- Option 1- (baseline scenario)- information re quirements for B2B transactions are due to 
national law. In B2C, information requireme nts are due to nationa l and EU law. The 
Commission in the impact assessment on th e Consumer Rights Directive (CRD IA) 
estimated that 25% of administrative costs stem from national legislation and the rest is due to EU law. This estimate has been taken forward in this impact assessment for B2C transactions. In B2B transactions 100% of the administrative costs result from national 
law. 
 
 
 131- Option 2a and 2b - no impact on administrativ e costs- a toolbox does not directly impose 
an information requirement.  
 
- Option 3 –impact on administrative costs depe nding upon whether and to what extent a 
Member State decides to apply the Commission Recommendation.  
 
- Option 4- impact on administrative costs. An optional Common European Sales Law will 
contain a set of information requirements. In  addition, all trader s choosing the optional 
Common European Sales Law will need to info rm consumers about this fact. This would 
generate additional administrative costs (compared to the baseline assumptions) concerning designing info rmation materials. 
 
- Option 5a and 5b / Option 6 
 
o Option 5a (full harmonisation) and Opti on 6 (Regulation establishing a Common 
European Sales Law) – impact on administrative costs. These instruments will contain a set of information requirements . Traders would need to adapt to new 
information requirements. 
 o Option 5 b (minimum harmonisation) - the same impacts as option 5a. However, if 
the Directive is based on minimum harmonisa tion, Member States will be able to go 
beyond the minimum information requirements and there would be additional costs for companies trading cross-border (the baseline administrative costs for exporters 
would remain unchanged). 
 
4. Identification of target groups 
 
 
The administrative costs will be borne by businesses.  The costs do not differ between small, medium 
and large enterprises.   5 Identification of the fre quency of required actions 
 
 Contract law related admi nistrative costs are mostly one-off costs-  e.g. there is no need to adapt the 
general terms and conditions or a website un til a major reform of contract law.  
 
- Option 1- one-off costs per entering a Member State.  Costs borne by companies wishing 
to trade cross-border. 
 
- Option 3- one-off costs for entering Member  States that applied the Recommendation 
with national adjustments due to possible diffe rences in the way Member States applied 
it. 
 
- Option 4- only one set of one-off costs for entering all Member States. Costs borne by 
companies wishing to trade cross-border. 
 
- Option 5 (a and b) and Opti on 6- one–off costs for all EU companies and under sub-
option b (minimum harmonisation) the additional administrative costs for companies trading cross-border (the same as under the baseline scenario) 
     
 
 132 
6 Identification of cost parameters  
 
Option 1 
As described in section 2.3.1 of the main report, a company wishing to trade cross-border needs to 
hire a lawyer who is an expert in  the contract law of each relevant country. The lawyer will need to 
check the relevant national laws and the company will need to design the information material accordingly.  The baseline transaction costs in BC2 for trad ing with one other Member State amounts to €8,695-
€9,565 and in B2B transaction €9,0 00-€10,568. These costs include admi nistrative costs and other 
costs to familiarise and comply with ot her non-information related requirements. 
 The Commission in the CRD IA estimated the cost of legal validation of information requirements 
per Member State amount to €2,500 i.e. 10 hours of  work billed at €250 per hour. In addition, the 
CRD IA considers other one-off cost elements such  as designing information material, copying and 
submitting the information. These additional costs have been estimated at €1,026 for a distance seller and €2,125 for a doorstep seller. The total baseline admi nistrative costs for a di stance seller selling 
cross-border to one Member State amount to €3,526 and for a doorstep seller to €4,625. 
 These costs are likely to go down once the CRD has been adopted. The CRD foresees full 
harmonisation of the pre-contractual informati on requirements but other information related 
requirements e.g. a form in which information is to  be provided are likely to remain fragmented. 
Therefore, exporters would still need to familiarise and comply with some national provisions 
concerning the information requirements. It coul d be assumed that the time needed for legal 
validation of information requirements as estimat ed in the CRD IA would be shorter but other 
required costs (e.g. designing information materials,  copying and submitting the information) would 
remain unchanged after the adoption of the CRD. The scope of the Directive is also likely to be 
limited to distance and off-premises sales meaning that the adoption of the CRD will not have any impact on administrative costs for exporters who sell by other methods (i.e. on-premises sales) or those which stem from provisions of  general contract law. Therefore,  for this impact assessment the 
average administrative cost per company exporti ng are estimated at €2,500 (average for all sales 
channels – doorstep, distance and on-premises sales) that will rema in after the adoption of the CRD. 
This means that the administrativ e costs amount to around 25% of the transactions costs as estimated 
in section 2.3.1 of the report.   
Difference between administrative and transaction costs
 
 
EU consumer protection rules requi re companies to provide certain information to consumers before 
and after the conclusion of a contract. The informa tion requirements cover, for example: identity of 
the supplier, the main characteristics of the pr oduct, the arrangements of payment etc. These 
obligations are however regulated differently between Member States. In some countries, 
information must be provided in writing or in a specific form. Member Stat es have also introduced 
additional information obligations.  
 
Administrative costs refer to all the costs asso ciated with compliance with these information 
requirements while transactions costs are a broader concept covering all the as pects of contract law. 
 
For example, companies need to investigate the national rules according to which remedies may be 
invoked or national lists of  unfair contract terms. These requirements do not impose any information 
obligations (i.e. companies do not have to provide  information on available sales remedies in the 
 
 133contract or before conclusion of the contract). Th ese costs are however part of the transaction costs 
for business wishing to trade cross-border. 
 
In addition, specific IT costs may be relevant for businesses selling to cons umers in other Member 
States via e-commerce. These additional costs stem  from the need to adap t a business's internet 
platform to the legal requirements of each Member States it directs its activity to. They include costs for adapting the web-site so that it  can recognise th e consumer's country of re sidence and retrieve the 
correct set of pages.
402 These additional transaction costs ha ve been estimated at €2,916 per Member 
State and they are related to providing information (action 6 – designing information material). 
 In B2B transactions, companies are not faced with such strict information requirements as in B2C 
contracts. The national law may however cont ain some provisions related to information 
requirements. It is assumed that the legal validation of information requirements in B2B transactions and other related actions will take less time than for B2C transactions. It has been roughly assumed 
that administrative costs would amo unt to 15% of transactions cost s for B2B sales as estimated in 
section 2.3.1 of the report (compared to 25% in B2C transactions).  To simplify calculations, it is further assumed that these administrative costs are split equally across 
all the identified actions. 
 
Option 3  
The impacts of this option would very much be dependent upon: 
• Whether and how many MS decide to incorpor ate an optional  Common European Sales Law 
and to what extent. 
• How many businesses decide to use the Common European Sales Law. 
On a qualitative basis the impacts would reduce the baseline administrative costs to some degree 
only.  For those MS who decide to incorporat e the Common European Sales Law completely 
without any changes and at the same time, the diff erences between national cross border laws would 
cease (similarly to option 4 and 5). Therefore if tr aders used the Common European Sales Law they 
would only incur the one off administ rative cost to become familiar and comply with the information 
requirements, but this cost would not be borne agai n if the trader wished to  expand trade to another 
MS that incorporated the Common European Sales Law.  
Option 4 
It is assumed that the one-off cost of adaptati on to the optional Common European Sales Law equals 
the baseline administrative cost  per company for entering one Me mber State under the baseline 
scenario i.e. €2,500. This is considered as a high es timate since the costs are li kely to be lower than 
under the baseline scenario e.g. a company would not n eed to advise an expert in international law 
which is often be the case under the baseli ne scenario but rather a local lawyer. 
 The additional administrative cost for option 4 in B2C contracts concerns the need to inform consumers about the choice of the optional Common European Sales Law. This cost will be borne 
by all companies. For example, companies trading via e-commerce
403 would need to create e.g. a 
pop window informing a consumer about the appl ication of the European contract law and 
companies trading via post will need to add simila r information in a brochure. This one-off cost is 
                                                 
402 Federation of Small Businesses (FSB) in the UK, Response to the Green Paper on policy options for progress towards a  possi ble European contract law for consumers  
and businesses , p.3; see FSB Position Paper on Rome I, p.3 for detailed breakdown of costs. 
403 It should be noted that under option 4, additional IT costs for companies trading via e-commerce would disappear as retaile rs would not be required to adapt their 
websites to recognise the consumer's country. They should use the same set of information for all the countries. 
 
 134assumed to be around €500. Therefore the total one -off cost for a company using an optional 
Common European Sales Law would amount to €3,000. 
 
 Option 5 and Option 6  
Option 5 a (full harmonisation Directive) and Option 6 (Regulation establishing a European contract 
law) Similarly to option 4, it is assumed that the one-o ff cost of adaptation to the Directive/Regulation 
equals the baseline administrative cost per co mpany for entering one Member State i.e. €2500. 
Similarly to option 4, this is considered as a high estimate sin ce the costs are likely to be lower than 
under the baseline scenario e.g. a company would not  need to seek advice  from an expert in 
international law which is often be the case under the baseline scenario but rather a local lawyer. 
 Option 5 b (minimum harmonisation Directive) The same impact as option 5a. However, if th e Directive is based on minimum harmonisation, 
Member States will be able to  go beyond the minimum information requirements. In this case the 
baseline administrative costs for companies trading cross-border will remain unchanged. 
 7. Assessment of the number  of entities concerned 
 
 
Option 1 
In B2C transactions all the exporting companies w ill need to bear administrative costs. In B2B 
transactions, the costs will be borne by companies exporting and applying the law of the other 
contractual party.  
Table 2:  Number of companies affected in Option 1 
 
 Number of firms 
exporting
404 
(a) Share of firms 
exporting under law of partner country 
405 
(b) Number of firms  
exporting under law of partner country (c ) c= a*b 
Agriculture (B2B) 28,771 14.6% 4,200 
Manufacturing and mining (B2B) 363,353 14.6% 
53,050 
Wholesale (B2B) 268,430 14.6% 39,190 
Retail (B2C) 184,670 - 184,670 
Total  845,224 n/a 281,110 
 The number of companies in B2C that w ill incur additional IT  costs amounts to 67,230.
406 
 The costs grow proportionally to the number of count ries with which enterprises trade. The number 
of required actions has therefore been multiplied by 4 (the average between the low and high 
estimate of the average number of EU countries  companies export to, both in B2B and B2C).
407 
 It should be noted that for Option 1 the administra tive costs are calculated for the firms currently 
active. Notably, these are mainly sunk one-off cost s, sunk by EU businesses which already entered 
                                                
 
404 See annex III.  
405 Flash Eurobarometer 299, European contract law in business-to-business transactions, not published. 
406 See annex III, Calculation of opportunity and transaction costs. 407 See annex III, Calculation of opportunity and transaction costs. 
 
 135cross-border trade. On the ot her hand, more administrative costs for the EU economy occur 
annually, as the new EU exporters  (estimated at 14.6% yearly)408 pay transaction costs for entering 
cross-border trade.   
Option 3 
 
There are several variants of the incorporatio n of the Common European Sales Law under this 
option and its subsequent outcomes:  
Scenario 1: 
 
In the ideal scenario all MS would implement th e Common European Sales Law completely, without 
changes and at the same time. There would be a one-off sunk cost for familiarisation of the Common 
European Sales Law when businesses first use it to trade with a business or consumer in one other 
MS. The impacts of this scenario w ould be the same as those listed under the analysis of impacts of 
policy option 4. 
Scenario 2:  
Some of the MS could decide to implement th e Common European Sales Law completely, without 
changes and at the same time. 
This scenario would be of benefit to traders w ho perform B2B contracts, because even where MS 
decided not to incorporate the Common European Sales Law, traders woul d have the freedom to 
decide on the law applicable to th eir contract (as the choi ce of using the law of a third country would 
still apply to them). This would mean that tr aders who performed B2B c ontracts would have the 
opportunity to reduce their admini strative costs through the use of the Common European Sales Law 
(provided that at least 1 MS implemented the Recommendation) – even if their MS had not 
incorporated it. The same would be the case for B2 C contracts, if both MS of the business' and the 
consumer's residence implemented the Common Eu ropean Sales Law entirely and without changes. 
If not, scenario 3 would apply. 
Scenario 3:  
Some MS could decide to incorporate the Comm on European Sales Law not completely, with 
changes, not at the same time, or a combination of these factors.  
Under this scenario, problems would arise simila r to those set out under S cenario 2 and in some 
countries businesses would face higher administrati ve costs than in other countries.  For B2B 
contracts the same situation as under scenario 2 would apply. For B2C contracts the situation would 
become even more complicated as businesses w ho wanted to use the Common European Sales Law 
could only approach and sell to consumers whose MS  have incorporated the Recommendation and in 
doing so, businesses would have to research where MS have gone beyond the drafting of the 
Common European Sales Law with regards to manda tory consumer protection rules and where the 
level of domestic consumer protection is higher than that offered in th e Common European Sales 
Law. However for those consumers whose MS have not implemented the Recommendation who approach a business in another country and want to use the Co mmon European Sales Law, they 
would not be able to.
409 
Because of the piecemeal way in which the Common European Sales Law could be incorporated, it 
is difficult to estimate the precise number of  companies potentially affected by additional 
administrative costs. The administrative costs are likely to remain on a similar level as under the 
baseline scenario. 
                                                 
408 The estimate of 14.6% does not take reflect that some of the new exporters may have already exported in the past and incurr ed the one-off transaction costs. However, 
this is partly balanced by the fact that this estimate does no t include companies which already ex port and want to expand their  operations to more EU countries. See annex 
III for further details. 409 See the main report, section 5. 
 
 136 
Option 4 
 
Option 4 is likely to affect the current exporters who w ould have the possibility to use the Common 
European Sales Law but also to encourage compan ies currently trading only domestically to extend 
their business cross-border.  
- Current exporters 
 
Companies wishing to trade cross- border would be able to choos e optional Common European Sales 
Law and need to adapt their terms and conditions onl y once to trade with all EU countries. These are 
the companies that are affected by the ba seline administrative costs (see table 2). 
 In the Eurobarometer surveys, 70% of the surveyed enterprises (B2B and B2C)
410 said that they 
would choose the jurisdiction of an EU contract la w if it existed and this has been used as an 
assumption of the number of companies using the Eu ropean contract law. However, considering that 
only a part of these respondents in dicated an optional instrument as the preferred policy options 
(respectively 38% EB 320 (on B2B) and 37% in EB 321 (for B2C) this assump tion is considered as 
a high estimate giving an indi cation of maximum costs to be borne by companies. 
 It could therefore be estimated that 156,272 co mpanies currently exporting (129,626 in B2C and 
26,643 in B2B) would use the optional instrume nt and would bear administrative costs. 
 Table 3:  Number of exporte rs using optional instrument 
 
 Number of 
firms affected 
by the baseline administrative costs
411 (a) 
    Share of firms 
likely to use 
Common European Sales Law(b)  Number of firms 
willing to use 
Common European Sales Law  (c) = a*b 
Agriculture (B2B) 4,200 70% 2,940 
Manufacturing (B2B) 53,050 70% 37,135 
Wholesale (B2B) 39,190 70% 27,433 
Retail (B2C) 184,670 70% 129,629 
Total  281,110  197,137 
 
- New exporters 
 
Option 4 is expected to encourage companies curre ntly trading only domestically to extend their 
business cross-border. 
 - B2C transactions
 
 The Eurobarometer survey found that 21% of reta ilers that do not make cr oss-border sales would 
expand their business across-borders if laws regulating transactions were the same across the EU.412  
                                                 
410EB 320 on European contract law in business-to-business transactions, 2011; EB 321 on European contract law in consumer tran sactions. 2011- companies likely or very 
;likely to of use the European cont ract law in cross-border transact ions for cross-border transactions. 
411 See table 2. 412 Flash Eurobarometer 300.  Business attitudes towards cross-border trade and cons umer protection,  p.25.  
 
 137The sample of this Eurobarometer survey cove rs only companies of 10 employees and more. The 
study on Internalisation of SMEs show s that the bigger the company is the more likely it is to export. 
The share of exporters among micro enterprises am ounts to 24% compared to 54% for medium size 
companies. It could be therefore assumed that th e proportion of micro enterprises that would expand 
their business cross-bor der if an optional European contract law instrument was available would be 
2,25 times  lower than for larger companies i.e. 9.3%. Micro companies account for 95% of all retailers. It could be ther efore estimated that 10% of all retaile rs would start cro ss-border operations 
under option 4.
413  
 Based on above, it has been estimated that 442,056 companies who trade B2C and who are currently 
only trading domestically would e xpand their operations cross-border. 
 - B2B transactions
 
In B2B transactions companies are free to choose the applicable law. It is therefore assumed that a considerably smaller proportion i.e. 5% of compan ies involved in B2B trans actions will extend their 
operation cross-border compared to 10% of comp anies involved in B2C transactions. For the 
agriculture sector where the number of companies currently e xporting is marginal i.e. 0.29% the 
potential effect will be minimal and therefore this sector is not included in the estimates below. 
Based on the above, it has been estimated that  173,229 companies in B2B who are currently only 
trading domestically would expand their operations cross-border (99,043 in the manufacturing sector 
and 74,186 in the wholesale sector).  Table 4: Number of new exporters usi ng the optional Common European Sales Law 
 
 Number of non 
exporters
414  
(a) Share of new 
exporters due to 
introduction of 
the Common European Sales Law (b) Share of firms 
exporting under  
optional Common 
European Sales Law (c ) Number of new 
exporters 
exporting under 
optional Common European Sales Law(d) d=a*b*c 
Manufacturing (B2B) 1,980,860 5% 100% 99,043 
Wholesale (B2B) 1,483,724 5% 100% 74,186 
Retail (B2C) 4,420,563 10% 100% 442,056 
Total 7,885,147   615,285 
 
Option 5  
 Full harmonisation Directive (option 5a) and Option 6  
All firms including exporters and non- exporters w ill have to adapt contracts and the general terms 
and conditions.  
 
Table 5:  Number of companies affected in Option 5a and Option 6 
 
 Number of 
firms415 
Agriculture (B2B) 13,700,400 
Manufacturing (B2B) 2,322,830 
                                                 
413 (95% of micro companies *8.4% + 5% (larger companies)  x21%=9.99%. 
414 See annex III, Calculation of opportunity and transaction costs. 415 See annex III, Calculation of opportunity and transaction costs. 
 
 138Wholesale (B2B) 1,752,155 
Retail (B2C) 4,605,233 
Total  22,402,000 
 
Minimum harmonisation Directive (option 5b) 
 
All firms including non-exporters will have to adap t contracts and the gene ral terms and conditions. 
 As this option is based on minimum harmonisati on, the impact on administrative costs for current 
exporters will be minimal compared to the baselin e scenario. Companies will need to familiarise 
themselves with national laws transposing the Di rective and adapt their contracts accordingly. The 
administrative costs for companies trading cross-border will remain unchanged compared to the baseline.  8. Summary of estimates  
 
 
B2C transactions  
 
The table below shows the comparison of administra tive costs of different options.  The baseline 
administrative cost per company amount to €10,000.416The average administrative cost per company 
are the lowest under option 5 and 6 (€2,500) but this option is likely to impact many more 
companies than option 4 so the total administrative burden for the companies is much higher. 
 
Table 6: Comparison of administra tive costs in B2C transactions  
 
 No of companies 
affected (a) Average one-off cost 
per company (b)  Total administrative 
costs (in millions €)
417 
c=a*b 
Option 1(baseline) E-commerce (additional costs) 
Total cost 184,670
418 
67,230   €10,000
419 
€11,664420  1,847 
784  
2,631 
Option 4 571,685421 €3,000 1,715 
Option 5a (full 
harmonisation) and Option 6 4,605,233
422 €2,500 11,513 
Option 5b (minimum 
harmonisation) 
 
All companies 
 
Exporters (additional costs- as in the  
  4,605,233  184, 670  
  €2,500  €10,000  
  11,513  1,847 
                                                 
416 The baseline administrative cost per company per MS €2,500 * 4 the average number of EU countries companies export to. 
417 See also the SCM spreadsheets with administrative costs calculations.  
418 This number covers all current exporters. The annual administrative costs for the EU economy can be estimated based on the percentage of new exporters within the EU 
on a yearly basis, estimated at 15%. See table 2, column c.  419 €2,500 (the baseline administrative cost per company per MS)*  4 (the average number of EU countries companies export to). 
420 €2,916 (the baseline additional administrative costs in e-co mmerce)* 4 (the average number of EU countries companies export  to). 
421 This number covers all the retailers that are likely to use an optional instrument: current exporters (129,619 –see table 3  column d) and new-exporters that will only 
expand their operations cross-border as the result of a new lega l framework (442,056 – see .table 4 column d). This effect will  not be immediate and is likely to take a 
number of years. 422 See table 5. 
 
 139baseline) 
 
Total costs 67,230  
  €11,664 784 
 
14,144 
 
 
Option 4, option 5 and option 6 are likely to contribut e to cost savings for companies trading to more 
than 1 MS compared to the baseline scenario. Th ese savings grow proportio nally to the number of 
Member States a company trades to. For example, if a company trades to 2 MS the cost saving of 
option 4 would amount to €1,500 and €2,500 under option 5 and 6. If a company trades in the whole 
EU, the cost saving per company under op tion 4 would amount to €62,000 and to €62,500 under 
option 5.  Table 7: Comparison of administrative co sts per company in B2C transactions 
 
 Option 1 (baseline) Option 4 Option 5 
Domestic traders 
only 0 0 €2,500 
Trading with 1 MS €2,500 €3,000 €2,500 
Trading with 2 MS €5,000 €3,000 €2,500 
Trading with 3 MS €7,500 €3,000 €2,500 
Trading with 4 MS €10,000 €3,000 €2,500 
Trading with 26 MS 
(whole EU) €65,000 €3,000 €2,500 
 
B2B transactions  
 
The table below shows the comparison of administra tive costs of the different options. The baseline 
administrative cost per company amount to €6,000. Th e average administrative cost per company are 
the lowest under option 4, 5 and 6. However, opti on 5 and option 6 are likely to impact many more 
companies than option 4 so the total administrative burden for the companies is much higher. 
 
 140 
Table 8: Comparison of administra tive costs in B2B transactions 
 
 No of companies 
affected (a) Average cost per 
company (b) Total 
administrative costs (in millions €)
423 
c=a*b 
Option 1 (baseline) 96,440424 €6,000425 579 
Option 4 240,737426 €1,500 361 
Option 5a (full harmonisation) and Option 6 17,775,385
427 €1,500 26,695 
Option 5b (minimum 
harmonisation)  All companies  Exporters (additional costs- as in the baseline ) 
Total costs   
 17,775,385   96,440  
 €1,500   €6,000  
 26,695   579   
27,274 
 
 
Option 4, option 5 and option 6 are likely to contribut e to cost savings for companies trading to more 
than 1 MS compared to the baseline scenario. Th ese savings grow proportio nally to the number of 
Member States a company trades to. For example, if a company trades to 2 MS the cost saving of 
option 4, 5 and 6 would amount to €1,500. If a compa ny trades in the whole EU, the cost saving per 
company under option 4, 5 and 6would amount to €37,500.  Table 9: Comparison of administrative co sts per company in B2B transactions 
 
 Option 1 (baseline) Option 4 Option 5 
Domestic traders 
only 0 0 1,500 
Trading with 1 MS €1,500 1,500 1,500 
Trading with 2 MS €3,000 1,500 1,500 
Trading with 3 MS €4,500 1,500 1,500 
Trading with 4 MS €6,000 1,500 1,500 
Trading with 26 MS 
(whole EU) €39,000 1,500 1,500 
                                                 
423 See also the SCM spreadsheets with administrative costs calculations. 
424 See table d, column c (4,200+53,050+39,190).  425 €1,500 (the baseline administrative cost per company per MS)*  4 (the average number of EU countries companies export to). 
426This number covers all the retailers that are likely to use an optional instrument: current exporters (2940+37135+27433–see table 3, column d) and new-exporters that 
will only expand their operations cross-border as the result of  a new legal framework (99,043+74,186– see .table 4 column d). T his effect will not be immediate and is likely 
to take a number of years. 427 See table 5. Total number of companies in B2B sector = 13,700, 400 (agriculture) + 2,322,830 (manufacturing) + 1,752,155 (w holesale). 
 
 141 
Option 1: Administrative costs B2C transactions
No. Art.Orig. 
Art.Type of obligationDescription of 
required action(s)Int EU
1Non labelling information 
for third parties Familiarising with the 
information obligationCompanies 
exporting 250 150 625 1         184.670           738.680            461.675.000   1 0 25%
OK
3Non labelling information 
for third parties Copying Companies 
exporting 250 150 625 1         184.670           738.680            461.675.000   1 0 25%
OK
4Non labelling information 
for third parties Submitting 
information to the relevant actorCompanies 
exporting 250 150 625 1         184.670           738.680            461.675.000   1 0 25%
OK
6Non labelling information 
for third parties Designing information 
material (leaflet 
conception…)Companies 
exporting250 150 625 1         184.670           738.680            461.675.000   1 0 25%
OK
14Non labelling information 
for third parties Designing information 
material (leaflet conception…)Companies 
exporting via e-commerce2916 1           67.230           268.920            784.170.720   1 0 25%
OK
657.717.680
 Total administrative costs (€) 2.630.870.720
 Total administrative burden (€) 2.630.870.720
 Administrative costs by origin (€) 0
10.000
2.500
12.916Regulatory origin
(%)Price
(per 
action)Freq 
(per entry) - 
ONE OFF 
COSTSNbr 
of 
entitiesEquipment 
costs 
(per entity 
& per year)Outsourcing 
costs 
(per entity 
& per year)B
usiness 
As Usual 
Costs
(% of AC)
Average cost per company per MS
Average cost for a company exporting via e-commerceIf the act assessed is the transposition of one or several acts adopted at 
another level, insert here the name and reference of that or these 'original' actsTotal 
Administrative 
Burdens
(AC - BAU)Total number 
of actions x 
4MSTotal 
A
dministrative 
Costs
Average cost per companyInsert here the name and reference of the regulatory act assessed
Tariff
(€ per 
hour)TIme 
(minutes)
 
Option 1: Administrative costs B2B transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationCompanies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
3Non labelling information for 
third parties Copying Companies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorCompanies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )Companies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
144.660.000 433.980.000
 Total administrative costs (€) 578.640.000
 Total administrative burden (€) 578.640.000
6.0001.500
 Nbr 
of 
entitiesTotal number of 
actions x 4 MSEquipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
Average cost per company
Average cost per company per MSOutsourcing 
costs 
(per entity 
& per year)Total 
Administrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTS
 
Option 4: Administrative costs B2C transactions
No. Art. Orig. Art. Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationCompanies exporting250 150 625 1 571.685 571685 357303125 1 0 100%OK
3Non labelling information for 
third parties Copying Companies exporting250 150 625 1 571.685 571685 357303125 1 0 100%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorCompanies exporting250 150 625 1 571.685 571685 357303125 1 0 100%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )Companies exporting250 150 625 1 571.685 571685 357303125 1 0 100%OK
14infroomation 
about the 
choice of ECLNon labelling information for 
third parties Designing information material 
(leaflet conception…)Companies exporting
500 1 571.685 571685 285842500 1 0 100%
OK
1.715.055.000 0
 Total administrative costs (€) 1.715.055.000
 Total administrative burden (€) 1.715.055.000
 Administrative costs by origin (€) 0
3.000
n/a  Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here the name 
and reference of that or these 'original' acts
Average cost per company
Average cost per company per MSOutsourcing 
costs 
(per entity 
& per year)Total A dministrative C ostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTSNbr 
of 
entitiesTotal number of 
actions Equipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)
 
 
 142Option 4: Administrative costs B2B transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationCompanies exporting250 90 375 1 240737 240737 90276375 1 0 100% 0%OK
3Non labelling information for 
third parties Copying Companies exporting250 90 375 1 240737 240737 90276375 1 0 100% 0%OK
4Non labelling information for 
third parties Submitting information to the 
relevant acto rCompanies exporting250 90 375 1 240737 240737 90276375 1 0 100% 0%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption…)Companies exporting250 90 375 1 240737 240737 90276375 1 0 100% 0%OK
 Total administrative costs (€) 361.105.500
 Total administrative burden (€) 361.105.500
 Administrative costs by origin (€) 0
1.500
n/a  Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
Average cost per company
Average cost per company per MSOutsourcing 
costs 
(per entity 
& per year)Total 
Administrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTSNbr 
of 
entitiesTotal number of 
actionsEquipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)
 
Option 5 a (full harmonisation) : Administrative costs B2C transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationall companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
3Non labelling information for 
third parties Copying all companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorall companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption…)all companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
11.513.082.500 0
 Total administrative costs (€) 11.513.082.500
 Total administrative burden (€) 11.513.082.500
 Administrative costs by origin (€) 11.513.082.500
2.500
 Nbr 
of 
entitiesTotal number of 
actions Equipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
Average cost per companyOutsourcing 
costs 
(per entity 
& per year)Total A dministrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTS
 
Option 5 a (full harmonisattion ): Administrative costs B2B transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationall companies250 90 375 1 17796767 17796767 6673787625 1 0 100% 0%OK
3Non labelling information for 
third parties Copying all companies250 90 375 1 17796767 17796767 6673787625 1 0 100% 0%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorall companies250 90 375 1 17796767 17796767 6673787625 1 0 100% 0%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )all companies250 90 375 1 17796767 17796767 6673787625 1 0 100% 0%OK
 Total administrative costs (€) 26.695.150.500
 Total administrative burden (€) 26.695.150.500
 Administrative costs by origin (€) 26.695.150.500
1.500
n/a  Nbr 
of 
entitiesTotal number of 
actionsEquipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
Average cost per company
Average cost per company per MSOutsourcing 
costs 
(per entity 
& per year)Total A dministrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTS
 
 
 143Option 5 b (minimum harmonisation): Administrative costs B2C transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationall companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
3Non labelling information for 
third parties Copying all companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorall companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )all companies250 150 625 1 4.605.233 4605233 2878270625 1 0 100%OK
8Non labelling information for 
third parties Familiarising with the information 
obligationCompanies exporting250 150 625 1         184.670                 738.680                        461.675.000   1 0 100%OK
9Non labelling information for 
third parties Copying Companies exporting250 150 625 1         184.670                 738.680                        461.675.000   1 0 100%OK
11Non labelling information for 
third parties Submitting information to the 
relevant actorCompanies exporting250 150 625 1         184.670                 738.680                        461.675.000   1 0 100%OK
12Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )Companies exporting250 150 625 1         184.670                 738.680                        461.675.000   1 0 100%OK
14Non labelling information for 
third parties Designing information material 
(leaflet conception…)Companies exporting 
via e-commerce 2916 1           67.230                 268.920                        784.170.720   1 0 100%
OK
############ 0
 Total administrative costs (€) 14.143.953.220
 Total administrative burden (€) 14.143.953.220
 Administrative costs by origin (€) 14.143.953.220
2.500
10.000  Average cost per company trading domestcially
Averega cost per company expoerting Regulatory origin
(%)Total Administrative 
Burdens
(AC - BAU)Total A dministrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Freq 
(per entry) - 
ONE OFF 
COSTSNbr 
of 
entitiesTotal number of 
actions Outsourcing 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)Equipment 
costs 
(per entity 
& per year)TIme 
(minutes)Price
(per action)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
 
 
   
Option 5b minimum harmonisation)): Administrative costs B2B transactions
No. Art.Orig. 
Art.Type of obligation Description of required action(s) Int EU Nat Reg
1Non labelling information for 
third parties Familiarising with the information 
obligationall companies250 90 375 1 17775385 17775385 6665769375 1 0 100% 0%OK
3Non labelling information for 
third parties Copying all companies250 90 375 1 17775385 17775385 6665769375 1 0 100% 0%OK
4Non labelling information for 
third parties Submitting information to the 
relevant actorall companies250 90 375 1 17775385 17775385 6665769375 1 0 100% 0%OK
6Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )all companies250 90 375 1 17775385 17775385 6665769375 1 0 100% 0%OK
8Non labelling information for 
third parties Familiarising with the information 
obligationCompanies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
10Non labelling information for 
third parties Copying Companies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
12Non labelling information for 
third parties Submitting information to the 
relevant actorCompanies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
14Non labelling information for 
third parties Designing information material 
(leaflet conce ption… )Companies exporting250 90 375 1 96.440 385760 144660000 1 0 25% 75%OK
 Total administrative costs (€) 27.241.717.500
 Total administrative burden (€) 27.241.717.500
 Administrative costs by origin (€) 27.241.717.500
1.500
6.000  Regulatory origin
(%)
If the act assessed is the transposition of one or several acts adopted at another level, insert here 
the name and reference of that or these 'original' acts
Average cost per company trading domestically
Average cost per company exportingOutsourcing 
costs 
(per entity 
& per year)Total A dministrative 
CostsBusiness 
As Usual 
Costs
(% of AC)Total Administrative 
Burdens
(AC - BAU)Freq 
(per entry) - 
ONE OFF 
COSTSNbr 
of 
entitiesTotal number of 
actionsEquipment 
costs 
(per entity 
& per year)Insert here the name and reference of the regulatory act assessed
Tariff
(€ per hour)TIme 
(minutes)Price
(per action)
 
 144ANNEX VIII: ANALYSIS OF IMPACTS OF MAJOR SUBSTANTIVE PROVISIONS OF 
A COMMON EUROPEAN SALES LAW  
 
METHODOLOGY 
 
A Common European Sales Law would comprise of  a number of provisions, however, not each 
provision is likely to have a dir ect impact of the same magnitude  on stakeholders. There are some 
rules, for instance the consumer protection provisions, which have re ceived particular  attention by 
both businesses and consumer stakeh olders. For example, business re presentatives have pointed out 
that a Common European Sales Law should have  a balanced level of consumer protection,428 and 
consumer representatives have insi sted that any new regulatory or non -regulatory tool in the field of 
consumer policy should have a clear added value for consumers.429  
 Quite a number of the provisions arise from the existing EU acquis or the the Consumer Rights 
Directive (CRD) which has been recently adopted. As  a result, these provisions would have to be 
integrated and have already been impact assessed.   For the purpose of this impact assessment report a number of provisions have been selected for a 
detailed impact analysis. They include the rule s which could be potentially burdensome on business 
or important for consumer confidence. They excl ude provisions arising fro m existing EU acquis or 
the CRD. For each of the former provisions, the le gal comparison and the assessment of impacts are 
carried out. Legal analysis  The legal comparison sets out the draft provisions  of a Common European Sales Law and compares 
it to the level of protection provide d in the legal systems of a repr esentative selec tion of Member 
States. It concludes with the impact such a provi sion would have on the leve l of protection in these 
Member States.  The sample of Member States (for most of the provisions) include: Austria, Belgium, Estonia, 
Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, 
Romania, Spain and United Kingdom. This se lection ensures a good geographical coverage 
(representation of EU15 a nd EU12 Member States) as well as c overage of different legal systems 
and traditions.  Assessment of impacts  For each provision the costs and benefits for the main stakeholders groups i.e. consumers and businesses are analysed.
430 These analyses are mostly of a qualitative nature. However, where 
reliable assumptions could be made and there wa s enough reliable information, the impacts are also 
monetised. 
 
      
                                                
 
428 See for instance responses to the European Commission Green Paper consultation on Policy Options towards a European contrac t law for consumer and businesses by: 
Eurocommerce, p.4; Emota, p.2; UEAPME, p.3  429 See for instance response to the European Commission Green Paper consultation on Policy Options towards a European contract  law for consumer and businesses by 
BEUC, p.9 
430 These analyses are mostly of a qualitative nature. However, where reliable assumptions could be made and there was enough r eliable information, the impacts are also 
monetised. 
 
 145B2C TRANSACTIONS 
Pre-contractual information:   Remedies for breach of information duty 
 
Issue:
 
 In the existing consumer acquis, there is only an  obligation imposed on Member States to ensure 
adequate and effective means exist to ensure co mpliance with the pre-contractual requirements 
provided by Directives in the intere sts of consumers.  For example Ar t. 11 (1) Direct ive 97/7/EC of 
the European Parliament and of the Council of  20 May 1997 on the protection of consumers in 
respect of distance contracts. This  Directive also states that wher e the business does not provide pre-
contractual information to the consumer, then th e withdrawal period of seven days is extended. 
However, the acquis  does not provide any right for damages.  
 A Common European Sales Law would introduce the following additional remedies in case of 
breach of pre-contractual information duties (if th ere was no information provided or the information 
provided was not correct): Where the business has not fulfilled his pre-contractual information duty and, as result a contract has been concluded wh ich the other party would not have concluded, or 
would not have concluded on the same terms, the business would be liable for damages. This would be a mandatory rule for B2C contracts. - Where the business has not fulfilled his pre-contractual information duty and a contract has been concluded, the other party may, under certain conditi ons, avoid the contract under the 'mistake' or 
'fraud' provisions.  Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  consumer protection 
BE - Distance contracts: The Belgian Ac t of 6 April 2010 on Market Practices 
and Consumer Protection contains  most of the national provisions 
implementing EU consumer contract la w directives, does not provide for a 
specific right to damages or a right to  enforce the obligation. It has been 
defended that a consumer who does not exercise his righ t of withdrawal 
can claim damages for any loss incurred by the omission of the information on the basis of the general Art. 1382 Civil Code on extra-contractual 
liability. No case law is known. - Off-Premises contracts: Off-premises  sales contracts must mandatorily be 
in writing. The absence of a written contract leads to the nullity of the contract. It is disputed whether this nu llity is of public order (in which case 
it has to be raised ex officio by th e judge). Normally courts do not 
recognise a right for the trader to cla im any compensation in case of nullity 
of the off- premises sales contract (e xcept where the consumer acted in bad 
faith). Like for distance contracts it would seem that the consumer in an 
off-premises contract would also have  the right to claim damages under tort 
law for any loss caused by the absence of the information. - In Belgian law it is generally accepte d that a contract is concluded on the 
basis of the expressed will of the parties rather than on their intended will. Thus where a party could legitimately re ly on the other party’s declaration, 
that declaration will prevail over the real will of that party and the parties will be deemed to have agreed on that basis.   + 
       
 
 146DE - Damages follow from §§ 280, 311 (1), 241 (2) BGB.  = 
EE - In the breach of information dutie s the consumer will have a right to 
damages under general information du ties rule (no special regulation).  =  
 
 
ES - Distance sales: Administrative sanctions for breach of obligations regarding information and documen tation [Sections 49.2.b) and 50.2 Act 
1/2007, of 16th November, that passes th e codified text of the General Law 
for the Defence of Consumers and Users and other complementary laws, henceforth TRLGDCU]. Reference to  the TRLGDCU general provisions 
for B2C contracts and the Spanish Civil Code general contractual 
provisions: → TRLGDCU: There are no special provisions on damages regarding 
breach of information duties. According to Section 65, consumers’ 
contracts that do not include relevant  pre-contractual information will be 
completed in favour of consumers, according to the good faith principle. → Civil Code: There are no special provisions on damages regarding 
breach of information duties. Consumers will have a right to damages based on pre-contractual liability or  culpa in contrahendo (Sections 7.1, 
and 1902 of the Civil Code). Contract s in which the failure to provide 
information amounts to –essential- mist ake (error esencial) or fraud (dolo 
omisivo o reticencia dolosa), the lack of information can make the contract 
void (Sections 1266,  1269, 1270, and 1300 and ff. of the Civil Code), and can eventually also lead to damages. In  cases of fraud (including for lack of 
information) case law of the Spanish Supreme Court allows the innocent party to use the remedies in the cont ract (essentially full damages and/or 
rescission, but there has been one cas e in which specific performance was 
granted) instead of avoidance and the accompanying damages. - Doorstep/off-premises sales: Consumers will have a right to damages based on precontractual liability or culpa in contrahendo (Sections 7.1 and 
1902 of the Civil Code). Contract s can be made void (Art. 112 
TRLGDCU) if consumers have not b een informed about their right to 
withdraw from them (Sec tions 69 and 111 TRLGDCU). =
 
 
 
  
FI - Consumers may have the right to da mages if there is a breach of pre-
contractual information duties. Right to remedies is not automatic but 
depends on how essential the breach has been. These are general principles which apply for all kind of (consumer) contracts.  - Consumer Protection Act Chapter Section 20 — Failure to provide 
information (1072/2000): (1) If the door-to-door selling document or the confirmation (…) has not been supplied to the consumer, the contract shall not  be binding on 
him/her. If the consumer wishes to invoke this remedy, he  shall notify the 
business within one year of th e conclusion of the contract.  
(2) If the business supplies the door-to-door selling document or the 
confirmation before the consumer has invoked the non-bindingness of the 
contract, the consumer shall be entitled  to withdraw from the contract, in 
door-to-door selling … and in distance se lling … as from the receipt of the 
document or the confirmation. (3) If the contract laps es owing to the consumer  having invoked its non-
bindingness, the business shall without delay and in any event within 30 
days of the notification refund the pa yments received and compensate the 
consumer for the costs of returni ng the goods or other performances.
 =  
 
   
 
 147FR The pre-contractual information duties for doorstep and off-premises sales 
are provided by Art. L. 121-18 of the consumer code. Distance sales are 
dealt with in Art. L. 121-18 of the consumer code.  No specific remedies are provided by Fr ench law more than the Directives 
allow. However application of general rules about damages and interpretation would lead to the same remedies mentioned above in the introductory paragraph. =  
HU - Regarding distance contracts, there are no specific remedies providing for 
damages for the non-compliance with the information requirements (see: 
Arts. (3) and (4) of the Govern ment Decree of 17/1999 on distance 
contracts.  - Regarding off-premises contracts, under Art. 3 (1) of the Government 
Decree of 213/2008 on off-premises contract s if the seller do es not fulfil its 
information duties the contra ct shall be null and void. + 
IT - There are no special provisions on damages regarding breach of 
information duties, but the general provisions on damages apply. (Arts. 
1337, 1218 of the Civil Code; see also, Cass. S.U. 26724/07). = 
LU - Distance contracts: In the absen ce of confirmation of the imposed pre-
contractual information duties (latest at  the delivery of the goods or supply 
of services), the withdrawal right is extended by a further 3 months (Art. L. 
222-5 Code Consommation).  
- Off-premises: If the consumer has not  been properly informed in writing 
about his/her withdrawal ri ght, the contract is void  and this avoidance may 
be invoked by the consumer whatever th e time lapsed since delivery of the 
goods or execution of the service (Art. 10 loi concernant le colportage, la 
vente ambulante, l’étalage de marc handises et la sollicitation de 
commandes).   + 
NL - Under current Dutch law there would be liability in damages only in the 
cases where the failure to provide th e information would amount to an 
unfair commercial practice (see Art.  6:193j BW) or to a common tort, 
where fault would have to be established (6:162 BW).  +  
 
 
PL - There is no special provision on dama ges regarding breach of information 
duties, but the general provisions on  damages (Arts. 471 and 415 of the 
Civil Code) would apply.  =  
 
 
PT Same protection regarding the right to damages. =  
 
RO In Romanian consumers protection le gislation, failure to inform the 
consumer prior to the conclusion of a distance agreement, insofar as it 
concerns certain specific matters (e.g. the essential characteristics of the 
product/service/tariff, consumer’s righ t to have the agreement terminated 
for convenience, price) constitutes a mi nor offence and is sanctioned by an 
administrative fine ranging between (approx.) €250 and €1,000.  No right to damages is expressly co nveyed to the consumer under the 
specific legislation for cases where business defaults on its information 
duties. However, where it may be proven that damage has been caused, the consumers may obtain proper repara tion based on the Romanian Civil 
Code provisions relating to tort. If the business fails to inform the cons umer of his/her right to terminate the 
agreement for convenience, or such information is incomplete or mistakenly transmitted, the consumer’s right to terminate the agreement for convenience is extended from 7-10 days to 60-90 days.   
 
 
     = 
 
 
  
UK - No provisions on damages.  + 
 
 148‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits 
for consumers Pre-contractual information requirements are one of the most important instruments 
for consumer protection. However at pres ent, in a number of Member States, 
companies are not liable for damages if a cons umer concludes a contract as a result of 
the incorrect information or in the abse nce of information (e.g. BE, HU, LU, UK). 
Consumers could under certain conditions also  avoid the contract under the 'mistake' 
or 'fraud' provisions (s ee section 2.2 and 2.3). 
Consumers would benefit from receiving more accurate information which would enable them to take well in formed purchasing decisions.  
Costs and benefits for businesses  
Costs for 
businesses Businesses would be liable for information requirements and damages if they fail to 
provide information or provide incorrect in formation. The additional costs related to 
any potential claims for damages would aff ect traders who do not currently fulfill their 
obligations to provide full or  correct pre- contractual in formation to consumers.  
In many Member States, the general provi sions regarding the rights to damages 
already apply (e.g. DE, ES, EE, FI, FR, IT, PL, PT, RO). In th ese countries, the 
Common European Sales Law w ould confirm or further clar ify these obligations but 
not create any additional obligations. 
Benefits for businesses Businesses would benefit from clearer rule s and increased consumer confidence.  
 
Duty to ensure information supplied is correct 
 
Issue:  
 In addition to the general duty to disclose information about goods and services, a Common 
European Sales Law could introduce a duty for the party who supplies information before or at the 
time a contract is made, to take reasonable care to  ensure that the information supplied is correct and 
is not misleading. In case of breach of this duty th e aggrieved party has the remedies for breach of 
information duties (see point 2.1.1 above).  
Country
 Provision comparison  Impact on 
the level of  consumer protection
 
BE  
 - Art. 4 of the Law of 6 April 2010 on Market Practices and Consumer 
Protection (MPCPA431) contains a general info rmation duty of businesses 
vis-à-vis consumers: at the latest at  the moment of convening the contract, 
the business shall give in good faith th e consumer appropriate and useful 
information with regards to the most important characteristics of the 
product and concerning the sale conditi ons, taking into account the need 
for information expressed by the consumer and taking into account the expressed use or the reasonable foreseeable use by the consumer.  = 
 
  
 
 
 
  
 
 
                                                 
431 Law of 6 April 2010 concerning 'market practices' and consumer protection, BS 12 April 2010. 
 
 149- Under general contract law giving in correct or misleading information is 
considered fraud (‘vice du consentement’; 1116 Civil Code). Four conditions must be fulfilled: (1) the us e of artifices; (2) the fraud must be 
committed by the other contracting party;  (3) the party that commits fraud 
must have the intention to deceive or to mislead the other party and finally (4) the fraud must be of an overrid ing importance. Only if the latter 
condition is fulfilled, will fraud (‘princip al fraud’) lead to the avoidance of 
the contract (at the request of the party that is vict im of the fraud). If the 
fraud is not of an overriding importan ce and has not led the other party to 
enter into the contract (b ut could have led him or her only to enter into the 
contract under different  conditions, e.g. a lower price) the fraud is 
'incidental'. In the latter case, only da mages can be claimed on the basis of 
a pre-contractual fault (tort liability: Art. 1382 of the Civil Code). The first 
condition (artifices) will be fulfilled: 1) If the information provided is 
incorrect, incomplete or misleading, (through lies, misleading declarations 
or overstatements); or 2) If there is an omission to provide information; in 
this case fraud will only be accepted if  there is a special duty to inform 
and if the contracting pa rty deliberately conceals this information. This 
special duty to speak can come forth of special legisla tion (e.g. Art. 4 
MPCPA). Thus, in B2C situations it is al so very likely that an omission to 
give information can constitute fraud. - All violations of the MPCPA, can gi ve rise to an action for injunctive 
relief, although in the case of Art. 4 that sanction does not seem to be 
obvious. In addition, violati on in bad faith of that provision is a criminal 
offense (fines: €500-€20000). In many cases of violation of Art. 4 MPCPA the consumer will have the possi bility to rely on the remedies of 
general contract law: pre- contractual liability (cul pa in contrahendo: Art. 
1382-1383 of the Civil Code (damages)) and the sanction of avoidance for 
a defect of consent (mistake or fraud). But no right to enforce an obligation on which the consumer reasonably believed was due to the breach of information duty.  
+ 
Regarding 
remedies 
EE432  Estonian Law of Obligations Ac t (1.07.2002) provides (§ 14. Pre-
contractual negotiations):   Persons who engage  in pre-contractual 
negotiations or other preparations for entering into a contract shall take 
reasonable account of one another’s interests and rights. Information 
exchanged by the persons in the course  of preparation fo r entering into the 
contract shall be accurate. There are no special remedies provided for in 
the Art. itself, but all remedies me ntioned above are av ailable (LOA § 101 
(1)). = 
ES  
 No similar provision exists in Act 1/2007, of 16th November, that passes 
the codified text of the General La w for the Defence of Consumers and 
Users and other complementary laws  (TRLGDCU). Nevertheless, Section 
60 TRLGDCU establishes that, before a contract is made, businesses must give relevant, truthful and sufficient information about the main features 
of the contract to consumers (s ee the same provisi on in Section 97 
TRLGDCU for distance c ontracts). The general remedies in Spanish 
Contract Law (TRLGDCU) would be av ailable and are roughly similar. Slightly + 
FI  
 No such duty in Finnish law. But if  the party supplies wrong information 
and the goods do not correspond to that information, the goods are 
defective (Consumer Protection Act, Chapter 5, Section 13). + 
                                                 
432 ESTONIA: The responses are based on the Law of Obligations Act (LOA, 2002) which contains all relevant mandatory provisions  for B2C and B2B contracts, General 
Part of Civil Code Act (2002) and Consumer Protection Act (1995).   
 
 150IT  
 There is no such provision under Italia n law. The Italian Consumer Code 
however has extended the meaning of unf air commercial practises also to 
misleading negotiation practises (Art. 21-23 Consumer Code).  
 According to Art. 20 of the Consum er Code, the victim of misleading 
information is entitled to claim fo r damages under general rules on torts 
(Art. 2043 of the Civil Code).  = for the duty 
 
 
  
+ for 
remedies 
LU   The business’ obligation not to supp ly false or misleading information 
derives from the implementation of the UCPD (Code de la consommation L.122-2).  Consumer may invoke avoidance of any contract clause(s) which infringe 
L.122-2 – see L. 122-8 (2) of the Consumer Code. = for the duty 
 
 
 + for 
remedies 
PL  
 There is no such special provision and no such remedies under Polish 
Law. + 
PT  
 - In general: Art. 227 para 1 of the Civil Code which provide a general 
duty of good faith in pre-contractual relations, from which the courts 
derive a duty to ensure the informati on is not misleading. Art. 8, para 1, of 
the Consumer Protection Act (CPA – Law 23/96, from the 31st July 1996), 
provides the same rule.   - The remedies in general are damages; in contracts with consumers, there can also be the possibility for the cons umer to withdraw from the contract; 
but no right to enforce an obligati on on which the consumer reasonably 
believed was due to the breach of the information duty. = 
 
  
 
  
 
+ for remedies 
UK  
 England and Wales: The rules governing misrep resentation, including 
Misrepresentation Act 1967, s 2(1) appl y in principle only where there has 
been a misstatement of fact, but th e courts are ready to find that a 
statement that literally may be true  but which is misleading amounts to a 
false statement. Right to avoid if mi srepresentation is serious; right to 
damages unless the person giving incorrect information shows that they had reasonable grounds for belief.  
Scotland: No such duty is directly imposed  in Scottish law. However, 
there will often be remedies via the ru les on error or damages for fraud or 
negligent misrepresentation. Also info rmation may have to be given to 
avoid liability for non-conformity.  Slightly + 
 
 Assessment of impacts
 
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Information requirements are one of the mo st important instruments for consumer 
protection. Proper information about goods and services enable consumers to make an 
informed purchasing decision and facilita te product comparison. Consumers are only 
enabled to do this if the information on goods  and services provided to them is correct 
and not misleading. In the case of a breach  of information obligations, consumers 
would benefit from remedies (see assessment in point 2.1.3) 
Costs and benefits for businesses  
Costs for 
businesses Businesses would have some additional costs to ensure that the information supplied 
is correct and is not misleading. However, th ese costs are considered as minor as the 
 
 151required standard would correspond to nor mal business practice. In many Member 
States, the rules on available remedies in the case of a breach of information 
requirements are less protective (e.g. PT, UK, LU, IT, ES, BE) and businesses might 
incur some additional costs if consumers make use of these remedies (see assessment in point 2.1.3) 
Benefits for businesses  Businesses would benefit from increased consumer confidence and from more clear 
rules concerning their rights and obligations.  
  
Mistake 
 
Issue:
 
 In the existing consumer acquis there are no contra ct law rules on a mistake and its consequences. 
 A Common European Sales Law would introduce a ri ght of each party to avoid a contract for a 
mistake if the party, but for the mistake, would not  have concluded the cont ract and if the other 
party: (1) caused the mistake; or  (2) knew or could be expected to  have known of the mistake and 
caused the contract to be concluded under a mist ake by not pointing out th e relevant information, 
provided that good faith and fair dealing would have required the party aware of the mistake to point 
it out; or (3) caused the c ontract to be concluded in mistake by failing to comply with his pre-
contractual information duty; or  (4) made the same mistake. 
 Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  
consumer protection  
AT § 871 (1) ABGB: Avoidance if the mist ake is fundamental and caused by 
the other party or the other party should have been aware according to circumstances. No particular refe rence to good faith and fair dealing. 
There is also a right of avoidance if the other party made the same 
mistake, but no black letter rule. = 
DE Broader right of avoidance under § 119 BGB (insofar one could say 
better protection in German law). - 
 
EE Same as in the General Part of Civil Code Act § 92.  = 
ES Under Section 1266 of the Civil Code, 'f or error to invalidate consent, it 
must be about the substance of the thing which constituted the subject matter of the contract, or about the conditions thereof which should have 
been the main reason to enter into it. Error concerning the person shall 
only invalidate the contr act where consideration for such person should 
have been the main cause thereof. A simple error in counting shall give 
rise only to its correction'. According to case law regarding Section 1266 of the Civil Code, a mistake is fundamental and therefor e there is a right of avoidance 
(Sections 1300 and ff. of the Civil Code) when: - the mistake affects the conditions th at have been a decisive cause of 
conclusion of the contract so the party, but for the mistake, would not have concluded it or would have done  so only on fundamentally different 
terms. - the mistake has been caused -not n ecessarily by fraud-by the other party = 
 
 152or at least the other pa rty knew of the mistake. 
- the mistake cannot be avoided with ordinary diligence. -the other party made the same mistake. 
FI Section 33 in Contract Law: A tran saction that would otherwise be 
binding shall not be enforceable  if it was entered into under 
circumstances that would make it incompatible with honour and good faith for anyone knowing of thos e circumstances to invoke the 
transaction and the person to whom th e transaction was directed must be 
presumed to have known of the ci rcumstances. Concerning the mistake 
of both parties, there is no such provision.  + 
FR A mistake is regulated by Art. 1110, of  the Civil Code and case law: A 
contract may be void if the mistake is provoked by the other party or if 
that other party makes the same mistake (e.g. Cass. civ. 1re, 17 sept. 2003, Bull. civ. I n° 183). In French Law, a mistake (even on a minor 
subject) always avoids th e contract when this mist ake is due to  fraud of 
the other party (Cass. civ. 3e, 21 févr. 2001, Bull. civ. III, n° 20). Slightly + 
HU Under Art. 210 (1) and (3) of the Civil Code the party acting under a 
misapprehension regarding any essentia l circumstance at the time of the 
conclusion of the contract is entitled to  challenge his contract statement if 
his mistake had been caused or coul d have been recognised by the other 
party. If the parties had the same mistaken assumption at the time of the 
conclusion of the contract, either of  them may challenge the validity of 
the contract.  = 
IT Under Art. 1428 of the Civil Code a right of avoidance exists when the 
mistake is essential and recognisabl e by the other party. Italian case law 
under this Art. admits a right of a voidance also without the required 
condition of recognisability when the same mistake is made by the other 
party. There is no provision about the right to claim for damages against 
the party who caused the mistake. + 
LU Same protection (i.e. Art. 1110 of the Civil Code).  = 
NL Level of protection more or less the same (Art. 6:228 BW). = 
PL Under Art. 84 of the Civil Code, where a declaration of will containing a 
mistake is made to another person, th e mistake must be caused by that 
person (even without fault) or must  be on which was known or should be 
known or could be easy have been noticed by that person. Under Polish 
law there is no provision about th e other’s party making the same 
mistake.  Slightly + 
PT - Avoidance for mistake depends on th e condition that other party has 
known or should have known that the mistake concerned an element that 
was essential to the mistaken party.  - Mutual mistake can lead to right of avoidance if it relates to the basis of 
contract (fundamental presuppos itions of both parties).  
- Simple causation of the mistake gi ves no right of avoidance (Arts. 247, 
251 and 252 of the Civil Code). Howe ver, in B2C contracts if the 
mistake was caused by violation of the duty to inform by the business and it affects adequate usage of the good or service, the consumer can 
rescind the contract within a short de lay of 7 days (Art. 8, para 4 of the 
Consumer Protection Act [CPA]).  Slightly + 
RO In accordance with the provisions of the Romanian Civil Code, the error 
is capable of invalidating the consen t when it bears to the substance of 
the essential things or matters falling within the scope of the agreement or to the person in whose consideration the agreement has been + 
 
 153concluded with. 
UK - Avoidance in the case of a mistak e caused by the other party falls under 
the rubric of misrepresentation or, in Scotland, induced error.  
- Concerning the latter case that the other party knew or could be 
expected to know the mistake and was re quired to point it out, there is no 
provision.  - Mistake by both parties gives the right of avoidance only under very 
restrictive conditions, almost requiri ng that the contract was in fact 
impossible to perform, Scottish la w takes a slightly less restrictive 
approach.  + 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
 Assessment of impacts
 
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Consumers would be able to claim damages fo r mistakes in well defined situations. At 
present, many national laws foresee the possibility for the consumer to avoid a contract only for some of these defined situations (e.g. UK, PT, IT, PL, FR, FI). 
Under a Common European Sales Law, cons umers in these Member States would 
benefit from strengthened rules. In other Member States, where the current rules offer 
the same level of protection, consumers c ould gain some clarity as the rules on 
mistakes would list specific situations in which a party could avoid a contract for a 
mistake (e.g. HU, LU, NL, EE, ES). 
Costs and benefits for businesses  
Costs for 
businesses Some businesses might face some increase of costs as the result of strengthened rules 
concerning the situations in which a c ontract might be avoided and in which 
consumers may potentially claim damages (e.g. UK, PT ,IT, PL, FR, FI). However, the costs are considered to be minor as th ey would mostly impact on the small number 
of traders who act in contrary  to fair trading principles and conclude a contract not 
pointing out a mistake. 
Benefits for businesses Businesses would benefit from more cl ear rules concerni ng their rights and 
obligations. 
 Fraud
 
 Issue: 
 
 In the existing consumer acquis there is no cont ract law rule on fraud and its consequences. 
A Common European Sales Law could introduce a right of each party to avoid a contract for fraud. 
Fraud can take place orally, by conduct or by fraudulent non-disclosure of information which good faith, fair dealing or any pre-co ntractual information duty require the other party to be informed 
about.      
 
 154 
Legal comparison:  
 
Country Provision comparison  Impact on 
the level of  consumer protection  
AT Not explicitly said in the rule on fraud (§ 870 ABGB). But requirement 
included in § 871. Also: § 928 handles liability for fraudulent silence on 
a defect. = 
BE The right of avoidance for fraud requires that the fraud is committed by 
the other party.  Keeping silent about certain information constitutes fraud where the party not disclosing the information has an obligation to provide information. That obligation may result from a specific legal provision (e.g. Art. 4 Market Practice s Act: the general duty / obligation 
of information) or the special respon sibility or competence of that party, 
e.g. a specialised business and a co nsumer who could reasonably not 
obtain the information but from the business. = 
DE German law provides a similar prot ection: under case law on § 123 BGB.  = 
EE Estonian law provides a similar protec tion: under the General Part of the 
Civil Code, Act § 94 (2). = 
ES Spanish law offers a similar protec tion: Under Section 1269 of the Civil 
Code, 'Fraudulent misrepresentation exists where, with insidious words or machinations on the part of one of  the contracting parties, the other 
party is induced to ente r into a contract which he would not have done 
without them'. Although Section 1269 of  the Civil Code does not foresee 
the right to avoidance by fraudulent non-disclosure of any information 
which good faith or any pre-contractua l information duty required that 
party to disclose, it is inferred fr om case law regarding this Section. = 
FR French jurisprudence offers a sim ilar protection: fraud because of non 
disclosure of information (Cass. ci v. 3e, 15 janv. 1971, Bull. civ. III, n° 
38), by application of Art. 1116 of th e Civil Code dealing with fraud.  = 
HU Hungarian law provides the same pr otection based on the interpretation 
of Art. 4 (1) and 210 (1 ) of the Civil Code. = 
IT According to Italian case law unde r Art. 1439 of the Civil Code, the 
notion of fraud includes fraudulent n on-disclosure of any information 
and false representation. = 
LU Luxembourgish law provides the same protection: under Art. 1116 of the Civil Code.  = 
NL The level of consumer protection und er fraud in Dutch Law (Art. 3:44 
BW) is more or less the same. Ho wever, in practice, it is almost 
impossible to prove fraud under Dutch law where the fraud is said to be constituted by keeping silent in brea ch of good faith and fair dealing, as 
the Supreme Court has determined that the consumer (as the trader’s 
counterpart) bears the burden of proof  that the trader has concealed the 
relevant fact  - i.e. acted on purpos e – and that where the trader has 
‘merely forgotten’ to mention the rele vant facts does not give ground to a 
claim for fraud (see HR 2 May 1969,  NJ 1969, 344 (Beukinga/Van der Linden). + 
PL There is no general duty of disclosu re under a regulation of fraud (Art. 
86 of the Civil Code) – Under the ci rcumstances such a duty could arise 
from the good faith and fair dealing rule.  + 
 
 155PT Portuguese law offers the same prot ection according to Arts. 227 para 1 
and 253, para 2, of the Civil Code.  = 
RO Under the Romanian Civil Code, the fraud constitutes a cause for 
invalidating an agreement if the fraudulent means used by a party leaves no room for interpretation that the other party would have not entered 
into the agreement had he been aw are of them. However, there is no 
protection for fraud committed in the pre-contractual phase except for remedies based on the Romanian Civil Code provisions relating to tort. = 
UK No such rule (unless the parties are in a relationship of trust and 
confidence).  + 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers At present, in most Member States there ar e general rules in case law that ensure a 
similar level of consumer protection (e .g. AT, BE, DE, ES, FR, HU, IT, PT, RO) 
Nevertheless, in these countries consumers would benefit from having more clear and 
specific rules. Consumer conf idence would increase, as it would be easier to assert 
the consumers right in case of a fraud.  
Costs and benefits for businesses  
Costs for 
businesses No additional costs for businesses as in most Member States the current rules provide 
for avoidance of a contract for fraud. Any potential costs would only arise for rogue 
businesses which use fraudulent practices, possibly in countrie s where the present 
rules are not so clear (e.g. UK, PL). 
Benefits for businesses Legitimate businesses would gain a compe titive advantage as clear rules against 
fraud would eliminate rogue traders using fraudulent practices. In the case of 
concluding a contract based on the cons umer's fraudulent non-disclosure of 
information, it would be easier for bu sinesses to avoid such a contract. 
 
Unfair exploitation  
 
Issue:  
In the existing consumer acquis, there is no co ntract law rule regard ing unfair exploitation. 
A Common European Sales Law could introduce a right for a party to avoid a cont ract if, at the time 
of the conclusion of the contract:  - the party was dependant on or had a relationship of trust with the other party, was in economic 
distress or had urgent needs, was improvident, ignorant, in experienced or lacki ng in bargaining skill; 
and - the other party knew or could be expected to have known this and took an  excessive benefit or 
unfair advantage  Legal comparison:
 
 
Country Provision comparison Impact on 
the level of consumer protection 
AT Same provisions: covered by § 879 (2) 4 ABGB. Invalidity of = 
 
 156contracts contra bonos mores . 
BE There is no general principle or rule in Belgian law that a contract is 
avoidable in case of unfair exploita tion. The avoidance of unfair terms 
in consumer contracts is seen as a lex specialis. There is also a special 
provision in the Civil Code on loans for interest that gives the judge 
the power to reduce the borrower’s obligation to reimburse the loan 
and/or to pay interest s where the lender has exploited the weakness, 
the passion or the ignorance of th e borrower by charging an interest 
that is manifestly excessive. (Art. 1907 of the Civil Code). + 
DE German law contains similar provisions, under § 138 BGB and case 
law; this case is constructed not as a right of avoidance, but as a nullity 
of the contract or juridical act. = 
EE Estonian law contains similar provisions  in the General Part of its Civil 
Code Act § 96. = 
ES Under Spanish law, there is no ge neral possibility of avoiding the 
contract for unfair advantage except where: (i) there is duress; (ii) 
there is some quantitative disadvantage in very specific cases involving minors and similarly situat ed persons, and no other remedy 
is available; (iii) in certain Span ish regions -Cataluña, Navarra- where 
the traditional rescission by seller for laesio enormis  is applicable.  + 
FI Finnish law provides a similar protec tion: Section 31 in the Contracts 
Act provides that if anyone, taking advantage of another’s distress, 
lack of understanding, impruden ce or position of dependence on 
him/her, has acquired or exacted  a benefit which is obviously 
disproportionate to what he/she ha s given or promised or for which 
there is to be no consideration, the transaction thus effected shall not 
bind the party so abused. = 
FR Art. L. 122-8 of the Consumer Code prohibits ' abus de faiblesse ' 
(weakness abuse) through criminal  prosecution. As a civil sanction 
mistake could make the contract void.  Case law has also developed the 
idea of ' contrainte économique ' (economic constraint) on the basis of 
threat (Art. 1112, of the Civil Code ) which is a cause of avoidance 
(Cass. civ. 1re, 30 mai 2000, Bull. civ. I, n° 169. - 3 avr. 2002, Bull. civ. I, n° 108). = 
HU Under Art. 202 of the Civil Code if  a contracting party has stipulated 
an unreasonably disproportionate ad vantage at the conclusion of the 
contract by exploiting the other party' s situation, the contract shall be 
null and void.   = 
IT Under Art. 1448 of the Civil Code the party is entit led to avoid the 
contract when there are sp ecific conditions such as:  
a) 'ultra dimidium' disproportion am ong the reciprocal  obligations;  
b) the party had urgent needs;  c) the  other party exploited the first party’s situation by taking an 
excessive benefit or an unfair advantage. = 
LU Luxembourgish law provides a si milar protection: Art. 1118 Code 
Civil. = 
NL Dutch law offers a similar protection: under 'abuse of circumstances' in 
Art. 3:44 BW. = 
PL Polish law offers a similar protectio n: under Art. 388 of the Civil Code 
in a case of unfair expl oitation, a party may demand a reduction of its 
own performance or an increase in the performance due it and in the 
event that one or the other would be excessively difficult, it may 
demand that the contract be declared invalid.  = 
 
 157PT Portuguese law offers a similar prot ection: under Art. 282 of the Civil 
Code, if the other party has drawn ex cessive or unjustified benefits of 
the exploitation. This Art. also appl ies to other conditions, namely the 
exploitation of dependency, weakness of character or mental state of 
the other party.  = 
RO Romanian Civil Code provides the possibility to invalidate the 
agreement on grounds of lesion for th e minors and other incapacitated 
persons. Under Romanian consumer prot ection legislation, the unfair 
exploitation may be inferred from any clause which was not negotiated 
with the consumer and which created in the detriment of the consumer 
(between the rights granted and the obliga tions undertaken) and 
contrary to the good faith princi ple, a significant imbalance.     = 
UK English law provides a similar protec tion if either th e parties have a 
relationship of trust and confidence or one of them is a 'poor and 
ignorant person', who acts without advice. In Scotland there can be 
avoidance for; facility and circumvention;. This is not limited to cases of necessity or ignorance but requ ires some mental weakness, some 
lesion and some element of deceit or dishonesty on the part of the 
exploiting person. Slightly + 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Consumers would benefit from having clear protection against unfai r exploitation e.g. 
they would be able to avoid a contract if they were in ec onomic distress, or had urgent 
needs, were improvident, ignorant, inexpe rienced of lacking of  bargaining skill and 
the other party knew this and took an exce ssive benefit from it. Consumers would 
particularly benefit in the small minority of  countries where at present the rules are 
less specific (e.g.  BE, ES, UK). 
Costs and benefits for businesses  
Costs for 
businesses No additional costs for businesses as in most Member States (e.g. AT, DE, FI, IT, RO, 
PL, PT, NL, LU, FR, HU, EE) the current rules provide for the similar level of 
consumer protection against unfair exploita tion. Any increase in costs would affect 
only rogue traders that current ly benefit from less strict rules on unfair exploitation in 
a few Member States (e.g. UK, ES, BE) 
Benefits for businesses Businesses would benefit from relying on one  set of clear rules concerning unfair 
exploitation.  
 
 
Interpretation in favour of consumers  
 
Issue:  
 According to the existing consumer acquis, where th ere is doubt about the me aning of a contractual 
term which has not been individu ally negotiated the inte rpretation most favourable to the consumer 
shall prevail (Art. 5 of Council Directive 93/13/ EEC of 5 April 1993 on unfair terms in consumer 
contracts). A  Common European Sales Law could possibly exte nd this interpretation rule to all contractual 
terms whether they are individually  negotiated or not, unless the term  was supplied by the consumer.  
 
 158 
 Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  consumer protection  
AT General 'unclearness rule': An unclear statement is interpreted to the detriment of the party w ho used it (§ 915 ABGB). Slightly + 
BE In case of doubt about the meaning of  a contract term in a contract 
between a business and a consumer, whether supplied by the consumer 
or not (the law does not make a distinc tion here), the interpretation that is 
most favourable to the consumer prev ails (Art. 40, § 2, Market Practices 
Act).  = 
DE Interpretation rule in favour of consumers (§ 305c (2) BGB) does not 
apply for individually negotiated terms. + 
EE The Estonian law does not contain su ch provision. This could be taken 
into account under the ru les of objective interp retation but not as an 
obligation (LOA § 29 (4)). Special ru le on interpretation of standard 
terms contracts in favour of the other party (LOA § 39).  + 
ES In case of doubt about the meaning of standard terms, interpretation most 
favourable to consumer prevails (Section 80.2 TRLGDCU). + 
FI According to the Consumer Protection Act Chapter 4 Section 3 and 4: If 
a term in a contract referred to in this Act has been drafted in advance 
without the consumer having been able  to influence its contents and if 
uncertainty arises as to the significance of the term, the term shall be interpreted in favour of the consumer. If a dispute arises as to whether a 
term referred to in sections 2 and 3 has been drafted in advance, the 
burden of proof of this shall lay on the business. + 
FR Art. L. 133-2 of Consumer Code provi des this solution. The general rules 
are on Art. 1162 of Civil Code; accord ing to case law the contract is 
interpreted against the pa rty who has drafted it (Cass. Civ. 1re, 22 oct. 
1974, Bull. civ. I, n° 271). = 
HU Same solution according to Art. 207 (2) of the Civil Code: in general, in 
the event of a dispute, the parties shall,  in light of the presumed intent of 
the person issuing the statement and the circumstances of the case, construe statements in accordance wi th the general accepted meaning of 
the words. However, in consumer c ontracts the national law creates an 
exception: according to the referred Art.  of the Civil Code, if the contents 
of a consumer contract cannot be cl early established, the interpretation 
that is more favourable to the c onsumer shall be authoritative.  = 
IT Italian law provides the same protect ion (Art. 35 co. 2 Consumer Code; 
Art. 1370 of the Civil Code). = 
LU Luxembourgish law offers the same  protection (Art. L.211-2 (2) Code 
Consommation)   = 
MT Art. 1009 of the Civil Code: In case of doubt, the agreement shall be 
interpreted against the obligee and in favour of the obligor. 
In addition, Art. 47(2) of the Consumer  Affairs Act provides that 'where 
any term is ambivalent or any doubt arises about the meaning of a term, the interpretation most favourable to  the consumer shall prevail'.  = 
 
 159NL A general rule to this extent does not exist in Dutch law; contra 
proferentem  may at most be one of the f actors to be taken into account. 
The contra proferentem  rule applies as a rule only with regard to not-
individually negotiated terms in consum er contracts, see Art. 6:238(2) of 
the Dutch Civil Code, introduced in order to implement Art. 5 of the 
Unfair Terms Directive. + 
PL Under Art. 385 §2 of the Civil Code interpretation contra proferentem  is 
recognised for standard terms in c onsumer contracts (without limitation 
of terms supplied by consumer).  + 
PT Portuguese law does not c ontain such provision.  + 
RO Under the Romanian legislation, in case of doubt about the meaning of 
standard terms, the interpretation wh ich is most favourable to consumers 
prevails. + 
UK No such a rule. However, courts do seem to interpret contracts in favour of the consumer. In England, Wales and Scotland contra proferentem  
rule might lead to this result, but not confined to consumers. + 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts:  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Consumers would benefit in case there is doubt about the meaning of a contractual 
term, negotiated or not, as the interpretation most favourab le to the consumer shall 
prevail in this case. In many Member States , the interpretation in favour of consumers 
apply only to standard term s and individually negotiated terms are excluded (e.g. DE, 
RO, PL, NL, FI, ES). As businesses would tr y to avoid any potential doubts as to the 
interpretation of the contractual terms, consumers might also benefit from having 
more clear contracts. 
Costs and benefits for businesses  
Costs for 
businesses There could be some additional costs fo r companies in case of doubts about the 
meaning of a contractual te rm which has not been individually negotiated as the 
interpretation most favourable to the consumer  is also likely to be more costly for 
businesses. These additional co sts are expected to be rather minor as they would only 
occur in case of doubts as to the interpretation and businesse s would be interested in 
avoiding such situations by making sure th at the contractual terms do not raise any 
doubts. For companies in a number of Memb er States (e.g. IT, LU, MT, HU) there 
would be no change as the current rules prov ide for similar levels of protection as a 
Common European Sales Law. 
Benefits for businesses Businesses might gain indirectly from havi ng more clear terms in contracts which do 
not leave scope for di vergent interpretation. 
 
 
Terms unfair as not sufficiently dr awn to the consumer's attention  
 
Issue:  
 A Common European Sales Law c ould protect against standard terms of which the party not 
supplying the terms could not be aware: contract  terms supplied by one party and not individually 
negotiated may be invoked against the other party only if the other party was aw are of them, or if the 
party supplying them took reasonable steps to draw the other party's attention to them, before or 
when the contract was concluded.  
 
 160Moreover, a term could be considered as not suffi ciently brought to the co nsumer’s attention by the 
mere reference to it in a contract document,  even if the consumer signs the document. 
 
Country Provision comparison  Impact on 
the level of  consumer protection  
BE  
 Under Belgian law, the control of unf air contract terms in B2C relations 
extends to terms that have been individually negotiated. Although there 
is no such provision in Belgian law, w ith regard to B2C contracts, Art. 
74(26°) MPCPA states that the following term is in all circumstances unlawful: a term which determines irrefutably the consent of the consumer with stipulations of whic h the consumer actually could not be 
aware of is sanctioned with nulli ty according to Art. 75, §1 MPCPA 
(Black listed). It should be noted that under gene ral contract law not individually 
negotiated terms will not be deemed to be accepted (and will therefore not constitute a part of the contract ) unless the other party has – at the 
latest at the moment when the cont ract was concluded – knowledge of 
those terms or could have obtained knowledge of those terms and has 
accepted those terms. - Regarding the mere reference to th e term in a contract document: there 
is no express provision in Belgian law to that effect. Case law is not 
uniform in relation to the acceptation of standard-terms. However, generally the courts rule that the mere  reference to their existence or that 
the standard terms can be consulted somewhere will not suffice. It is generally held that the business has a duty to make standard contract 
terms available to the consumer. Gene ral clauses are preferably written 
on the front side of the contract and if they are provided for on the back, 
there must be a clear reference to them on the front side of the document.   = 
EE 
 - Estonian law provides this principle as part of the fairness control: § 
37-Standard terms as part of contract : (1) Standard terms are part of a 
contract if the party supp lying the standard terms clearly refers to them 
as part of the contract before enteri ng into the contract or while entering 
into the contract and th e other party has the opportunity to examine their 
contents. Standard terms are also part  of a contract if their existence 
could be presumed from the manner in which the contract was entered 
into and the other party was give n the opportunity to examine their 
contents. (2) The parties may (…) agr ee in advance that standard terms 
apply to certain types of contracts.  - Regarding the mere reference to the term in a contract document: no such rule exists in Estonian law.   = 
 
 
  
 
  
 
 + 
ES  
 - A provision in Section 5 of the Standard Form Terms Act (Ley 7/1998, 
de 13 de abril, LCG) determines that a standard term will not be incorporated to the contract if the su pplier of the term did not effectively 
ensure that the other party knew of  the existence and content of the 
term. In B2C, according to Section 80 TRLGDCU, terms supplied by one party and not individually nego tiated must fulfil the following 
conditions: (i) have precise, clear an d simple writing; (ii) be accessible 
and legible in order to let consumer s know the existence and content of 
the contract before its celebration.  = 
 
 
  
 
  
 Slightly +  
 
 161- Regarding the mere reference to th e term in a contract document: No 
similar provision exists in TRLGDC U, but it is clear from the above 
rules just mentioned. A clearer rule  such as the one envisaged would 
provide a slightly higher protection. 
IT  
 - There is no such provision under Ital ian law. Nevertheless, Art. 34 co. 
5 Consumer Code provides the genera l rule by which the business bears 
the burden of proving that it has pr ovided all the information required. 
Moreover, the general clause stated by Art. 35 co.1 Consumer Code provides a duty of plain and intell igible language in the drafting of 
written terms. - Regarding the mere reference to th e term in a contract document: there 
is no such provision under Italian law. However, Art. 34 co. 4 – 5 
Consumer Code on the duty of plai n and intelligible language can be 
interpreted as to reach a similar result. According to Italian case law under the above mentioned Art. (Cass. 8.6.2007, n. 13377; Cass.26.9.2008, n. 24262), terms are not sufficiently brought to the consumer’s attention by a mere re ference to them in a contract 
document, even if the consumer signs the document. + 
  
=  
HU 
 - No such specific provision in th e national law. However, Art. 205/B 
(1) of the Civil Code provides that  standard terms become part of a 
contract only if they have previously  been made available to the other 
party for perusal and if the other pa rty has accepted the terms explicitly 
or through conduct that implies acceptance. Finally, according to Art. 209 (4) of the Civil Code, a standard contract condition or a contractual 
term of a consumer contract which has not been individually negotiated 
shall be regarded as unfair if they are not drafted in plain, intelligible language.  - Regarding the mere reference to the term in a contract document: no such provision in the national law.  = 
  
 
+ 
LU   - L.211-1 Consumer Code refers to compliance with Art. 1135-1 Civil 
Code (' Les conditions générales d’un  contrat préétablies par l’une des 
parties ne s’imposent à l’autre partie que si celle-ci a été en mesure de 
les connaître lors de la signature du contrat et si elle  doit, selon les 
circonstances, être considérée comme les ayant acceptées').  Such terms cannot be enforced (inopposabilité)  - Regarding the mere reference to the term in a contract document: the Consumer Code blacklists the followi ng clause which pursues a similar 
objective : 'Les clauses qui constatent  de manière irréfragable l’adhésion 
du consommateur à des clauses don t il n’a pas eu, effectivement, 
l’occasion de prendre connaissance avant la conclusion du contrat' – 
L.211-3 (23)).  = 
PL  
 - There is a provision in the grey list of unfair cont ract terms under 
which a term is presumed to be unfai r if the consumer was not aware of 
them (Art. 3853 (4) of the Civil Code). 
- Regarding the mere reference to th e term in a contract document: there 
is no such special provision.  
+ 
PT  - Terms are excluded from a contract  if the party supplying the terms 
did not fulfil the duty of communicati on or the duties of information to 
the other party about the terms– Ar ts. 5, 6 and 8 of the Decree-Law 
446/85, from the 25th of October 1986. When the other party was not 
aware of the terms, they are also automatically excluded if there was a lack of communication or information or if, by their context, title or 
presentation, the said terms w ould not be noticed by a normal = 
 
  
 
 
 162contracting party in the position of th e real one (Art. 8 of the Decree-
Law 446/85).  - There is no specific provision on the mere reference to the terms in a contract document. However, term s included after the signature, or 
terms included and referred to in a signed document are not included in 
the contract if the duties of comm unication and information were not 
fulfilled.  
UK  
 England and Wales: Where the rele vant term is not in a signed 
document but, for example  on a ticket , then they will be incorporated 
into the contract only if the part y supplying them gives reasonable 
notice of the terms to the other party. Where a term is unusual or onerous, the degree of notice required is greater and it may be necessary 
to draw attention to the term specifically. Where the term is in a document that has been signed by the other party, it will form part of the contract; but the legislation controlling unfair terms (Unfair Contract terms Act 1977; Unfair Terms in Consumer 
Contracts Regulations 1999) are fre quently used (when applicable) to 
deal with clauses that are surprising to  such an extent that they can be 
seen as unfair.  Scotland: No such express general ru le. However, a contract term may 
be regarded as unfair under the Un fair Terms in Consumer Contracts 
Regulations 1999 if it has the eff ect of irrevocably binding the 
consumer to terms with which he or she had no real opportunity of 
becoming acquainted before the conclusion of the contract.  Slightly + 
 
 
  
 
  
 
  
+ 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Consumers would be more clearly protecte d against terms supplied by businesses of 
which they were not aware. Such term s could be invoked only if a trader took 
reasonable steps to draw the consumer's atten tion to them, before or when the contract 
was concluded. A term could be consider ed as not sufficiently brought to the 
consumer’s attention by the mere reference to  it in a contract document, even if the 
consumer signs the document. At present, in  a number of Member States the rules are 
less strict i.e. the mere refe rence to the term in a contract document is sufficient (e.g. 
HU, EE, PL, UK). Consumers in these countri es would gain more confidence as they 
would need to be made aware of all th e terms supplied by businesses or otherwise 
regard this term as unfair. As a result, they would be able to make well informed 
purchasing decisions. 
Costs and benefits for businesses  
Costs for 
businesses Businesses supplying the terms to a contract would be obliged to take reasonable steps 
to draw consumers' attenti on to them, before or when the contract is concluded. 
Business from countries where the similar ru les are in place at present (e.g. BE, PT, 
LU, ES) would not bear any a dditional costs. Any costs w ould only affect traders that 
insert terms in the contract and do not inform the other party about them in a 
sufficient way at present. However, these costs are considered as minor as the reasonable steps to inform the other party about inserted terms would in practice be 
relatively easy to implement. 
Benefits for Businesses would benefit from the increased  consumer confidence. They could also 
 
 163businesses benefit from avoiding potential disputes with consumers if they bring all the 
contractual terms to consumers' attention.  
Merger clauses  
 
Issue:   
In the existing consumer acquis there are no contract law rules on merger clauses. 
 A Common European Sales Law would introduce a pr ovision on merger clauses as follows: where a 
contract document contains a 'merger clause' stati ng that the document embodies  all the terms of the 
contract then any prior statemen ts, undertakings or agreements  which are not embodied in the 
document, do not form part of the contract. Ho wever, a consumer would not be bound by such a 
merger clause.  Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  consumer protection  
AT § 10(3) KschG stipulates that the legal validity of formless declarations 
of the company cannot be excluded by contract to the detriment of the consumer. = 
BE No such provision in Belgian law. + 
DE German law offers a slightly lower protection: it follows case law on the 
general clause for unfairness controls  of standard contracts, § 307 BGB. + 
ES No specific provision on merger clau ses for consumer contracts.  + 
FI There is no special provision in Finnis h law. If such clauses were used, 
they would probably be cons idered as unreasonable.  + 
FR No provision and no case law. + 
HU There is no specific provision on th is issue in national law.  + 
IT Italian law offers the same protectio n: according to case law under Art. 
34 co. 4 of the Consumer Code, merg er clauses do not demonstrate the 
existence of an individual ne gotiation. (Cass. 13890/05).  = 
LU Luxembourgish law offers the same pr otection, even if not  explicitly laid 
down. = 
NL A comparable rule does not exist in  Dutch law. However, a merger 
clause which is not individually negotia ted is presumed to be unfair if the 
clause would fundamentally limit the c ontent of the trader’s obligations 
that the consumer could otherwise re asonably have expected (see Art. 
6:237(b) of the Dutch Civil Code). In  such a case, the trader bears the 
burden to prove that the cl ause is nevertheless fair. + 
PL Under Polish law there is no express regulation on a merger clause. + 
PT No such general provision under Portuguese law.  + 
RO There are no specific provisions on merger clauses in consumer 
contracts.  + 
UK No such provision under English law. + 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
 
 164Benefits for 
consumers Consumers would benefit as in most Member States the use of merger clauses is not 
prohibited as such (e.g. BE, ES, UK, PL, RO, PT, FR, HU). In several Member States, 
this issue is dealt within th e context of the Unfair Contract Terms legislation (e.g. DE, 
NL). Consumers would gain more confidence as they would be able to rely on the 
clear invalidity of merger clauses attempti ng to reduce the obligation of the business 
following from prior statements, undertakings  or agreements which are not embodied 
in the contract document.  
Costs and benefits for businesses  
Costs for 
businesses Businesses would need to adapt their contr acts to eliminate any merger clauses. Any 
potential costs are likely to be one-off and affect only companies that are at present 
using such merger clauses. Business would also have to be aware that some prior 
statements, undertakings or agreements not  embodied in the contract document may 
still bind them in their relationship with the consumer. However, the impact of this is 
likely to be minor as pre-contractual in formation required by the CRD and taken over 
by the Common European Sales Law for distance and off-premises contracts forms in any case an integral pa rt of the contract. 
Benefits for 
businesses Businesses might gain indirectly from incr eased purchases by consumers who are able 
to rely on prior statements by businesses even  if they are not explicitly mentioned in 
the contract.  
  Method of payment 
 
Issue:
 
 A Common European Sales Law coul d introduce a rule that, unless in dications about the means of 
payment are made by the seller, ,the buyer may use a ny form of payment. Consequently, a seller is 
obliged to accept all types of payment (e.g. cash, bank transfer or all types of debit or credit cards) 
when he or she did not make any previous indica tions about the method of payment, provided that 
the method of payment is one used in the ordinary course of business at the place of payment (i.e. the business' place of business) and is appr opriate to the nature of the transaction. 
 Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  consumer protection 
DE There is no specific provision on method of payment. According to jurisprudence, payment by card or bank transfer must be (at least 
implicitly) agreed by the parties - (Münchener Kommentar BGB, § 362 Rn. 20 f., 364 Rn. 1.) + 
EE LOA § 91 - Manner of performance of monetary obligations (1) 
provides: 'A monetary obligation ma y be performed in cash. A monetary 
obligation may also be performed in so me other form if so agreed by the 
parties or if such form is used in the ordinary course of business at the 
place of payment.'  = 
ES Art. 1170 of the Spanish Civil Code pr ovides that payment must be made 
in the agreed way and, if not possible,  in money that is legal tender in 
Spain. No similar provisi on exists in TRLGDCU.  + 
FI In Finland there is no longer in forc e a rule which always obliges to 
accept payment in cash. If the consumer is offered the opportunity to pay with any available bank account debit car d, this is usually considered as a + 
 
 165sufficient alternative to payment in cash. Cash payment is any case the 
basic method of payment. If the se ller does not accept cash or a debit 
card, the consumer must be informed  separately already in the early 
marketing stage, so that he can take such information into account in his 
purchasing decisions. If the credit payment is the only payment method accepted by the seller, the consumer must be informed in advance.  
FR There is no specific provision on met hod of payment in French consumer 
law.  + 
HU There are no such rules in the Civi l Code (Ptk) at pr esent. Currently 
businesses can and effectively do limit th e form of payment (the type of 
cards) irrespective of the actual possib ility of usage, for both face-to-face 
and distance sales. In the case of e- commerce it is quite frequent that the 
only possible form of payment is cas h payment at the time of delivery, 
although contracting would be easier w ith the use of different cards. + 
IT There is no specific provision on me thod of payment in Italian law. 
According to Art. 52 co. 2 lett. e) Consumer Code on distance sales and 
Art. 67-sexies co. 1 lett. f) Consumer  Code on distance financial services, 
payment may be made by the met hods established by the business and 
previously communicated to consum ers. Specific provisions regarding 
payments with credit card for distan ce contracts can be found in Art. 56 
co. 1 of the Consumer Code.  + 
NL The Dutch Civil Code decrees that payment is made in current money 
(Art. 6:112 of the Civil Code). Unle ss otherwise decreed by the creditor, 
payment can also take place via transf er to his bank account (Art. 6:114).  + 
PL Polish law obliges the trader to pu t – in the place of business – clear 
information which methods of elect ronic payment are accepted (Art. 11 
of Ustawa z dn. 12 wrze śnia 2002 r. o elektronicznych instrumentach 
płatniczych). It does not, however, oblig e the seller to a ccept all types of 
payment cards in case he or she failed to determine the method of payment. + 
PT  There is no special provision on method of payment.  + 
UK England and Wales: No specific rule. The court is likely to reach this 
result as a matter of interp retation of the contract.  
Scotland: No such rule but same result is likely to be reached in practice.  Slightly + 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers  
Businesses would be able to indicate th e most convenient methods of payment and 
avoid any potential compliance costs stemmi ng from the obligation to accept more 
costly methods of payment e.g. credit cards. Therefore, there are likely to be no costs 
for consumers. 
Benefits for consumers If the means of payment are not indicated by a trader a consumer would benefit from 
the possibility of choosing the payment method which suits him best among these 
which are used in the ordinary course of bus iness and are appropriate  to the nature of 
the transaction.  Businesses wishing to receive the paymen ts by certain methods would need to 
indicate them to consumers. A consumer  could therefore not be surprised by a 
unilateral restriction on th e methods of payment imposed by the business, which 
would currently be possible under the nationa l law of most of Member States. This 
would be the case for example in FR, DE, HU,  IT, ES, PT, PL, NL, IT where there are 
no specific provisions on methods of paymen t in the national contract laws. Under 
 
 166these laws traders can force consumers wit hout prior information to make a payment 
by a particular method which may be more  costly and less convenient for them. 
Costs and benefits for businesses  
Costs for 
businesses Businesses would avoid any a dditional compliance costs as they would have the 
possibility to indicate the accepted methods of payment to consumers. Any potential 
costs would affect only trader s who do not provide this info rmation. In this case, they 
would be obliged to accept al l types of payments which are used in the ordinary 
course of business and are appropriate to  the nature of the transactions. As a 
consequence their margin could be redu ced if consumers c hoose e.g. credit card 
payments. However, in practice most of th e traders are very likely to indicate the 
accepted methods of payment thereby avoiding any additional compliance costs.  
Benefits for businesses Retailers would profit from an increase in  both the buyer’s c onfidence and easiness 
when performing a purchase. 
 Place of delivery  
 
Issue:
 
 The current acquis does not contai n a provision regarding the place  of delivery of goods in a 
consumer contract of sales. A Common European Sales Law could provide a specific default rule 
stating that, where the place of delivery cannot be ot herwise determined, the place of delivery is in 
distance and off-premises contracts, or in contra cts where the seller has undertaken to arrange 
carriage to the buyer, the consumer's place of reside nce at the time of the c onclusion of the contract. 
 
Country Provision comparison  Impact on the 
level of  consumer protection  
BE  
 There is no specific provision conc erning the place of delivery in 
consumer sales and distance and o ff-premises contracts. However, 
general sales law (Art. 1609 of the Ci vil Code) determines that in the 
absence of an agreement, the place of delivery is the place where the 
good was at the time of the sale. Re garding the hypothesis 'where the 
seller has undertaken to  arrange the carriage to the buyer', it could be 
considered as being an agreement on the place of delivery, but the text is more protective in that it clearly points out th at the good must 
be delivered at the consumer's pl ace of residence at the time of the 
conclusion of the contract. + 
EE There is no such special provi sion under Estonian law.  + 
ES  No similar provision exists in TRLGDCU.  + 
HU 
 According to Art. 278 of the Civil Code the place of performance is 
the domicile or registered place of business of the obligor, unless: a) 
it is otherwise provided by legal re gulation, b) the object or purpose 
of the service suggests otherwise, c)  the object of the service is at a 
different location, which is known to the parties. If the object of a 
service is to be sent to a place ot her than the domicile or registered 
place of business of the obligor, and if such a place or an 
intermediate location has not been stipulated as the place of delivery, 
performance shall be deemed accomplished when the obligor delivers the object of service to the beneficiar y, a shipping agent, or a carrier. + 
 
 167In the case of consumer contract s, performance shall be deemed 
effected upon handing over to the co nsumer. If the obligor delivers 
the thing by its own means of transportation or through its 
representative, the place  of performance shall be the domicile or 
registered place of business of the latter. For distance and off-premises contracts: the same rule applies. 
IT  There is no such provision under Italian law.  + 
LU  No such rule in the Consumer Code.  + 
PL  There is no such special pr ovision under Polish law.  + 
PT  There is no such provision in Port uguese law. According to the 
general rules of the Civil Code, the place of delivery will normally be 
the place where the good wa s at the time of the conclusion of contract 
(Art. 773, para 1).  + 
UK 
 England and Wales: No clear rule but a court might well reach this 
result as a matter of interp retation of the contract.  
Scotland: No such express rule. + 
 Assessment of impacts
 
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers as a place of consum er's residence is in most cases the most 
convenient place of delivery. 
Benefits for consumers Consumers would benefit from having the goods  delivered to their place of residence 
in distance and off-premises contracts or in  contracts where the seller has undertaken 
to arrange carriage to the buyer (if th e place of delivery cannot be otherwise 
determined). The delivery of goods to a consumer's place of residence would be very 
convenient for consumers. Consumers w ould not have to bear any costs of 
transportation of the goods from the pl ace where the good was at the time of the 
conclusion of contract which is a default pl ace of delivery at present in some Member 
States (e.g. PT, BE). 
Costs and benefits for businesses  
Costs for 
businesses Businesses in distance and off-premises contra cts or in contracts where the seller has 
undertaken to arrange carriag e to the buyer would have a dditional costs for delivering 
the goods to the consumer's place of residence at the time of the conclusion of the contract. These additional costs would de pend on the delivery distance and might 
affect companies in most Member States wh ere at present the rules are less protective 
for consumers (e.g.UK, PT, PL, LU, IT, HU, EE, ES). These costs would however occur only where the place of delivery cannot be otherwise determined e.g. was not agreed with a consumer. 
Benefits for businesses In many Member States ther e are no specific rules concer ning the default place of 
delivery (e.g. PL, LU, IT, EE, ES). In thes e Member States, businesses could benefit 
from having clear rules on default place of de livery where the place of delivery cannot 
be otherwise determined. 
 
Right to damages for non-performance  
 
Issue:  
 The current acquis does not provide  for rules on damages for non-perf ormance, but defers the matter 
to national laws.  
 
 168A  Common European Sales Law could provide a right to damages fo r non-performance of 
contractual obligations, unless th e non-performance is excused.  
  Legal comparison:
 
 
Country  Provision comparison  Impact on 
the level of  consumer protection
 
BE There is a right to damages under ge neral law of obligations (See Art. 
1649 quinquies § 1 C.C.) = 
DE According to German law, th ere is a right to damages. = 
EE Remedies are available for al l kinds of non-performance. = 
ES Damages for non-performance would be covered by general rules of the 
Spanish Civil Code: liability will  depend on the proof of effective 
damages caused by non-performance and/or the existence of an accepted offer -particularly in those cases wher e a binding offer is required by law. = 
FR French consumer sales law provides for legal warranty of conformity. 
Nevertheless, a claim under the lega l warranty does not preclude the 
consumer from using the rights he de rives from general contract law for 
performance (Art. L 211-13 of the Cons umer Code). According to Art. 
1184 of the Civil Code the party faced with non-performance of his 
contracting partner may either requir e specific performance or resolve the 
contract without prejudice of damages according to Art. 1147 of the Civil 
Code. For the consumer it is always possible to claim the damages in case of non-performance.   = 
HU According to Art. 310 of the Civil Code, apart from guarantee rights, consumers are entitled to damages resulting from lack of conformity under the rules of indemnification. If the consumer suffers damages because  of a faulty performance, he can 
ask for reimbursement of his damages according to the indemnification rules.  This in practice means that the cons umer can only receive reimbursement 
through a litigation process if the bu siness is not willing voluntarily to 
give such a reimbursement. = 
IT Italian consumer sales law provides for legal warranty of conformity. 
Nevertheless, a claim under the lega l warranty does not preclude the 
consumer from using the rights he de rives from general contract law.  
There is a general right to damage s for non-conformity unless the seller 
has ignored them without fault (Art .1494 of the Civil Code) The party 
faced with non-performance of his co ntracting partner may either require 
specific performance or terminate the contract without prejudice of 
damages (including actual damages and loss of profit, but not punitive damages). = 
MT Maltese law has general rules abou t damages for non-performance (Art. 
1125 of the Civil Code: 'Where any pers on fails to discharge an obligation 
which he has contracted, he sh all be liable in damages'). = 
NL Under Art. 6:74 BW, any failure to fu lfil an obligation shall require the 
debtor to compensate the creditor fo r the damages he suffered due to the 
non-performance, unless the non-performance is excused. = 
 
 169PL Polish law has general rules about damages for non- performance (Art. 
471 of the Civil Code).  = 
RO The consumers are entitled to dama ges arising out of the lack of 
conformity of the products ascertai ned within the warranty period. The 
consumers are entitled to damages according to the general provisions of the Romanian Civil Code.  = 
UK Under English law, there is  a right to damages.  = 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for consumers No costs for consumers. 
Benefits for 
consumers At present, most Member States ha ve general rights to damages for non-
performance (e.g. BE, EE, ES MT, HU, NL, HU, IT, PL,FR, RO, UK). 
The level of consumer protection would not change. Consumers would be able to claim compensation for non-performance of a business's obligations. 
Costs and benefits for businesses  
Costs for businesses No additional costs for businesses as in most Member States the current 
rules provide for damages for non-performance. 
Benefits for businesses Businesses would benefit from rely ing on one set of clear rules on 
damages for non-performance. Busine sses performing their obligations 
diligently may gain additional customers. 
 
Length of the prescription periods  
  
Issue:  
 
In the current acquis (Consumer Sales Directive 1999/ 44/EC), the business is li able for the lack of 
conformity of the goods which becomes manifest  during 2 years from the moment the goods are 
delivered to the consumer.  
 
A Common European Sales Law woul d not contain such a fixed lia bility period during which the 
consumer could still claim lack of  conformity. Instead the general ru les on prescription would apply. 
A prescription period would run for 2 years from the moment the consumer has knowledge of the 
defect, but no later than for 10 years from the moment the goods were delivered. In practice, the 
result would be comparable to the existing acquis. While the starting point would be slightly later, 
i.e. knowledge of the defect extent of delivery, the period would be sli ghtly shorter as contrary to the 
substantive period of the Consumer Sales Direct ive, the consumer woul d need to undertake the 
necessary steps before the end of the prescrip tion period in order to prevent its effects.  
 
Legal comparison:  
 
Country Provision comparison  Impact on 
the level of  
consumer 
protection 
BE No longer than 2 years. = 
DE Prescription after 2 years (except for building materials), cf. § 438 BGB. = 
EE  No longer than 2 years. = 
 
 170ES Under Spanish Law – Art. 123 RD 1/2007 – the seller responds for the 
lack of conformity of the product fo r 2 years after the delivery. If the 
product is second hand, this period coul d be reduced to a minimum of 1 
year.  However, general rules on breach of contract may be used, and here the 
limitation period is very generous (15 years).  = 
FR Under the French Consumer Code, the action resulting from lack of 
conformity lapses two years after delivery of the product.  However, it must be noted that a claim under the Consumer code does 
not preclude the consumer from us ing the rights deriving from general 
sales law of the Civil Code. Then  according to those general rules 
(Articles 1641 and following)  the buyer has 2 years to bring a claim after 
having discovered the defect (Civ. C ode, Art. 1648, para. 1). This means 
that the guarantee is prescribed by the general prescription duration (5 
years, under Art. 2224 of Civ. Code : 'personal or movable actions 
prescribe in 5 years from the date on which the holder of a right knew or 
should have know of the facts to enable him to exercise it'). 
However, the buyer must be particularly  vigilant when taking delivery of 
the product because many decisions have considered that the silence of the buyer when faced on delivery with a product which had an apparent vice or was not conform to what had been contractually agreed upon 
could be interpreted as a tacit acc eptance of the non-conformity, thus 
depriving the buyer of any future claim for non-performance of the 
obligation of conform delivery rela ting to the said non-conformity. - 
HU In general the time limit is 2 years, but if the consumer is unable to 
enforce his claim for an excusable reason, particularly if lack of 
conformity, owing to its character or the nature of the goods, is not 
apparent within the 2-year time lim it, in the case of goods designated for 
long-term use the consumer may enfo rce his rights within 3 years of 
delivery. If the statutory use period exceeds 3 years, this time limit shall 
apply to the enforcement of such a claim (Art. 308 and 308/A of the Civil 
Code). This extended (long) guara ntee period can only be found in 2 
current regulations: the first is  a Common Decree from 1985, which 
states that the statuary use date in case of building materials is 5 years or 
in certain cases 10 years (e.g. walls , balusters). The second is the 
Government Decree of 151/2003 on the obligatory express warranty regarding goods designed for long-term use. = 
IT The seller is liable if the defect occu rs within 2 years after delivery (Art. 
132 Consumer Code). It must be noted that a claim under the legal 
warranty does not preclude the consum er from using the rights he derives 
from sales law as a buyer and from ge neral contractual rules. According 
to Art. 135 Consumer Code, consum ers' rights under other statutory 
instruments shall not be limited or re pealed by the provisions relating to 
the legal warranty. In principle, th e consumer can also recover the 
damages according to the conditions of  Italian sales law (Art. 1494 of the 
Civil Code). In this last case the ordinary limitation period (10 years – 
Art. 2946 of the Civil Code) applies.  = 
LU Consumers may invoke the hidden def ects (vices cachés) provision of 
Art. 1641 sequ. Code Civil which is not limited in time. This is a mandatory right for B2C contract s (Art. 1645 of the Civil Code). - 
NL NL law does not contain a fixed liability period after which the consumer 
can no longer claim lack of conformity  with the contract (see Art. 7:21-
23 BW). Whether or not a consumer can still claim lack of conformity = 
 
 171depends on which expectations he could reasonably have, given the 
circumstances of the case.  
PL There is no such provision in Polish law. Under Art. 10 (1) of the  
Consumer Sales Act, the seller is li able where the lack of conformity 
becomes apparent within 2 years from the delivery of the goods, unless the seller knew about the lack of conf ormity at the time of conclusion of 
the contract and did not  inform the consumer. = 
RO The seller’s liability is engaged for lack of conformity if the defect 
becomes apparent within 2 years of the delivery of the good (in second-
hand goods, within 1 year). = 
UK The UK has not introduced the 2-year time limit for business liability 
(from the time of delivery of the goods). UK law relies on the general 
limitation period for commencing a legal action for a breach of contract, 
from the date of the contract (the Limitations Act 1980 allows a 
consumer to claim for up to 6 years after the date of purchase). Once the defect is discovered, then the consum er may lose his right to terminate 
the contract because of the rules on acceptance. - 
 
 Assessment of impacts 
 
 
Costs and benefits for consumers  
Costs for 
consumers In a small number of countries e.g. the FR and the UK where the current liability 
period during which the consumer can still clai m lack of conformity is more favorable 
to consumers (the UK law allows a consumer to make claims regarding non-conformity up to 6 years after the date of  purchase and in FR, the business would be 
liable 5 years from the moment the consumer has knowledge of the defect) the 
consumer might be slightly disadvantaged. However, considering that most failures 
are likely to occur once the consumer st arts operating the product after buying, the 
costs for consumers are likely to be minor. 
Benefits for consumers Consumers would be able to assert their ri ghts over a 2- year period from the moment 
the consumer has knowledge of the defect, but no later than 10 years from the 
moment the goods were delivered. This would increase the le vel of consumer 
protection in e.g. PL, RO and HU. 
Costs and benefits for businesses  
Costs for 
businesses No major additional costs for businesses as in practice the current 2-year substantive 
period which applies in most MS at pres ent and the proposed 2-year prescription 
period provide for a similar result as regard s level of consumer protection. This is 
because most defects appear once the cons umer starts operating the product after the 
purchase and the consumer would still need to undertake the necessary steps before 
the end of the 2-year prescription peri od in order to prevent its effects.  
 
Benefits for businesses  There would be some minor benefits fo r businesses from e.g. UK and FR where at 
present consumers can claim lack of conformity for the longer period of time. 
Retailers in general would benefit from increased consumer confidence. 
 
Period for notifying the seller of non-conformity in B2C contracts 
 
Issue:  
 
 172Under the acquis, Member States ma y provide that, in order to bene fit from his right, the consumer 
must inform the seller of the lack  of conformity within a period of  2 months from the date on which 
he detected such lack of conformity. 17 Memb er States have implemented such a limitation433.  
A Common European Sales Law coul d introduce a rule that the cons umer does not have to give 
notice to the seller of a lack of conformity within a certain period after which the consumer 
discovered it. The lack of notice within a certain time would therefore not deprive the consumer of 
his remedies based on th e lack of conformity. 
 Legal comparison:
 
 
Country  Provision comparison  Impact on 
the level of  consumer protection
 
DE There is no 2-month-rule. = 
EE The obligation to notify is limited to reasonable time. + 
ES Under Spanish law – Art. 123.5 RD 1/2007 – the consumer must notify 
the seller of the non-conformity within  2 months. In case of failure to 
notify within 2 months, the consumer loses his right to damages but does 
not lose his substantive remedies for non-conformity.  Slightly + 
FI Section 16 – Notice of defect  (16/1994) 
(1) The notice of defect may always be given within 2 months of the buyer’s discovery of the defect; it may also be given to the business that 
has sold the goods on behalf of the seller or assumed liability for the 
characteristics of the goods.  + 
FR There is no rule in French law compelling consumer to notify non 
conformity within 2 months.  Under the general sales rules of th e Civil Code, Art. 1648, the consumer 
has to bring his legal action within 2 years of the discovery of the defect. = 
HU The general rule is that the trader must be informed of any lack of 
conformity within the shortest time permitted by the prevailing circumstances. However, according to Art. 307 (2) of the Civil Code in the case of consumer contracts, if notif ication of the lack of conformity is 
made within 2 months of the time it is detected, it shall be deemed that 
notification was made in due time. A ny agreement of the parties to the 
contrary shall be null and void.  + 
IT The consumer loses the rights to cla im for the legal warranty if he does 
not inform the seller of the lack of  conformity by no later than 2 months 
after the date on which he discovered it. This notification shall not be 
required only in case the seller has ac knowledged the existence of the lack 
of conformity, or has concealed it.  + 
LU There is no rule in Luxembourgish la w with such a time limit to notify the 
defect.   = 
MT Art 79. 1 of the Consumer Affairs Act provides a 2 month time limit to 
notify the defect.   + 
NL Under Art. 7:23 BW, the consumer lose s his rights if he does not inform 
the seller of the discovery of the def ect within a reasonable time. In case 
of a B2C contract a notification with in 2 months is considered to be 
reasonable.  + 
                                                 
433 Consumer Law Compendi um, http://www.eu-c onsumer-law.org/di rectives_en.cfm 
 
 173PL Under Art. 9 (1) of the Consumer Sale s Act the consumer must inform the 
seller of the lack of conformity within  period of 2 months from the date on 
which he detected it, unless the sell er knew about the non-conformity with 
the contract and did not inform  the consumer (Art. 10 (4)). + 
PT The consumer must notify the seller of a non-confor mity within 2 months 
of when he detected it for mova ble goods and within one year for 
immovable goods. + 
RO Obligation to notify within 2 months = 
UK There is no such provision under UK law. = 
 Assessment of impacts 
 
 
Costs and benefits for consumers  
Costs for consumers No costs for consumers. 
Benefits for 
consumers Consumers in the 17 Member States (i.e. BG, CY, DK, EE, ES, FI, HU, 
IT, LT, MT, NL, PL, SL, PT, RO, SL, SE) where currently the notification within a given deadline is  a precondition for the exercise of 
their right to remedies in case of  lack of conformity would find 
themselves in a more advantageous position. They could rely on the remedies for the lack of conformity i rrespective of the notification given. 
Thus, consumers who would not have been  able to exercise their right to 
remedies because of missing the noti fication deadline would not lose their 
rights.   
Costs and benefits for businesses  
Costs for businesses The number of consumers now legi timately relying on the lack of 
conformity claims for remedies ma de later than 2 months after the 
consumers discovered the lack of conformity for these MS with a 
notification period is likely to incr ease only marginally (e.g. defects that 
seemed to be fixed, but then reappear ing etc.). In 10 Member States where 
at present such a period is not se t,  businesses would not bear any 
additional costs. Business operating cost s would increase (especially if the 
order of remedies will be freely c hosen by consumer- see point 2.17), but 
the increase is likely to be insign ificant. The risk of consumers 
discovering faults and claiming redre ss after the previ ous deadline of 2 
months is not high, considering that mo st faults are likely to occur once 
the consumer starts operating th e product after buying it.   
Benefits for businesses Businesses would benefit from the increased consumer confidence. 
 
Remedies in case of lack of conformity   
 
Issue:  
 Current EU consumer protection rules provide a hierarchy in which re medies can be invoked. 
According to Art. 3(3) of Directive 1999/44/EC, the consumer is obliged in the first instance  to 
claim repair or replacement before being able to te rminate the contract and return the faulty product. 
Termination of the contract or reduction in price can only be invoke d if repair and replacement are 
impossible, or if repair or replacement could not be completed within a re asonable time or without 
significant inconvenience to the consumer. Art.  3(6) of Directive 1999/44EC provides that 
consumers cannot rescind the contract, if  the lack of conformity is minor.  
 Member States however, are still allowed to regul ate differently in favour of consumers; several 
countries have not adopted the two-stage hierarchy of  remedies and made all four remedies available 
 
 174to the consumer.  The harmonised rules on hierarchy of sales remedies have been introduced in the 
CRD (chapter IV). However, the fi nal version to be adopted very s oon does not contain Chapters IV 
and V anymore.  A Common European Sales Law could provide: 
• no hierarchy of sales remedies: consumers c ould freely choose a remedy in the case of a 
faulty product. 
• possibility to terminate the contract in the case of any lack of c onformity of the goods 
purchased, unless the lack of conformity is insignificant. 
 Legal comparison:
 
 
Country Provision comparison  Impact on 
the level of  consumer protection  
AT There is a hierarchy of remedies. Th e buyer must first ask for repair or 
replacement, unless repair/replacemen t is impossible or too big a burden 
for the seller (§ 932(2) ABGB). § 8 KschG contains an additional rule on 
the way the repair should be done. The buyer can then ask for a  reduction of price or, if not a minor defect, termination of the contract 
('Wandlung'). - Right to terminate by notice (§ 918 ABGB).  +  
BE The Civil Code follows the hierarchy of the Directive. +  
DE Hierarchy of remedies in place.  + 
EE Hierarchy of remedies in place. +  
ES According to Sections 119.1 and 121 TR LGDCU, there is a hierarchy of 
remedies.  The termination of a contract is not possible in the case of minor faults. 
Furthermore, Spanish Civil Code and case law make a clear difference between minor faults that give rise  to a reduction of price and greater 
faults that entitle the purchaser to terminate the contract.  If a termination of contract is not accepted by the business, the consumer 
must ask the court to declare it (case law is not always unanimous as far 
as how termination of contract due to non compliance of the other party 
must be executed. However most courts  will require a court’s decision if 
termination is contested).  + 
 
 
FI There is a hierarchy of remedies.  
Consumer Protection Act Chapter 5 Section 9 — Cancellation of the 
contract:  (1) The buyer may cancel the contract on account of the seller’s delay if 
the breach of contract is essential.  
Chapter 5 Section 19 — Reduction of pr ice and cancellation of contract 
If rectification of the defect or the delivery of  a non-defective good is not 
possible or if it has not been perf ormed (…) the buyer shall have the 
right to: (1) demand a price reduction pr oportionate to the defect; or 
(2) cancel the contract, except if the defect is of minor significance. + 
 
 
FR If the consumer makes a claim under the legal warranty provided by the 
Consumer Code (Art. L 211-1 et seq.), he shall be faced with a hierarchy 
of remedies: he must first settle for repair or replacement, and if such 
remedies are impossible, he may term inate the contract (return the goods = 
 
 
 
 175and obtain restitution of the price)  or obtain a price reduction while 
keeping the goods. Art. L 211-10 of the Consumer Code  provides a delay between consumer 
demand and the resolution: if the repair or replacement cannot be 
implemented within one month followi ng the claim of the buyer, he may 
rescind the contract.  In addition, termination may be required if the repair or replacement of a 
specific good may give rise to a major damage to the consumer. In any case the right of termination cannot be performed in case the lack 
of conformity is minor.  However, under the general provision  of the Civil Code (Art. 1641 s), 
there is no hierarchy of ri ghts (right to rescind th e contract immediately). 
HU In general, under Art. 306 (1) and (2) of the Civil Code there is a 
hierarchy of remedies (repair, replacement, price reduction and 
termination of the contract). Cons umers may, in the first place, be 
entitled to choose either repair or replacement unless this is impossible or 
it results in disproportionate expens es on the part of the seller as 
compared to the alternative remedy, taking into account the value the 
goods would have if there had been no lack of conformity, the significance of the lack of confor mity, and whether the alternative 
remedy could be completed without significant inconvenience to the 
consumer. Any repair or replacem ent must be completed within a 
reasonable time and without any si gnificant inconvenience to the 
consumer, taking account of the nature  of the goods and the purpose for 
which the consumer required the goods . If the consumer is entitled to 
neither repair nor replacement or if th e seller refuses to provide repair or 
replacement or is unable to meet the conditions mentioned above, the 
consumer may require an appropriate reduction of the pr ice or have the 
contract terminated.  + 
 
 
 
IE Ireland has a hierarchy of remedies: Regulation 7(2) and 7(3) EC Sales 
Regulations 2003 (repair or replacement first; then reduction of price or 
rescission of the contract).  +  
 
IT If the consumer claims the legal guarantee of conformity provided by the 
Consumer Code (Art. 128 seq.), he shall be faced with a hierarchy of remedies: He must first settle for repair or replacement, and if such remedies are impossible, he may obtain restitution. Art. 130, par. 7 of the Consumer Code provides three different  cases in which the consumer can 
demand the termination of the contrac t: 1) if repair or replacement are 
impossible or disproportionate 2) if  the seller has not completed the 
remedy within a reasonable time or replaced the goods within the 
appropriate time 3) if the replacemen t or repair carried out previously 
caused significant inconvenience to the consumer.  In any case the right of termination cannot be performed in case the lack 
of conformity is minor (Art. 130, par. 10).  +
 
 
  
 
  
 
  
 
  
 
LU Luxembourgish law has a hierar chy fixed by Directive 1999/44 but 
contains one addition, namely that th e repair or replacement of the goods 
is done within 1 month. Afterwards, th e consumer is entitled to rescind 
the contract or claim a price reduction (Art. L.212-5 Code 
consommation). However, under the general provision of the Civil Code (Art. 1641 s), there is no hierarchy of rights (right to rescind the contract 
immediately). =
 
 
 
MT Art. 74 of the Consumer Affairs Ac t provide a hierarchy (repair or 
replacement first; reduction of price or rescission of the contract). + 
 
 
 176NL Under Dutch law, there is a hierarch y: buyers are generally obliged to 
first ask for the faulty product to be repaired / replaced (7:21 BW). 
Among the secondary remedies (termina tion of the contract, reduction of 
price), however, no hierarchy exists. +  
 
 
 
PT There is no hierarchy of remedi es (Art. 4 Decree-Law 67/2003). =  
PL There is a hierarchy of remedies: buyers  are generally oblig ed to first ask 
for the faulty product to be repair ed/replaced. For secondary remedies, 
the buyer can require an appropriate re duction of the price or the contract 
to be rescinded, unless the lack of conf ormity in the latter is minor. (Art. 
8 of Ustawa  z dn. 27 lipca 2002 r. o szczególnych warunkach sprzeda ży 
konsumenckiej). In Polish law specific performance re mains the primary content of the 
obligation. Although there is no spec ial provision, the principle of 
specific performance was strongly em phasised.  However, currently, one 
can observe that importance of sp ecific performance has decreased. + 
 
 
  
 
  
 
RO Under Romanian consumer protecti on legislation, when products do not 
conform to the contract, consumers can choose among their reparation or 
replacement unless one of these opti ons is impossible objectively or 
disproportionate. Reduction of price and termination of contract will be 
used when consumers cannot ask for reparation or replacement or when 
they have not been satisfied in a r easonable period of  time or without 
inconvenience for consumers.  +  
 
 
UK A hierarchy of remedies is in pl ace (complying with Directive 1999/44), 
but these provisions operate alongside the existing rules which i.e. grant 
a consumer a right to terminate the contract if he does so within a 
reasonable period of delivery (cons umers have the choice between 
invoking remedies under the national legi slation transposing Art. 3 Dir. 
99/44 or to rely on the remedies av ailable under general sale of goods 
legislation). +  
 
 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers Consumer prices may rise in particular  for complex products with a high failure 
rate. 
Benefits for consumers Consumer protection would be increased in  the EU countries where at present less 
favourable rules on the order of remedies are in place (i.e. AT, BE, DE, EE, ES, 
FI, HU, IE, IT, LU, MT, NL, PL, RO).  The study on 'sales remedies'
434 shows that the preferred order of remedies is 
influenced by the type of product, as well as its age. For consumable items including foodstuffs, clothes, shoes, accesso ries and cosmetics as well as smaller 
durable items such as CDs, DVDs, ga mes, mp3 players and jewellery, most 
respondents would like to be offered sale s remedies in the following order: 
replacement then termination of the cont ract. In some instances consumers may 
opt for a termination as the first option, es pecially in situations where they have 
lost trust in a brand, pro duct or the seller. For recen tly purchased (less than 6 
months ago) larger durable items such  as cars, large home appliances and 
furniture, most respondents would like to be offered sales remedies in the following order: replacement, repair, term ination. If the larger durable item has 
already been used for ‘a while’, c onsumers would accept the order: repair, 
                                                 
434 EB Qualitative study on sales remedies, December 2009 http://ec.europa.eu/consumers/rights/docs/aggregate%20report_dec2009_ en.pdf 
 
 177replacement, termination.  
Where items have been purchased cross- border, the order in which consumers 
would like to be offered sales remedies remains largely the same as for domestic 
purchases. However consumers appear to be  more likely to think carefully about 
whether or not replacement is worth the trouble and possible cost involved in 
returning the product. As a result, the number of consum ers opting for a refund in 
the case of cross-border purch ases tends to be higher. 
Consumer confidence would increase significa ntly in particular in countries where 
at present 'the hierarchy of remedies' is in place (e.g. AT, BE, DE, EE, ES, FI, 
HU, IE, IT, LU, MT, NL, PL, RO).  The boost in confidence would result not only in an effective increase in the level 
of protection but also from having uniform  rules across the EU. Consumers losing 
their trust in a trader woul d have the opportunity to te rminate the contract, while 
potentially also benefiting from havi ng the opportunity to use the refund for a 
better and/or cheaper alternat ive available on the market. 
Costs and benefits for businesses  
Costs for 
businesses The cost to businesses in the Member States currently employing a two-level 
structure (hierarchy of remedies) could in crease slightly, due to increased requests 
from consumers to rescind the contract and refund the price.  In case of refund 
after termination of the contract, the loss is the sale price (plus returns handling) 
minus the remaining value of the good return ed. The loss in case of replacement is 
considered to be the production cost of the replacement good concerned (plus 
returns management) minus the remaining value of the goods returned. However, 
for certain goods e.g. cars, where the valu e of a new car diminishes significantly 
on the first day of use, the loss in case of  replacement could be also significant. 
As confirmed by the study on sales remedies  consumers are aware that the need to 
offer sales remedies has implications for traders and there was recognition that, in 
some instances, repair is the ‘fairer’ option for the trader.  Hence, it is likely that 
consumers would continue to ask for a replacement of consumable goods and replacement or repair in cas e of larger durable goods and therefore minimise the 
potential burden on businesses compared to the baseline scenario. SMEs which currently rely on (multiple) repair can be more disadvantaged and may be more cautious to sell abroad usi ng a European Common Sales , as distance 
consumers might be more likely to ask fo r a termination of the contract resulting 
in a refund (not accepting the inconvenien ce of lengthy repairs or waiting for a 
replacement). 
Benefits for businesses Retailers would benefit from in creased consumer confidence. 
 
Digital content products 
 
Issue:  
 Digital content products are exclude d from the scope of the Sale of  Consumer Goods and Guarantees 
Directive. The CRD however covers digital content products. It should be not ed nevertheless, that 
the material scope of the Directive will be lim ited to withdrawal rights and pre-contractual 
information obligations.   The European Commission conducted a study called 'Digital Content Services for Consumers: 
Assessment of Problems Experienced by Consumers - LOT 1.'
435 The objective of the study was to 
provide an evidence-based analysis of: 
                                                 
435 Not yet published. 
 
 178• the possible problems consumers are expe riencing with digital services; and 
• the cause of these problems. 
 The study shows the growing popularity  of digital content products, problems suffered by consumers 
and related detriment. The combined value of financial losses and the value of lost time resulting from problems encountered in the previous 12 m onths with the digital content services was 
estimated at approximately €64 billion for the onl ine population in the EU27. The financial loss and 
value of lost time across the eigh t digital product types examined ranged between €1 billion and €23 
billion. The box below shows the key data from the study.  
Usage of digital content products 
From the eight digital product types covered in th e survey (email, music, social networking sites 
(SNS), anti-virus software (AVS), games, positioni ng and navigation services (PNS), e-learning and 
ringtones) email music and SNS are the most pop ular product types us ed (93%, 79% and 67% 
respectively). Games and anti-virus software, while not as popular as email, music and SNA, were still relatively 
popular with approximately 60% of  respondents citing that they ha d used these products over the 
previous 12 months. E-learning a nd ringtones were the least popular  with only 12% to14% of people 
using these types of products.  
Occurrence of problems 
While most people (57% to 71%) had not experien ced a problem over the last 12 months, up to 36% 
of users of the eight products had. The actual figure s, may be higher as 8% to 9% of respondents did 
not know or were unable to recall whet her they had had a problem or not. 
 
Type of problems 
Overall, access was by far the most common type  of problem experienced followed by lack of 
information and unclear/complex information. Acce ss problems were most common for email, lack 
of information problems were most common for ringtones, while unclear/complex information 
problems were much more evenly spread across  service type. The proportion of problems that 
related to privacy (0% to 4%) a nd unfair terms and conditions (1% to  6%) was the smallest across all 
service types.  Of the information respondents expect  to receive, ‘user instructions ’ and ‘terms of use’ were the 
most common across all service types. These were also the two types of information in which the 
gap between expectations and outcomes (i.e. what wa s actually received) were  the smallest. Even in 
these cases, however, up to a third of responde nts across service types did not have their 
expectations realised.    
Impacts of problems 
The most dominant types of impact s experienced as a result of the pr oblems encountered were anger, 
annoyance, loss of time and inconvenience. The pr oportion of respondents that suffered a financial 
loss was small compared with the other types of im pacts suffered (2% to 5%). Ringtones were the 
exception, as a much higher proportion of problems with that service type result ed in a financial loss 
(18%).  Although problems associated with ringtones were thos e most likely to have resulted in financial 
loss, the actual value of the financial losses per pe rson from problems experienced with this service 
was the lowest across the service types (on aver age €87 per person/problem that resulted in a 
financial loss), particularly when compared to  email and SNS (average from €519 to €563). Time 
lost in addressing problems tended to be much larger for problems related to email, antivirus 
software and ringtones and more  generally for digital servic es accessed through CD/DVD/blu-ray 
and TV. 
 
 179 
For those that had experienced problems, only a ve ry small minority (i.e. up to 6%) had received 
compensation, financial or otherwise.     
 
Consumer detriment  
The consumer detriment for digital content product s was estimated at approximately €64 billion for 
the online population in the EU 27. The financial loss and value of lost time across the eight 
individual services ranged betw een €1 billion and €23 billion with the highest detriment for e-mails, 
followed by music and social networking sites.        
 
 
 
   The most detrimental type of problem was the lack  of information which acc ounted for one third of 
the total consumer detriment with digital pr oducts (€18.7 billion), followed by unclear/ complex 
information (€15 billion) and access (€10 billion). 
              The scale of the problem with di gital services has also been co nfirmed by ECC-NET which receives 
numerous consumer complaints about the sector concerning functionality, safety and user rights.
 
 
The European Consumer Centres have indicated that  the main areas of concern regarding the digital 
market in 2008 and 2009 were the following:436 
 
Intellectual property and copyright 
The legitimate use, copying and di stribution of intellectual property  and copyrights appeared to be 
one of the most problematic issues for consumers. Tr aders very often tend to apply overly restrictive 
                                                 
436 http://www.cons umenteninformatiepunt. nl/bin/binaries /13-102-ecc_brochure2010-fina l-lage-resolutie--2-.pdf Service type  Gross loss (€m) 
Music 9,952 
Games 7,850 
SNS 8,631 
Ringtones 2,224 
Email 23,276 
AVS 7,578 
PNS 3,700 
E-learning 1,244 
Total for the EU 27 64,454 
 
Service type  Value of lost time 
(€m) 
  
Lack of information 18,775 
Unclear/ complex information 15,042 
Quality 7,498 Access 10,273 Unfair terms and conditions 1,969 Privacy 376 Security 9,277 
Total for the EU 27 63,211
 
 180provisions in contract terms when it comes to the regulation of legitimate copying and/or playing of 
the digital content to be purchased.  
 
 
  Unclear information provided to consumers 
One cause of cross-border consumer disputes when purchasing digital content is very often unclear 
or lacking information on terms and conditions, pri ce, withdrawal or contact information for the 
traders.  
 
Withdrawal based on the regulat ions regarding distance-selling 
While regulations for distance selling allow consum ers a cooling-off period during which they can 
withdraw from the contract, traders may seek to  restrict consumers’ withdrawal rights when 
purchasing digital content.  
Privacy- and data protection of consumers 
There are an increasing number of problems related to the privacy and data protection of consumers 
in the digital world. The ability to protect, particular ly from third parties, the information one reveals 
on the internet is a growi ng area of concern. The general experience  is that consumers tend to be less 
cautious when giving out their personal data (for  example when registering on websites), but then 
object to the unauthorised usage of their personal data.  
Non-functioning digital content/ Digita l content restricted to some hardware 
The problem is that it is unclear what, if any, reme dies are available to consumers in cases of  non 
functioning digital content products.  Traders at times restrict the usag e of digital content contrary to 
the consumers’ expectations. In other words, some  business models restrict the usage of digital 
content to specific hardware.   Given the problems mentioned above,  digital content products could be included in the scope of a 
European Common Sales and could provide for issues included by the legislator in the fully 
harmonised CRD and in addition for instance Coverage of 'cost-free' products; a Common Eu ropean Sales Lawcould cover digital content 
products not only those which are offered for remune ration, but also those whic h are 'cost-free'. In 
practice, this means that the cons umer will have the same remedies whether he gives remuneration in 
exchange for a digital content products, or so me other benefit (such as personal data). 
 Sales remedies for digital conten t products; clear rights to cons umers in case a digital content 
product is defective, irrespective of  the way it has been supplied (on line or for instance by means of 
a CD or DVD). If a European Common Sales al so covered the sales of  digital products, the 
classification under service or sa les contracts in certa in national laws woul d not be relevant. 
 Conformity in long-term contracts; insofar as the digital content is not provided on a one-time 
permanent basis, the trader must ensure that the digital content remains in conformity with the contract throughout the contract pe riod. This is relevant for ex ample where updates of software 
contain bugs. This provision ensures that the cons umer has a right to remedies for non performance 
for each defective update.  The analysis of the above provi sions is provided separately: 
    
 
 181 
     
'Cost-free' products  
 
Legal comparison:  
 
Country Provision comparison  Impact on 
the level of  consumer protection  
DE There is no specific consumer law pert aining to digital content products  
German courts have applied sales la w to digital products. According to § 
480 of the Civil Code the provisions on sales apply to barter as well. + 
FR There is no specific provision on cost-free products in French law.  + 
HU At present there is no such regulatio n in Hungary. Currently it is only 
possible to act against a cost-free pr oduct provider if the product has 
caused damage.  + 
IT There is no specific provision on cost-f ree products in Italian law. The 
consumer sales law protection cannot  be invoked for cost-free products.  + 
NL Art. 7:1 BW defines sales in relation to a price in money but also apply 
to barter (Art. 7:50 BW), thus in case of any other benefit than payment. + 
PL The Consumer Sales Act applies on ly to the sale of tangible goods 
between a professional seller and a consumer  (Art. 1 of Ustawa o 
szczegolnych warunkach sprzedazy kons umenckiej). The provision has 
to be interpreted strictly; it does no t apply to other (non-sale) contracts 
on the basis of which the consumer becomes an owner of a good or to 
sale contracts of digital content products. Contracts that have no 
monetary consideration but where th e parties exchange one service or 
privilege for another (barter) are not defined in th e Civil Code.  + 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers Consumers may be adversely affected by a decrease in the number of 'cost-free' 
products available on the market. 
Benefits for consumers At present, in most Member States there are no specific provisions for 'cost- free' 
products (DE, FR, IT, PL) and the consumer  sales law cannot be invoked for 'cost-
free' products as the law applies only to tangible goods or there is no monetary 
value of the product. The provision would result in an increase in consumer 
protection as the consumer would be entitled to certain rights, for instance in case 
of lack of conformity. According to ECC-NET (2010)
437, there are numerous 
consumer complaints about 'cost-free' products.  The 'free' product might also contain dangerous bugs that can damage a 
consumer's hardware. In such a case, a c onsumer would be able to seek remedies 
asking for compensation. 
Costs and benefits for businesses  
Costs for Businesses providing 'cost-free' products w ould have additional co sts as at present 
                                                 
437 http://www.cons umenteninformatiepunt. nl/bin/binaries /13-102-ecc_brochure2010-fina l-lage-resolutie--2-.pdf 
 
 182businesses there are no obligations to provide remedi es in cases of defective 'cost-free' 
products.  An increase in costs associat ed with offering 'cost-free' digital products could lead 
to a decrease in the number of 'cost-free'  product providers especially in small 
countries where the market is not larg e enough to provide profits from other 
sources (media, advertisement). 
Benefits for businesses Retailers would benefit from the increased  consumer confidence. More consumers 
could download 'cost-free' products and as a result businesses would increase their 
profits (e.g. advertisements linke d with cost- free products). 
  
 Sales remedies for digital content products  
 
Issue:
 
 The current acquis  does not deal with the rights of a buyer if  a digital product contains a defect. One 
of the reasons is the uncertainty regarding the qualifica tion of contracts con cerning digital content 
products. Depending on the national laws and the circ umstances of a case, those contracts might be 
qualified as a contract of sa le or a service contract.  
 Most legal systems apply rules on consumer sale s law in the case where a consumer purchases a 
piece of software on a DVD and the DVD fails to func tion in his computer as a consequence of a 
defect in the software on the DVD. However, this is not the case for inst ance in Finland and in 
Scotland, and it is still uncertain in France. In the scenario where the software was downloaded 
through an online (automated) update service or a real-time (remote) software support service, the 
contract is most likely cl assified as a sales contr act for instance in Germany, Italy and in the UK, but 
as a service contract in othe r countries (e.g. Finland). For in stance in Hungary and Spain, the 
contract will possibly be classified as a service contract, but sales rules may be applied by way of 
analogy. In any case, in many of the national legal sy stems, the classification of the contract – and 
thus the question of which legal rules apply to the contract – is far from settled.  
 Under most legal systems, irrespective of th e classification of the contract, the remedies  of repair 
and replacement, termination and price reduction are av ailable to the dissatisfied consumer, as well 
as a claim for damages. In most of these legal systems, the hierarchy of these remedies stemming 
from the Consumer Sales Directive applies as we ll, with the exception of France (in so far as 
remedies under general contract law may be applied) , Italy (with regard to tailor-made software) and 
Poland. In the UK, only the remedies of termination and damages are available if the contract is not 
classified as a consumer sales contract. If the contra ct may be classified as a consumer sales contract, 
the consumer may also resort to the regime of the vices cachés (hidden defects) in France or to the 
right to reject the ‘goods’ in the UK.   A possible European Common European Sales Law could provide clear right s to consumers if a 
digital content product is defectiv e, irrespective of the way it ha s been supplied (online or for 
instance by means of a CD or DVD) . If a European Common Sales  al so covered the sales of digital 
products, the classification under serv ice or sales contract in certa in national laws would not be 
relevant.  Legal comparison:
 
 
Country Provision comparison   Impact on the 
level of  consumer protection 
 
 183DE No specific consumer law pertaining  to digital content services has 
been developed in Germany. German courts have applied sales law to digital products on hardware since the mid-1980s and Germany has, in principle, extended the sales law to contracts concer ning the sale of 
other than movable tangible products, such as intangible products, in 
2002. Thus, the sale of software comes under sales law – if the contract is a sales contract and not any different type of contract, such 
as a contract on works and services , a licensing contract or a rental 
contract.  According to § 435 BGB the provi sions on the purchase of goods 
apply with the necessary modifications to the purchase of rights and other objects. This wa s explicitly meant to apply to software in 
tangible form, i.e. on a computer or a CD ROM, amongst others. For software that was transmitted online,  courts have applied sales law in 
many instances with certain modifications. However, the scope of application of the specific consumer sales rules has been restricted to 
'tangible movable items'. Despite this, some legal doctrine sources endorse its application to the online purchase of software.  
In case of defectiven ess of the software on a CD/DVD a consumer 
can take recourse to consumer sale s law. When the defective software 
was transmitted online the contract will be treated in accordance with 
the rules for contracts for the sale of goods. Thus, the rules on 
conformity and the remedies of  the Consumer Sales Directive 
1999/44/EC apply. The German legislator has maintained the hierarchy of remedies as provided for in Art. 3 of the Directive. 
However, case law as to whether th e rules of §§ 474 ff. BGB that are 
reserved to consumer sales contracts and which are mandatory and 
contain some specific provisions, e.g.  the reversal of the burden of 
proof, apply, is not yet available.  In case of non-performance the normal  remedies of the general law of 
obligations apply. The purchaser may rescind the contract after 
having set a reasonable additiona l period for performance (§ 323 
para. 1 BGB) or claim damages (§ 280 para. 1 BGB). He can also do both: rescind the contract and claim damages (see § 325 BGB). The hierarchy of consumer sales law does not apply since the consumer sales law remedies do not a pply to non-performance. + 
ES Except in some very particular  cases (e.g. Art. 102 TR-LGDCU, 
LSSICE), Spanish legislation doe s not have any specific rules 
governing digital content services. The provisions of the Civil Code 
may be applied to a contract fo r services (e.g. the provision of 
information services), contract for work (services of streaming, video 
on demand, etc.), lease of goods and sa le contracts. The same can be 
said of the sale of consumer goods (Arts. 114-127 TR-LGDCU), 
especially considering the broad defi nition of 'product' adopted in Art. 
6 TR-LGDCU of 2007 (movable good or chattel in the general sense of Art. 335 CC. and not just a 'tangible movable item' of Directive 99/44/EC), although the question is di sputed. Also applicable are the 
TRLPI provisions of intellectual pr operty in relation to the user 
license (music downloads, video software, and any other digital 
content susceptible to being f iled on durable medium, etc.). 
Software and hardware on a CD or  DVD are independent items from 
each other, but constitute a single asset or product (never a service). Despite this, its acquisition will not be  treated as an instance of sale, +  
 
 184but as a licensing agreement for a n on-customised use of a computer 
program, as the real property of th e whole is not acquired. The license 
terms will govern the rights and dut ies of the user and, as for the 
topics not foreseen in the contract terms, the general provisions of the 
Civil Code regarding co ntracts will apply.  
In relation to the existence of any software malfunctioning as a consequence of an error not attribut able to the hardware or medium 
(CD, DVD), the provisions on the contract of sale will not be applied but a series of regulations that are not just applicable to this (mainly 
the TR-LGDCU in relation to the liability for defective products and in relation to lack of conformity), but also to any form of distribution 
of market assets (including the licen sing contract for use of software). 
The same applies when software is transmitted online. In accordance with the provisions in Art. 119 TRLGDCU the consumer may claim specific perf ormance. Such a remedy, regulated 
by Arts. 119 and 120 TRLGCU will enable consumers to choose between repair and replacement of the product provided that the 
choice is not impossible or dispropor tionate. Furthermore, if the seller 
refuses to abide by the consumer re quirement, the latter may exercise 
the corresponding remedies thr ough a third party at their own 
expense. In cases where after repair  or replacement the digital content 
does not function properly, the cons umer may choose (Art. 121 TR-
LGDCU), between termination or a price reduction of the product. 
Moreover, under (Art. 117 TR-LGD CU) the consumer may use the 
civil law legislation (specifically  Arts. 1101 of the Civil Code. and 
related provisions) in orde r to obtain damages.  
 
Under general contract law, th ere is no hierarchy between the 
remedies that the consumer may invoke in the case of non-performance by the provider of the di gital content service. In the case 
of synallagmatic obligations (Art . 1124 of the Civil Code), the 
consumer may choose between specific performance and termination of the contract, with compensation for damages and payment of interests in both cases. 
FI In Finland no specific consumer pr otection rules pertaining to digital 
content services exist. The provisi ons on consumer sales, included in 
the Consumer Protection Act (Chapter 5, Sale of Consumer Goods, 16/1994), apply to the sale  of goods: services fall outside this Chapter 
and therefore cannot apply directly  to digital content services.  
The physical platform (CD/DVD) can  be regarded as goods but the 
main subject matter of the purchase is  treated as a serv ice. If the CD 
fails to function because of defec tive software the consumer sales 
provisions cannot be applied. Instea d the provisions of the EULA 
(End-User License Agreement) will be applicable as far as they 
cannot be regarded as unfair.  In Finland no specific remedies of non-performance have been 
developed in relation to digital co ntent services. This issue has not 
been discussed in the literature a nd there is no releva nt case law in 
relation to this issue. A specific hi erarchy between the remedies in the 
case of non-performance of digital content services has not been 
developed in Finland. If digital cont ent services were classified as 
goods (which is not the case in Fi nland), the hierarchy of remedies 
indicated in the Consumer Sales Directive would apply. + 
 
 185FR 
 In French law, the qualification of  a contract determines the legal 
regime which is applicable. The qua lification of the purchase of a CD 
or DVD containing software is not envisaged by French law, and case 
law as well as legal doctrine diverge on the matter. Some decisions and authors consider the operation to be a sales contract, while others 
see it as a variant of a contract of hiring, and yet others consider it to 
be a sui generis operation. As for th e purchase of software on material 
support, the question of the purch ase of software through purely 
immaterial means has not been envisaged by French law.  If the contract is qua lified as a sales contra ct, the buyer has several 
legal actions available under sales contract law and consumer sales 
law in case of a defect of the so ld product. The legal actions are 
available for consumers who buy software on a CD or DVD. When the software is downloaded, the buyer can take the above mentioned actions as well as  additional ones (general sales law, automatic liability in e-commerce contracts and, if he is a consumer, the 
automatic liability in distance contracts):  - Sales contract law; claim for non conformity: Arts. 1603 et seq of 
the French Civil Code require th e seller to deliver  a product which 
conforms to what has been agreed  upon contractually and is exempt 
of any apparent defects. If this is  not the case, the seller will be 
considered to have violated his obligation of conformed delivery. The 
buyer will have all the remedies in general contract law for non-
performance.  - Warranty against hidden defects: Arts. 1641 et seq of the Civil Code 
protects the buyer against a hidden defect in the good provided three 
conditions are met: 1) the defect must  be hidden, 2) it must exist prior 
to the sale  and 3) must render the good unfit for its normal use, insofar as the defect must be of  a certain gravity. The buyer has an 
option between keeping the good and asking for a price reduction or 
returning the good and asking for a re fund. If the seller knew of the 
defect, , he may owe damages to th e buyer (the professional seller is 
irrefutably presumed to be of bad faith).  - Automatic liability (responsabilité  de plein droit) in e-commerce 
contracts: Art. 15, I of the LCEN foresees that  any natural or legal 
person offers or guarantees at a distance and through electronic 
means the supply of goods or services, is automatically liable towards the buyer for the correct execution of  the obligations resulting from 
the contract. - Consumer sales law: Legal warranty of conformity. This warranty only applies to tangible goods. It is  thus improbable it would apply to 
defect in software. When software is placed on a CD or DVD, French 
case law distinguishes between the sale  of the support and the sale of 
the software. If Arts. L. 211-1 et seq. of the Consumer Code are strictly applied, it is necessary to determine if the defect is due to the support or to the software. As the support is a tangible good, the legal 
warranty of conformity can be invok ed. Conversely, if the defect is 
due to the software, the legal warr anty of conformity should not be 
used.  If the consumer makes a claim under his legal warranty, he shall be faced with a hierarchy of remedies: he must first settle for repair or replacement, and if such remedies are impossible, he main obtain +  
 
 186restitution.  
- Automatic liability in distance contracts: Art. 15, II of the LCEN inserted two end paragraphs to Art. L. 121-20-3 of the Consumer Code to provide automatic liability  of the professional towards the 
consumer. Its regime is almost identi cal to that of Art. 15, I, except it 
applies to distance contracts in gene ral, and not only those concluded 
through electronic means. In general contract law in the case of non-performance, a party has several options: withhold performa nce, require specific performance 
or resolve the contract without prejudice of damages. 
HU Hungarian law does not contain a speci fied 'digital content services' 
regulation.  Software as a product protected by copyright law, cannot be sold, 
only a right of use can be acquired. The right to use and the special 
contract for use of copyright pr oducts are governed  in the Act no. 
LXXVI of 1999 on Copyright (Copyri ght Act) and as a secondary 
rule, the Civil Code of Hungar y, Act no. IV of 1959, as amended 
(Civil Code).  If the software on the CD or DCD is  faulty, it is a simple breach of 
contract, and the obligor, in this case the seller, who sold the CD 
/DVD is obliged to repair and re place or bound by other remedies 
under the general rules of the Civ il Code. The European Consumer 
Sales Directive has been incorporated  into the Hungarian contract law 
in such a way that the consumer protection provisions of the said 
Directive are applicable to a variety of contracts and are not limited to 
sale and purchase contracts. Du e to this legislation, Hungarian 
contract law has an extensive c onsumer protection character which 
applies to all contracts entered in to by consumers. Under the Civil 
Code, the subject of the consumer contract can be 'movable property' 
(chattel). However, the 'consumer contract' can be applied for other goods as well, including intangible assets. This view is supported by 
the former practice of the Supreme Court. Based on this legal regime, 
a software license agreement can also be considered as a consumer contract and the general rules on cons umer contract of the Civil Code 
are applicable. No case has been published yet where a software licence agreement was qualified as a consumer contract. The method and way of the cont racting does not challenge the 
qualification of the contract itself. Should the contract be entered into 
by an online update service or real-t ime software support service, this 
contract cannot be qualified  as sale and purchase. 
If the software is defective the consumer may seek remedies under the general rules of the c ontract law (Civil Code).  
Irrespective of the special rules for consumer contracts, the remedies 
of the Civil Code can apply, as follo ws: repair or replacement; repair 
of the goods by the customer themselves or have the goods repaired by others at the expense of th e obligor; price (fee) reduction; 
rescission from the contract; seeki ng  damages, if any. Section 306 
(5) states that any deviation from  the law of the statutory guarantee 
(implied warranty) is null and void  in consumer contracts which 
differs from the hierarchy of these ri ghts. The list of the rights is a 
hierarchy, but the beneficiary has a ri ght to select first between repair 
or replacement, after that he has a right to switch from the remedy he 
has selected to the alte rnative remedy. The costs of the switch shall be + 
 
 187reimbursed by the obligor unless it was made necessary by the 
obligor's conduct or for other reas ons (Section 306/A of the Civil 
Code). 
IT No specific set of rules / specific remedies have been developed in 
Italy for contracts of digital services.  Currently, on some occasions, the Civil Code section on Sales (Art. 1470 ff) will apply, on others the contr act of Services (Appalto) rules 
(Art. 1650 ff). There is little case law,  because these contracts mainly 
involve small transactions, which ar e most of the time settled out of 
court.  The sale of software, according to co urts, falls within the notion of a 
tangible good intended for the consumer. Therefore, the purchaser has to report the lack of conformity of the software within 2 months from 
the date of the discovery of the de fect (Art. 1519  of the Civil Code, 
now in Title III of the Consumers’ Code). This rule, however, should not apply where the object is the arrangement of some specific application software for the production of data bases. In such cases,  
there would be a tailored servic e which would be excluded from 
consumer regulation. The Court of Appeal of Rome has clarified, on the point, that the contract for th e provision of electronic services 
shall be qualified as a contract of  services (contratto di appalto), 
rather than sale of tangible goods, when the required services do not 
concern the transfer of a 'pre packag ed' digital product, but rather the 
arrangement of a specific applicatio n software for the production of 
database therefore, being a provision of works, and not the transfer of 
a good already made according to st andard procedures, Art. 1667.II 
of the Civil Code shall be applie d, instead of Art. 1495 of the Civil 
Code. According to some legal scholars, reference should be made to the rules on lease contracts (1578-1579-1581 of the Civil Code), since the 
transfer of software is defined as a licence agreement. In this case, if at the moment of the delivery the leased good is affected by defects 
that considerably decrease the suita bility for the us e agreed upon, the 
consumer can request the cancellation  of the contract or a reduction 
of the price, unless the consumer wa s aware or could have easily been 
aware of the defects. The provider has to compensate the lessee for 
the loss resulting from the defects of the good, unless he proves that 
he was not aware of the defects at  the moment of delivery, without 
any fault on his part. The rules on e-commerce can be applied where the parties enter into a digital contract, which was conc luded by means of contractual 
statements sent by electronic means and in a context of standardised 
negotiation (point and click modality). The software’s failure due to 
defects or bugs will allow the consumer to invoke the consumer sales 
law protection. In a formalistic approach, sometimes adopted by a few Italian courts, the contract can be seen as a service contract but 
this would prevent the consumer to  benefit from the more effective 
remedies of consumer law. Although at present there is no significant 
case law involving a consumer as a plaintiff, it is unlikely that in the future the courts will reduce the broad scope of consumer law protection. Under general contract law: the consumer can invoke the execution or the termination of the contract, as  well as claim for damages (Art. + 
 
 1881453 of the Civil Code). If the pr ofessional fails to  fulfil his own 
obligations arising from the contract , the consumer can always refuse 
the fulfilment of his obligation.  
NL No specific consumer or contract  law regarding digital content 
services.  In the case of standard software on a CD or DVD that is offered for 
sale in retail shops, consumer sale s law is applicable, irrespective 
whether the failure to function is  caused by a defect in the CD/DVD 
itself or by a defect in the software . This seems to be the prevailing 
opinion in legal doctrine. In a recent judgment, which questioned 
whether the producer of software could still invoke  its copyright 
against the (professional) buyer of software, the District Court of 
Dordrecht confirmed this view by in dicating that sales law applies to 
the contract whereby not only comp uters but (also) the (much more 
valuable) installed software were transferred. Others regard standard softwa re contained on a CD or DVD as 
‘rights’ Art. 3:6 BW. This implies that  to such contracts, by virtue of 
Art. 7:47 BW, sales law is applied ‘to the extent that this conforms to 
the nature of the right’. There is  no established au thority indicating 
whether, if this view were followe d, this would mean that the specific 
provisions on consumer sales la w would or would not apply as 
mandatory law.  According to a minority view in legal doctrine, contracts where 
standard software is contained on a CD or DVD cannot be considered 
as sales contracts because of the a pplicability of copyright law. In a 
recent judgment, the court of Appeal of Amsterdam, in a case in which the software failed to functi on properly as a consequence of a 
defect in the software, not in the CD/DVD itself, underlined ( in accordance with the common opinion in the Netherlands) the fact that 
the software was not a good in the sense of Art. 3:2 BW. The court 
continued that sales law nevert heless applied by virtue of the 
provision of Art. 7:47 BW. However, as the case concerned two 
professional parties, the court wa s not asked whether or not the 
specific protective provisions of c onsumer sales law would apply.  
Where software is downloaded over the internet, sales law may only 
be applied by way of analogy or by qualifying the standard software 
as rights in the sense of Art. 3:6 BW, to which by virtue of Art. 7:47 
BW sales law applies as well. In  both these views, contracts 
concluded through distance selli ng would be qualified as sales 
contracts.  However, a minority view in Du tch legal doctrine rejects the 
qualification of the purchase of standa rd software as a sales contract, 
which would imply that the contract  would be qualified as a (specific 
type of) service contract, to wh ich consumer sales law would not 
apply. If the contract could not be qualified as a sales contract, the 
question arises which type of se rvice it is. It would seem that 
qualification as a contract for work (Art. 7:750 BW) is not possible, 
as that would require the creation of  tangible work. However, if the digital content could be considered  as tangible work, the contract 
would have been qualified as a sale s contract. This implies that if 
sales law is not applicable to the contract, the contract for the supply 
of digital content would have to be qualified as a service contract in + 
 
 189the sense of Art. 7:400 BW. The provisions that apply to such 
contracts, however, are la rgely of a default nature. 
If consumer sales law is app lied by analogy to digital content 
services, Arts. 7:21 and 7:22 BW establish a hierarchy of remedies. According to Art. 7:21(1)(b) BW the consumer may claim that the digital content services must be  repaired or according to Art. 
7:21(1)(c) BW that the digital co ntent service must be replaced. 
These claims only apply if the digi tal content servi ce did not perform 
as it should have (in accordance w ith Art. 7:18 BW). Another option 
is dissolution of the contract in pursuance of Art. 7:22(1)(a) BW in 
situations in which the good is not  in compliance with the contract. 
The ability to dissolve the contract on ly exists if repair or replacement 
is impossible (7:22(2) BW) and if dissolution of the contract is not 
disproportional (7:22(1)(a) BW). If the contract is not qualified as a sale of goods, but as a sale of 
rights under Art. 7:47 BW, it is not certain that the consumer sales 
provisions would be appli cable. If this is not th e case, the hierarchy of 
remedies, embodied in Art. 7: 22(2) BW would not apply.  
If the contract is qua lified as a service contr act, the general contract 
law (Book 6 BW) provisions are applicable: a consumer has the right to compensation for damages that was caused by the non-performance of the service, unless the failure in performance cannot 
be attributed to the service provi der (Art. 6:75 BW). Moreover, the 
consumer may terminate the contract if the failure of the digital content justifies such termination (Art. 6:265 BW).  
PL There are no specific rules of cons umer law established for digital 
content services in Poland. As far as  specific rules of contract law are 
concerned there is the Law of 18 July 2002 on Provision of Services 
through Electronic Means (Ustawa o swiadczeniu uslug droga elektroniczna, Dz.U.02.144.1204) which implements the E-Commerce Directive in Poland. Cons umer sales law application is 
limited by Art. 1 of the Law of 5 September 2002 on Special Conditions of the Consumer Sale  (Ustawa o szczegolnych warunkach 
sprzedazy konsumenckiej, Dz.U.02.141.1176) pursuant to which this law applies only to sale of a tangible good (movables) between a 
professional seller and a consumer. In  the Polish legal doctrine this 
provision has been interpreted strict ly: the law should not be applied 
either to other (non-sale) contracts on the basis of which a consumer 
becomes an owner of a good or to sale contracts of intangible good 
(which means it could be applicable only to digital content saved/stored on a tangible good, lik e CD/DVD and then it would 
apply to the sale of that CD/DVD and not to the sale of the digital 
content). Therefore general contract  law regulation of sales contracts 
would be applicable: Art. 535-581 of  the Polish Civil Code (Kodeks 
cywilny) since it applies to the sale  of either tangible or intangible 
goods as well as to the sale of ri ghts. Moreover, some implemented 
provisions of the E-Commerce Dir ective and the Distance Selling 
Directive could be applicable to digital content service. 
Most legal scholars endorse that the purchase of software may be 
treated as a contract for the consumer  sale of goods, if the software is 
contained on a tangible good (CD/DVD) . However, in this case the 
CD/DVD is the subject of the sale s contract and not the software 
itself. This means that the recourse to consumer sales law is + 
 
 190unavailable, in case there is a defect  in the software. Recourse may be 
made to general liability rules for faults in goods bought: Arts. 556-
576 of the Civil Code, as well as to general rules on non-performance 
Art. 471 and sub from the Civil Code. In many cases, such a purchase of software will be combined with the purchase of license to exploit 
that software (service contract). Th e grounds for liability for faults in 
the software could then be found onl y in the contractual relationship 
between the parties. The defect of software which was transmitted online will not fall under the definition of consumer sales in Polish law which means that no recourse in consumer sales law will be available. The purchase of software may be treated as a cont ract for the sale of goods, however, 
in most cases, it will be combined with the purchase of license to exploit that software (s ervice contract). The gr ounds for liability, in 
case the purchase of license is i nvolved, could be found only in the 
contractual relationship between the parties. The legal character of 
such a purchase has not yet been clearly defined in Poland. Besides 
the concept of it being a sales co ntract, it might be declared a 
purchase of license, or a contract transferring ownership of a copy, or 
a contract of access. Presently it is  unclear which rules actually are 
applied to digital content not stored on a DVD/CD. 
UK In contracts for the sale or supply of goods, there are implied terms to 
the effect that if the goods are sold by description, they comply with the description; that they are of sa tisfactory quality; and that they are 
fit for any particular purpose expressly or implicitly made known. These are ‘strict liability' or ‘outco me based’ standards. In contracts 
for the supply of a service, there is  an implied term that the supplier 
will carry out the service with ‘reason able care and skill’. This is a 
‘fault based’ standard. Where a consumer purchases a piece of software on a CD or a DVD: the basic legal nature of the suppl y is in question. A physical vector 
such as a CD or DVD is a good, and if such a vector (or any computer hardware) is supplied al ong with software under a single contract this 
has been held (in the E nglish Court of Appeal) to  be a contract for the 
sale of goods. If this is the case, th en the statutory implied terms as to 
description, quality a nd fitness will apply.  
There is also equivalent Scottish au thority to the effect that such a 
contract should not be viewed as one for the sale of goods; but, rather, 
as a contract sui generis. If this is  the case, then the courts would use 
common law to imply similar outcome  based standards to those that 
would be applicable under the S GA or SGSA. These would require 
the hardware and software package as a whole to be reasonably fit for its intended purpose. 
Such contracts do not seem to be viewed as service contracts (a 
classification that would cause the fault based standard from SGSA, 
s. 13 to apply). Whether or not such  contracts are technically viewed 
as being for goods or as sui generis,  outcome based standards seem to 
apply. Where a consumer purchases a piece of software through an online (automated) update service or a r eal-time (remote) software support 
service: there is a lack  of certainty as to how  judges will treat this 
question. Again, the basic legal natu re of the supply is in question. 
Where the software has been transf erred without any durable medium + 
 
 191being involved, the definition of ‘sof tware’ in a particular contract 
has been held to mean that goods are being supplied; although if the 
software is being licensed and not so ld (as is typically the case) the 
contract would be viewed as one fo r the supply (rathe r than sale) of 
goods. This would mean that the (o utcome based) statutory implied 
terms as to description, quality a nd fitness from SGSA, Part 1 would 
apply. At the same time, one view is that there is neither a sale nor a supply of goods in any case where only so ftware is being supplied. This 
would mean that the statutory imp lied terms as to the description, 
quality and fitness of the goods would not apply. However, it does 
not seem that such a contract will necessarily be treated as being a 
contract for a service either. So, the fault based implied term as to 
reasonable care may not apply. Pu re software contracts may be 
treated as contracts sui generis. This  being the case, it is possible that 
the courts would imply similar outcome based implied terms to those applicable under the SGA or SGSA to goods; i.e. essentially to the 
effect that the software is r easonably capable of achieving its 
intended purpose.  The above cases deal with busine ss to business, not business to 
consumer contracts. It is very hard  to predict exactly what will be 
decided in relation to the latter. There are no remedies specific to di gital services. If the contract is 
qualified as a contract of sale of goods: the buyer will have a right for damages, termination as well as the remedies from the Sales Directive –with a hierarchy. UK law allows the consumer to choose between 
this package of remedies and the right to terminate the contract; 
although the right to terminate itself will be lost after a 'reasonable 
period of time', which tends to be  a matter of a month or couple of 
months at the most. If the contract is one of supply of services or sui generis: only 
damages and termination are available. The termination remedy is only available where the breach is shown to be sufficiently serious. 
‘+’ means an increase, ‘-’ means a reduction and '=' m eans no change in the level of consumer protection 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers Consumers might face an increase in prices  as businesses could try to compensate 
the higher costs for remedies. 
Benefits for consumers Consumer certainty in relati on to purchases of digital products would increase, as 
consumers would be certain that if a digi tal content product is defective, a seller 
would be obliged to offer remedies. Th e consumer detriment stemming from the 
problems related to the quality of digita l content products has been estimated at 
€7.5bn and €10bn for problems concerning acces s to digital content products.  
A Common European Sales Law would incr ease consumer protection compared to 
many national laws, as it would offer a fr ee choice of remedies for a defective 
digital product. Thus, a consumer could al so choose between repair, replacement, 
termination and price reduction for digi tal products.  As a result consumer 
detriment could be significantly reduced.  A Common European Sales Law  would en sure certainty in cross-border shopping, 
as well removing the hierarchy of remedies. Thus,  the level of consumer protection 
under a Common European Sales Law would increase compared to the baseline 
 
 192scenario, for instance compared to the laws  of DE, ES, FI, FR, HY, IT, NL, PL and 
the UK.  
Costs and benefits for businesses  
Costs for 
businesses Businesses would have to bear some addi tional costs as their customers would be 
able to freely choose the remedies they  prefer which is not the case in most 
Member States at present. However, consid ering that national laws provide at least 
for certain types of remedies (with or w ithout a specific hierarchy), the additional 
costs for business would only be limited to  the difference in the cost of a given 
remedy, compared to another. For instance,  the additional costs would only be the 
difference between the cost of a remedy that would otherwis e apply under a given 
national law (e.g. replacement), as opposed to the cost of an alte rnative remedy that 
a consumer could choose under a European Common Sales (e.g. reimbursement of the cost).  The costs would mostly affect companies who sell on average more defective products than their competitors, as the co sts would only occur if the company sells 
a defective product.  
Benefits for businesses  Businesses would gain legal certainty as to their obligations when selling digital 
content products. At present, depending on the national law and the circumstances, 
contracts for digital content products might be  qualified as a contract of sale or a 
service contract. Moreover, businesses would be able to de velop economies of scale, as they could 
sell their digital pr oducts to consumers across the EU, based on the same rules. 
Considering that digital produc ts can easily be sold on the internet irrespective of 
national borders, the expansion of cross-borde r trade in digital pr oducts is likely to 
be even higher in a simplified legal environment where businesses could use a 
uniform contract law throughout the EU compared to the ex isting situation.  
 
 
Conformity in long term contracts 
 
Legal comparison:  
 
Country Provision comparison  Impact on 
the level of  consumer protection  
DE No specific provision requiring the serv ice provider to make after sales 
service available or to fix bugs or up dates. The availability of updates is 
subject to the contractual agreem ent. Whether the seller gave a 
contractual warranty and is therefore liable for non-conformity depends 
on the interpretation of the contract in each single case. The jurisprudence often denies such an  obligation (OLG Koblenz 6 U 268/08: 
no liability for software-update fo r camera by producer). It seems, 
however, that there is a time dimension to the conformity with the 
contract if the digital content cannot  be used any more after an unduly 
short term (the non-conformity would lie  in its lack of sustainability or 
flexibility (examples from DE case- law refer to the year 2000 or the 
introduction of the Euro – systems that could not cope with these 
changes were held not to be in conf ormity with the contract). The usual 
life cycle would be an indicator of the duration of an update obligation. + 
FR This question is not specifically dealt with under French law. If there is 
an obligation of the trader  to update, a lack of conformity can be claimed 
according to the general rules. + 
 
 193HU There is no specific regulation at present, only on the level of General 
Terms and Conditions. Thus the agr eement between the parties is the 
governing rule, there are three typica l models of updating in contracts: 
1. Regular safety updates for free. 2. Safety updates are free but other u pdates or developments are provided 
on payment. 3. Optional updates. + 
IT This question is not specifically deal t with under Italian law. If there is 
an obligation for the trader to update, remedies for a lack of conformity 
can be claimed. + 
NL No specific provision in Dutch law. General conformity requirements 
apply. + 
PL No specific provisions exist obliging the service provider to make an 
after sales service available. If the consumer concludes a contract for 
having digital content service provide d to him for an unlimited period of 
time, it may be assumed that out of the nature of the obligation would 
arise the obligation for the service provider to provide access to the 
digital content and its updates, wh en necessary. Although consumer sales 
are not applicable, rules of genera l contractual remedies apply (the 
general regime under Art. 471, Arts. 559, 568, 563 of the Civil Code. + 
UK There is no legal right to after sales service; apart from what is provided 
for expressly in the contract or in  any associated guarantee or extended 
warranty. It is in such express provis ions of particular contracts that 
conditions relating to how long (and in what form) an after sales service 
will be available can be found. This would depend on how the courts interpreted and applied the ‘durability’ criteri on that is relevant to the ‘satisfactory quality’ implied 
term applicable to goods; or how ‘reasonable fitness for purpose’ was interpreted (the implied term applicable if the contract was treated as sui 
generis ); or what was expected in term s of ‘reasonable care and skill’ if 
the contract was treated as one fo r services. These various criteria 
provide a significant degree of flexibili ty and no case law exists on these 
issues.  + 
 
Assessment of impacts  
 
Costs and benefits for consumers  
Costs for 
consumers No costs for consumers. 
Benefits for 
consumers Warranties are important for consumer prot ection in the case of digital products. 
Digital content products ar e excluded from the current EU consumer protection 
law as intangible products. A number of businesses are reported to make 
limitations and/or exclusions in their contract terms, es pecially regarding warranty 
disclaimers. At present, in most Memb er States (e.g. DE, FR, HU, IT, UK) there 
are no specific provisions obliging the trader to make an after sales service available and only the general rules and th e specific contractual agreements apply. 
The provision of conformity with the l ong-term contract woul d therefore increase 
consumer rights as remedies could be  sought by consumers through the whole 
duration of the contract. 
Costs and benefits for businesses  
Costs for 
businesses This provision does not invol ve a direct burden and co st but nevert heless might 
imply a burden for digital content provid ers. This burden would stem from the 
 
 194increased liability of digital content provi ders which as the result could increase 
the cost of after-sales services. However, contrary to tangible  products, repair or 
replacement of digital products are not so costly. 
Benefits for businesses Retailers would benefit from increased c onsumer confidence in purchasing digital 
content products. 
  B2B TRANSACTIONS  Duty to disclose informatio n about goods and services  
 
Issue:
 
 A European Common Sales could introduce a rule that  before the conclusion of a B2B contract, the 
supplier would have a duty to disclose to the other business any information concerning the main 
characteristics of any good or service. Breach of  the duty might, among other consequences, trigger 
liability for damages.  Legal comparison:
 
BE There is not such a specific  and clear provision. However: 
-The principle of good faith (Art. 1134.3 of the Civil Code) obliges 
contracting parties to cooperate loya lly and to inform each other in good 
faith. When a party does respect thes e duties, the judge can decide that 
this contractual party has committed a contractual fault and is liable for the loss caused to the other party.  - In addition the violation of the dut y to inform can also lead to pre-
contractual liability: e.g. when there is a defect of consent (fraud (1116 
of the Civil Code) / mistake (1110 of the Civil Code)) the contract can be 
avoided or give rise to damages. As to fraud,  there is no general duty to 
inform the other party (every cont racting party has also a duty to 
inquire). Fraud by omission (to provid e information) will not be easily 
accepted. Fraud by omission supposes the existence of a special duty to inform and the deliberate concealment of the information. A special duty to speak can be derived from special  legislation (e.g. Art. 4 MPCPA or 
the prohibition in that Act, to misl ead the consumer by omitting essential 
information, see Art. 90 MPCPA, in B2 C relations), customs, the nature 
of the contract, the special circumst ances of the contracting parties (e.g. 
professional expertise, the weakness of  a contracting party), the trust that 
a contracting party creates, the circumstances of the preliminary 
negotiations and the obligation of loyalty (e.g. the duty to answer 
correctly on questions). In case of a mistake, the mistake must be 
'excusable': there is only a mistake if a reasonable person in similar circumstances would have made the same mistake. The contract cannot 
be avoided if a contracting party is frivolous or negligent when 
contracting. Indeed, both contracti ng parties have a pre-contractual 
information duty: a contracting party has a duty to inform, but the party 
who made a mistake also has a duty to obtain information. 
If a pre-contractual breach takes pl ace then the following sanctions are + 
 
 
 Country  Provision comparison  Impact on 
the level  of protection
 
 
 195applicable: damages a nd voiding the contract. 
DE There is no special provision. The ge neral principle of  good faith obliges 
to inform about unusual circumstan ces which the other party cannot 
expect and which are obviously importa nt for the other party, especially 
when they concern the purpose of the contract. Breach of the duty may 
cause contractual liability for damages. = 
EE 
 - Estonian law has a genera l obligation to inform:  
LOA § 14. Pre-contractual negotiations (1) Persons who engage in pre-c ontractual negotiations or other 
preparations for entering into a cont ract shall take r easonable account of 
one another’s interests and rights. In formation exchanged by the persons 
in the course of preparation for en tering into the contract shall be 
accurate. (2) Persons who engage in pre-c ontractual negotiations or other 
preparations for entering into a contr act shall inform the other party of all 
circumstances with regard to whic h the other party has, based on the 
purpose of the contract, an identifiab le essential interest. There is no 
obligation to inform the other party of such circumstances of which the 
other party could not reasonably expect to be informed. - Obligation to inform derives also  from the rules on mistake (GPCCA § 
92 (3)): A person who entered into a transaction under the influence of a 
relevant mistake may cancel the trans action if: 1) the mistake was caused 
by circumstances disclosed by the othe r party to the transaction, or non-
disclosure of circumstances by the other party if disclosure of the 
circumstances was required pursuant to the principle of good faith. 2) the other party knew or should ha ve known of the mistake and leaving 
the mistaken party in error was cont rary to the principle of good faith. 
3) the other party to the transacti on, entered into the transaction on the 
basis of the same erroneous circum stances, except if the other party 
could have presumed, having the correct perception of the circumstances, that the mistaken party would have entered into the transaction even if it had known about the mistake. - In assessing what kind of inform ation should be delivered, in court 
practice GPCCA § 95 regarding 'Notificat ion obligation' is often used: In 
order to ascertain whether circumstances  are subject to disclosure to the 
other party (…), regard shall be had, in particular, to whether the 
circumstances are clearly important to the other party, to the specific 
expertise of the parties, the reasonable opportunities of the other party to 
obtain the necessary information a nd the extent of the necessary 
expenses to be made by the othe r party in order to obtain such 
information. Amongst other, damages and voiding the contract are remedies available under Estonian law.  = 
ES There is no specific provision for B2B transactions, but general rules on 
avoidance for a mistake and fraudulent omissions, and good faith, determine duties to disclose. However, the duties are much less precise.  + 
FI There is no such duty in B2B transactions.  The Sale of Goods Act (355/1987), S ection 18(1) provide s that the goods 
are defective if they do not conform with inform ation relating to their 
properties or use which was given by the seller when marketing the 
goods or otherwise before the conclusion of the contract and the information can be presumed to ha ve had an effect on the contract. + 
FR The jurisprudence has developed a ge neral obligation of pre-contractual + 
 
 196information (fraud/mistake/good faith) which varies according to the 
circumstances, the quality of the part ies or the complexity of the product 
for instance.  
HU Under Art. 205 (3) of the Civil Code , the parties must inform each other 
regarding all essential circumstances in relation to the proposed contract 
before the contract is concluded. Mo reover, according to Art. 367 of the 
Civil Code, the seller must inform  the buyer regarding the essential 
characteristics of the goods and all important requirements pertaining to 
the good, particularly any potential rights in connection with or any 
encumbrances on the good. The seller must also convey the documents concerning such circumstances, rights , or encumbrances to the buyer.  
Finally, the general duty of good faith is applicable also during the pre-
contractual phase. As a result, a cont ract could be annulled, for example, 
if the party withholding information lead s the other party to enter into the 
contract by mistake. However, the bu rden of proof lies on the party who 
allegedly made the mistake. = 
IT There is no such rule  under Italian law.  + 
NL There is no specific provision in Dutch law.  + 
PL There is no general duty to provid e the other party with information 
prior to the conclusion of a contract . In relation to specific contracts, 
according to Art. 546(1) of the Civil Code, a seller is obliged to inform 
a buyer about all necessary circumstan ces related to legal and factual 
aspects of the goods being sold. However, it is not certain in legal doctrine whether this obligation also  covers pre-contractual duties. A 
party may also release its elf from a contract ente red into on grounds of 
a mistake (Art. 84 of the Civil Code) or fraud (Art. 86 of the Civil Code).  + 
PT 
 This duty is based on the general dut y of good faith in pre-contractual 
relationships – Art. 227 para . 1 of the Civil Code.  
The remedies in general are damages.  = 
 
 
UK England and Wales: There is no direct general duty. However, 
businesses may have to disclose information on the characteristics of goods to avoid liability for non-conformity.  Scotland: No such duty is directly  imposed in the law of Scotland. 
However, there would sometimes be remedies via the rules on error or damages for fraud or negligent misr epresentation. Also information may 
have to be given to avoid liability for non-conformity.  + 
  
 
 + 
 
 
 Assessment of impacts 
 
 
Costs and benefits for consumers  
Costs for consumers No costs for consumers. 
Benefits for 
consumers The provision does not have a dir ect impact on consumer wellbeing. 
Consumers might indirectly bene fit of an increase in business 
competitiveness and productivity (addressed below). 
Costs and benefits for businesses  
Costs for businesses Businesses might incur administrativ e costs for providing information on 
their products. In this case, these co sts are likely to be  recurrent, as 
providing product information is a con tinuous activity. However, it could 
be expected that similar informati on is provided already in the usual 
 
 197course of businesses. 
The costs would affect mostly businesses involved in B2B transactions only. Those selling to consumers as we ll would have lower costs as they 
could use the same pre-contractual in formation with some adjustments if 
necessary both for their consumer and business customers. 
Benefits for businesses SMEs would benefit in relations w ith companies with greater market 
power, as this general disclosure duty and related remedies in case of a 
breach – which currently do not exist or only partially exist in most Member States (e.g. DE, ES, FI, FR , IT, NL, PL, UK) – would entitle 
them to information they otherwise may not have received from the other 
party and/or would not have been able  to obtain in another way. By being 
better informed, they could strengthe n their position in negotiations.  
In general, businesses would be in a better position to judge about the 
characteristics of the products they purchase in advance of concluding a 
deal. This information would enable them to select the products that 
mostly suit their needs. As this w ould result in a be tter allocation of 
resources, their productivity and competitiveness would increase. 
  Duty to ensure that information supplied is correct 
 
Issue:
 
 In addition to the general duty to disclose information about goods and services, a Common 
European Sales Law could introduce a duty for the party who supplies information before or at the 
time a contract is made, to take reasonable care to  ensure that the information supplied is correct and 
is not misleading.  
 In case of breach of this duty the aggrieve d party would have the following remedies: 
 - Where the business has not fulfilled his pre-contr actual information duty and, as a result a contract 
has been concluded which the othe r party would not have conclude d, or would not have concluded 
on the same terms, the business would be liable for damages.  - The contract may be void on the basi s of a mistake or fraud provisions. 
 
Legal comparison:  
 
BE  There is not a specific provision. However:  - The principle of good faith (Art. 1134,3 of the Civil Code) obliges 
contracting parties to loyal cooperation and to inform each other in good 
faith. When a party violates one of thes e duties, the judge can find that this 
party commits a contractual fault and is liable for loss caused to the other 
party.  - In addition, the violation of the dut y to inform can also lead to pre-
contractual liability: e.g. when there is  a defect of consent (fraud (1116 of 
the Civil Code)/ a mistake (1110 of th e Civil Code)), the contract can be 
avoided and/or damages can be cl aimed. Especially where a party 
intentionally gives misleading or incorrect information there will often be fraud. In the case of fraud, four conditi ons must be fulfilled: (1) the use of + Country  Provision comparison  Impact on 
the level  of protection
 
 
 198artifices; (2) the fraud must be comm itted by the other contracting party; 
(3) the party that commits the fraud must have the intention to deceive or to mislead the other party and finally (4) the fraud must be of an overriding 
importance. Only when the latter condition is fulfilled, a fraud will 
(‘principal fraud’) lead to avoidance of  the contract (at the request of the 
party that is victim of the fraud). If the fraud is not of an overriding 
importance and has not led the other part y to enter into the contract (but 
could have led him or her only to en ter into the contract under different 
conditions, e.g. a lower price) the fra ud is 'incidental'. In the latter case 
only damages can be claimed, on the basi s of a pre- contractual fault (tort 
liability: Art. 1382 of the Civil Code).  The first condition will be fulfilled 
(artifices): If the information provided is incorrec t, incomplete or misleading, (through 
lies, misleading declarations  or overstatements); or 
If there is an omission to provide in formation, deceit will only be accepted 
if there is a special duty to inform an d if the contracting party deliberately 
conceals this information. This specia l duty to disclose can result from 
special legislation (e.g. Art. 4 MPCPA) . Whilst in B2C situations it is 
likely that an omission to give information constitute a fraud, it is less certain in B2B situations. The first condition of fraud will be fulfilled when the information provided is incorrect, incomplete or misleading. The condition that there must be an 
intention to deceive or to mislead th e other party, makes the defect of 
consent 'fraud' less protective than th e provision envisaged at the European 
level mentioned above. Under Belgian law the remedies fo r fraud consisting in not providing 
information that the other business pa rty needed are limited to avoidance 
and damages.  
EE Estonian Law of Obligations Ac t (1.07.2002) provides (§ 14. Pre-
contractual negotiations ): Persons who engage in pre-contractual 
negotiations or other preparations for entering into a contract shall take 
reasonable account of one another’s interests and rights. Information 
exchanged by the persons in the course  of preparation fo r entering into the 
contract shall be accurate. There are no special remedies provided for in the Art. itself, but all remedies mentioned above are available (LOA § 101 (1)). = 
 
ES There is no such specific provision. But general rules on avoidance for 
mistake, fraudulent omissions and good faith determine such a duty. However, the duty is much less precise.  There is no specific provision for B2B transactions. The remedies based on 
general contract law woul d, however, be similar. + for the duty 
 
 
 = for remedies 
FI No such provision in the Finnish law. + 
IT No corresponding provision in Italia n law – extreme cases are however 
dealt with by the general provision on good faith.  + 
PL There is no such special provisi on. There are no such remedies. + 
PT This duty of care follows from the general duty of good faith – Art. 227 
par. 1 of the Civil Code.  The remedies in general are damages. = for duty 
 
 
+ for remedies 
UK England and Wales: the rules gove rning misreprese ntation, including 
Misrepresentation Act 1 967, section 2(1), apply in  principle where there 
has been a misstatement of fact. Moreove r, the courts are ready to find that  
+  
 
 199a statement that literally may be true  but which is misleading amounts to a 
false statement. Right to avoid if mi srepresentation is serious; right to 
damages unless the person giving the in correct information shows that he 
had reasonable grounds to believe th at the information was correct.  
 Scotland: no such duty is directly imposed in Scottish law. However, there 
are sometimes remedies via the rule s on error or damages for fraud or 
negligent misrepresentation. Additiona lly, information may have to be 
given to avoid liability for non-conformity. No such comprehensive remedies in Scottish law.   
 
 
  
 
 + 
 
Assessment of impacts  
 
Costs for consumers Consumers are unlikely to be concerned. 
Benefits for 
consumers Consumers are unlikely to be concerned. 
 
Costs and benefits for businesses  
Costs for businesses Some additional costs may be incu rred by businesses to adapt the 
information materials to make sure that the information supplied is correct and is not misleading. In the case of breach of this duty i.e. where the business has not fulfilled his pre-contr actual information duty and, as result 
a contract had been concluded which the other party would not have been 
concluded, or would not have been concluded on the same terms, the 
business would be liable for damages.  The potential costs for compensating 
damages would however only affect  traders providing incorrect or 
incomplete pre-contractual information to other parties. These costs are considered as minor as the required standard would correspond to normal 
business practice.
 
Benefits for businesses Businesses would benefit from receiving complete and correct pre-
contractual information that would f acilitate the business decision making 
process. In a number of Member Stat es at present there are no specific 
provisions concerning remedies for a br each of information obligations in 
B2B contracts (e.g. PL, FI) or the rules are not so clear and strict (e.g. PT, 
IT, UK). Businesses in these countries  would be more protected in case 
they conclude a contract based on in complete or misleading information.  
 
 
Unfair exploitation 
 
Issue:  
 
A Common European Sales Law could introduce a provi sion that a party may a void a contract if, at 
the time of the conclusion of the contract: (a) the party was dependent on or had a relationship of 
trust with the other party, was in economic distre ss or had urgent needs, was improvident, ignorant, 
inexperienced or lacking in bargaining skill; and (b) the other party knew or  could be expected to 
have known this and, given the circumstances and pur pose of the contract, exploited the first party’s 
situation by taking an excessive benefit or unfair advantage. 
 
Legal comparison:  
Country  Provision comparison  Impact on 
the level  of 
 
 200BE There is not such an explicit provi sion under Belgian law. However legal 
literature and case law have developed the theory of the 'qualified unfair 
treatment' (gekwalificeerde benadeli ng/ lésion qualifiée) of a contract 
party. There are three cumulative requirements: 1) there must be a manifest imbalance between the obligations of the parties; 2) there must be an abuse of the concrete circumst ances of the inferiority of the unfair 
treated contractual party (inferiority can be: physi cal, moral, financial, 
intellectual, functional, a monopoly, …)  and 3) the abuse has to be the 
determining factor: without  the abuse of circumstances the unfair treated 
party would not have concluded the c ontract or would have concluded a 
less onerous contract. The sanction under Belgian law is based on the 
culpa in contrahendo (Art. 1382 of th e Civil Code) and damages will be 
awarded to the victim. Some scholars have submitted that redress in kind 
can consist out of nullifying the contract or reducing an overstated obligation. The text envisaged at Eu ropean level as mentioned above 
provides for a clear provision. + 
EE Regulation is based on nullity of the contract:   GPCCA § 96. Transaction contrary to good morals or public order: 
(1) A transaction which is contrary to  good morals or public order is void.  
(2) A transaction is contra ry to good morals, inter alia, if a party knows or 
must know at the time of entry into the transaction that the other party 
enters into the transaction arisi ng from his or her exceptional need, 
relationship of dependency, inexperien ce or other similar circumstances, 
and if: 1) the transaction has been en tered into under conditions which are 
extremely unfavourable for the other party or 2) the value of mutual 
obligations arising for the parties is out of proportion contrary to good 
morals.  (3) If the value of mutual obligations  specified in paragraph (2) 2) above 
is unreasonably out of proportion contra ry to good morals, it is presumed 
that the party knew or should have known of the other party’s exceptional 
need, relationship of dependenc y, inexperience or other similar 
circumstances.  (4) If a transaction is void due to th e obligation to pay interest which is 
contrary to good morals, the party who is obliged to pay the interest or 
other charge depending on the time duri ng which the loan is used, has the 
right to return that which is received  as a result of the void transaction by 
the due date by which the party had, according to the void transaction, to 
repay the whole loan.  In such a cas e, interest for the time during which 
the loan was used shall be paid in  the amount provided for in subsection 
94 (1) of the Law of Obligations Act. = 
ES Under Spanish law, there is no general possibility of avoiding the contract 
for unfair advantage except: (i) ther e is duress; (ii) there is some 
quantitative disadvantage in very specific cases involving minors and 
similarly situated persons, and no ot her remedy is available; (iii) in 
certain Spanish regions - Cataluña , Navarra - where the traditional 
rescission by seller for laesio enormis is applicable.  + 
FI Section 31 in the Contracts Act: (1) If anyone, taking advantage of 
another’s distress, lack of unders tanding, imprudence or position of 
dependence on him/her, has acquired or exacted a benefit which is obviously disproportionate to what he/s he has given or promised, or for 
which there is to be no consideration,  the transaction thus effected shall = protection 
 
 
 201not bind the party so abused. 
IT Under Art. 1448 of the Civil Code the party is entit led to avoid the 
contract when there are sp ecific conditions such as:  
a) 'ultra dimidium' disproportion am ong the reciprocal  obligations;  
b) the party had urgent needs;  c) the other party exploited the fi rst party’s situation by taking an 
excessive benefit or unfair advantage. No judicial revision of the agreement is allowed by the court. + 
PL Under Art. 388 of the Civil Code in  a case of unfair exploitation, a party 
may demand a reduction of its own pe rformance or an increase in the 
performance due to it and in the event that one or the other would be excessively difficult, it may demand that  the contract be de clared invalid.  
There is no possibility to avoid contr act by notice of the entitled party.   + 
PT The same remedy is foreseen in Art. 282 of the Civil Code.  = 
UK England and Wales: Where the parties are in a relationship of trust and 
confidence, remedies (for 'undue influence') are readily given. In other cases there is the possibility that th e contract may be avoided as an 
unconscionable bargain, but the cases are few.   Scotland: No such express rule exists , but in some cases a contract may 
be avoided on the ground of 'facility and circumvention' or undue influence. 'Facility' here means mental weakness. Cases are few.    
+ 
 
  
 
+ 
 
Assessment of impacts  
 
Costs for consumers Consumers are unlikely to be concerned. 
Benefits for 
consumers Consumers are unlikely to be concerned. 
Costs and benefits for businesses  
Costs for businesses Businesses which exploit the other party’s situation by taking an 
excessive benefit or unfair advant age would need to change their 
businesses practices. In the case of unfair exploitati on the other party 
could avoid the contract and this may generate some costs for the 
exploiting party. However, these cost s are considered as minor as the 
required standard would correspond to normal business practice. 
Benefits for businesses At present, in a number of Member Stat es, the rules are le ss strict i.e. not 
provide for the same remedies or provide for less cases of unfair exploitation (e.g. ES, PT, PL, UK). Bu sinesses in these countries would 
benefit from more protection against unfair exploitation. SMEs are likely 
to benefit particularly from this pr ovision as they are often the weaker 
party and are more likely to fall victim of unfai r exploitation. 
 
 
Unfairness control of standard terms  
 
Issue:  
 A Common European Sales Law coul d introduce a rule that in B2B transactions, a business cannot 
rely on a contract term included in its standard terms and conditi ons which grossly deviates from 
good commercial practice, contrary to  good faith and fair dealing.  (i.e. unfair term). This rule means 
 
 202that not individually negotiated unf air standard terms and conditions shall be fair, otherwise that 
term cannot be enforced.       Legal comparison:
 
 
Country  Provision comparison  Impact on 
the level  of protection
 
BE There is no such provision under Belgian law. + 
DE The general provision on the reasonableness of unfair terms is also 
applicable to B2B transactions. Accord ing to this, provisions in standard 
business terms are ineffec tive if, contrary to the requirement of good faith, 
they unreasonably disadvantage the ot her party to the contract with the 
user. An unreasonable disadvantage may arise from the provision not 
being clear and comprehensible. Unr easonableness is, in case of doubt, to 
be assumed to exist if a provision is not compatible with essential 
principles of the statutory provision from  which it deviates, or if it limits 
essential rights or duties i nherent in the nature of the contract to such an 
extent that the purpose of the contract is jeopardised. To interpret that rule 
the courts take into account the black and grey lists from B2C legislation, 
as an overall grey list for B2B contracts.  = 
EE A standard term is void if, taking in to account the nature, contents and 
manner of entry into the contract, th e interests of the parties and other 
material circumstances, the term causes unfair harm to the other party particularly if it causes a significant imbalance in the parties’ rights and obligations arising from th e contract to the detrimen t of the other party or 
if the standard term is contrary to good morals. + 
ES No such provision for B2B transactions. + 
FI No such general provision in Finnish  law. But under certain circumstances 
contract terms may be considered as unfair (e.g. Supreme Court 2008:53). + 
FR Under Art. L 442-6 of the Commer cial Code (introduced in 2008)  any 
professional engages his liability and requires him to repair the damage 
caused by the fact that he: - submits or attempts to submit a trading partner to obligations which create a significant imbalance in ri ghts and obligations of the parties  
- obtains or attempts to obtain undue or  disproportionate benefits from a 
trading partner.  Moreover, Art. L.132-1 of the Consumer  Code contains a reference to a 
'non-professional' which might lead, under certain circumstances, to the 
application of the unfair terms control of the Consumer Code to relations 
between businesses. + 
HU There is no such specific provision in the national law. However, Art. 
205/B (2) of the Civil Code provides that  the other party shall be explicitly 
informed of any standard  terms that differ substantially from the usual 
contract conditions, the regulations pertaining to cont racts, or any 
stipulations previously applied by the same partie s. Such conditions shall 
only become part of the contract if, upon receiving special  notification, the + 
 
 203other party has explicitly accepted it. Th is is mandatory for B2B contracts. 
IT No corresponding provision in Italian law.  + 
NL Standard terms can be nullified if they are unreasonably burdensome: Art. 
6: 233 BW- of the Dutch Civil Code. The fairness control in Dutch law 
provides a similar protection. = 
PL There is no such specific provision in Polish law  + 
PT Terms not individually negotiated are unfair if they are contrary to good 
faith – Art. 15 of the Decree-Law 446/85 –in B2B as well as in B2C. 
There are also black and grey lists of terms specifically for B2B.  = 
UK There is no unfairness control, unle ss the term was an exclusion or 
limitation of liability clause, void un der UCTA 1977. Apart from penalty 
clauses, there is currently no cont rol over other unfair terms in B2B 
contracts, but the Law Commissions  have recommended Unfair Terms 
Directive-like controls over small business contracts. The Government has accepted the recommendation but nothing has been implemented in law.  + 
  Assessment of impacts 
 
 
Costs and benefits for consumers  
Costs for consumers No direct costs. There is a potential  risk that busine sses that use unfair 
terms will pass on the costs of adjustment to consumers. However, this risk is low in a competitive market. Moreover, many of the businesses may be engaged in B2B relations on ly and do not sell their products to 
consumers.    
Benefits for consumers Consumers may indirectly benef it from increased business activity. 
Costs and benefits for businesses  
Costs for businesses Businesses that impose unfair terms mi ght need to adjust the conditions 
they offer and may incur operational costs. Businesses would no longer be 
reliant that their standard terms and conditions (which include some 
unfair terms) could be enforced a nd might be faced with some legal 
uncertainty. However the risk and cost s are considered minor as including 
terms which grossly deviate from goo d commercial practices, contrary to 
good faith and fair dealing, do not co rrespond to normal business practice. 
Benefits for businesses Businesses would be protected agains t the enforcement of unfair terms 
and therefore would be able to av oid the detriment stemming from such 
terms in particular in Member Stat es where there are no such specific 
provisions in place (e.g. BE, IT, ES, PL, UK) or where the unfairness control covers certain re strictive circumstances (e.g. DE, EE, FR, HU, FI). 
SMEs are likely to benefit in particul ar, as they usually have less market 
power to oppose unfair terms or legal resources to identify them in a 
contract.  SMEs would gain a stronger positio n in negotiating the terms of a 
contract as they would not have to invest resources in negotiating against 
unfair terms.  
 
 
Terms which are unfair if not sufficie ntly drawn to the buyer's attention 
 
Issue:  
 
 204 
A Common European Sales Law t co uld protect against standard terms of which the party not 
supplying them could not be awar e: contract terms supplied by one party and not individually 
negotiated may be invoked against the other party only if the other party was aw are of them, or if the 
party supplying them took reasonable steps to draw the other party's attention to them, before or 
when the contract was concluded.. 
 
  
Legal comparison:
 
 
Country  Provision comparison  Impact on 
the level  of protection
 
BE 
 Under general contract law it is gene rally held that standard terms are 
not accepted (and not part of the cont ract) until the other party has, at 
the latest at the moment the cont ract was concluded, knowledge of 
those terms or could have obtained kn owledge of those terms, and he 
has accepted those terms. 
A Common European Sales Law w ould provide a higher level of 
protection because there is also an obligation for the party supplying the 
terms, to take reasonable steps to dr aw the other party's attention to the 
standard terms. + 
DE Standard terms become part of the contract in B2B by agreement which 
can be explicit, implied or tacit. The incorporation of standard terms 
may be made by reference or derive d from commercial practice. The 
party does not have to 'draw the other party's attention' to the terms. The 
other party is however protecte d by the unfairness control which 
includes transparency and the rule on surprise clauses. = 
EE Estonian law provides this principle as part of the procedural fairness:  
§ 37. Standard terms as part of contr act:  Standard terms are part of a 
contract if the party supp lying the standard terms clearly refers to them 
as part of the contract before enteri ng into the contract or while entering 
into the contract and th e other party has the opportunity to examine their 
contents. Standard terms are also part  of a contract if their existence 
could be presumed from the manner in which the contract was entered 
into and the other party was give n the opportunity to examine their 
contents. = 
ES A provision in Section 5 of the St andard Form Terms Act (Ley 7/1998, 
de 13 de abril, LCG) determines that a standard term will not be incorporated into the contract if  the supplier of the term did not 
effectively ensure that the other party knew of the existence and content of the term.  = 
FI No such provision in Finnish law. + 
HU No such provision in Hungarian law.  However, Art. 205/B (1) of the 
Civil Code provides that standard te rms become part of a contract only 
if they have previously been made  available to the other party for 
perusal and if the other party ha s accepted the terms explicitly or 
through conduct that implies acceptance. Mandatory for B2B contracts. - 
IT Arts. 1341 and 1342 Italian Civil Code: (1) Standard terms or model contracts supplied by one pa rty are effective as agai nst the other party if 
the latter was aware of them at the ti me of conclusion of the contract, or 
should have been aware of them  by using 'ordinaria diligenza' + 
 
 205(appropriate care taking objective ci rcumstances into account); (2) 
Terms regarding the limitation of liability or the right to terminate the contract or to withhold performan ce in favour of the supplier of the 
term, as well as terms imposing to the other party cut-off periods, limitations as to counter-claims, limita tions of freedom of contract with 
third parties, tacit prorogation or rene wal of the contract, arbitral clauses 
or derogation to jurisdiction have to  be individually ap proved in writing 
by the other party. This provision in troduces a formal requirement of 
signature of the contract (and any sp ecifically indicat ed unfair clause) 
by the other party, but it does not amount to a substantive test. 
PL There is no such provision. + 
PT Terms are excluded from the contract  if the party supplying the terms 
did not fulfil the duty of communicati on or the duties of information to 
the other party about the terms– Ar ts. 5, 6 and 8 of the Decree-Law 
446/85, from the 25th October 1986. When the other party was not 
aware of the terms, they are also automatically excluded if there was a lack of communication or information or if, by their context, title or 
presentation, said terms would not be noticed by a normal contracting 
party in the position of the real one  (Art. 8 of the Decree-Law 446/85).  + 
UK England and Wales: Where the rele vant term is not in a signed 
document but, e.g., on a ticket, then it will be incorporated into the 
contract only if the party supplyi ng it gives reasonabl e notice of the 
term to the other party. Where a te rm is unusual or onerous, the degree 
of notice required is greater and it ma y be necessary to draw attention to 
the term specifically.  Where the term is in a document that has been signed by the other party, 
it will form part of the contract; but the legislation controlling unfair 
terms (Unfair Contract Terms Act 1977; Unfair Terms in Consumer Contracts Regulations 1999) are fre quently used (when applicable) to 
deal with clauses that are unfairly surprising.  In Scotland: No such rule. = 
 
  
 
  
 
 
 
 
+ 
 
 
Assessment of impacts  
 
Costs for consumers Consumers are unlikely to be concerned. 
Benefits for 
consumers Consumers are unlikely to be concerned. 
 
Costs and benefits for businesses  
Costs for businesses Businesses supplying the terms to a c ontract would be obliged to take 
reasonable steps to draw the other pa rty’s attention to them, before or 
when the contract was concluded. Any additional costs are considered as 
minor as informing the other party about inserted terms would correspond 
to normal business practice. Business  from countries where the similar 
rules are in place at present (e.g. EE, DE, ES) would not bear any 
additional costs. In HU where the presen t rules are more strict i.e. provide 
that standard terms become part of a contract only if they have previously 
been made available to the other party for perusal and if the other party has accepted the terms explicitly or through conduct that implies acceptance, the protection for businesse s would decrease slightly (they 
would need to be informed about such terms, but the explicit acceptance would not be required). 
 
 206Benefits for businesses Businesses would be protected agains t terms supplied by the other party 
of which they were not aware. In a number Member States, at present 
there are no such rules or rules are less  strict i.e. (e.g. BE, UK, PT, PL, IT, 
FI). Businesses in these countries would gain more confidence as they 
would need to be made aware of a ll the terms supplied by the other party 
or otherwise they could not  be invoked against them. 
 
   
Seller's right to cure for fundamental non-performance 
 
Issue:  
 A Common European Sales Law could foresee a selle r's right to cure his non-performance in the 
following cases:  - A seller who has delivered goods early and who is no tified that they are not in conformity with the 
contract may make a new and conforming tender if  that can be done within the time allowed for 
performance.  - In other cases a seller w ho has tendered a performance which is not in conformity with the contract 
may, on being notified of the non-conformity, offer to cure it at the se ller’s own expense. 
 Legal comparison:
 
 
Country  Provision comparison  Impact on the level  of protection
 
BE 
 Such a provision does not exist under Belgian law. Although some 
roughly similar results may be reac hed under several legal basis (e.g. 
Arts. 1610, 1630-1637, 1641-1646 and 1184 of the Civil Code), a Common European Sales Law would set out a clear provision on the 
seller's right to cure his non-pe rformance, which would be more 
protective towards the seller. + 
EE -No such rule in Estonian law.  - LOA § 107. Cure: (1) A party who fails to perform a contractual obligation may, at the party’s own ex pense, cure the non-performance, 
including improving or repl acing defective a performance, as long as the 
other party has not withdrawn from  or cancelled the contract or 
demanded compensation for damage in lieu of the performance, provided that: cure is reasonable in the ci rcumstances, and cure does not cause 
unreasonable inconvenience or expenses to the injured party, and the injured party has no legitimate intere st in refusing a cure. (2) A non-
performing party may cure non-perfor mance within a reasonable period 
of time after the party has given not ice to the injured party of the 
intention to cure and of the proposed  manner and timing of the cure and 
if the injured party with a legitimat e interest in refusing cure has not 
given notice of such refusal with in a reasonable period of time. + 
= 
ES No specific provision for B2B transa ctions, however case law may lead 
to roughly similar results but with  less precision and certainty.  + 
FI Sale of Goods Act, Section 36: the seller may, at his own expense, 
remedy the defect or deli ver substitute goods if th is can be done without 
substantial inconvenience to the buyer  or uncertainty of reimbursement 
by the seller of any expenses advanced by the buyer. = 
HU There is no such specific provision in Hungarian law.  + 
 
 207IT While there is no specific provision in the Italian Civil Code on the 
debtor’s (or seller’s) right to cure non-performance, either in case of 
early performance or in other cases of non-conformity, scholars and case-
law have suggested that the debtor’s  (or seller’s) offer for a conforming 
tender should be taken into account in  assessing whether parties behaved 
according to fair dealing (Art. 1175 of the Civil Code). Moreover, the debtor (or seller) can make a new conf orming tender as long as the other 
party has not requested a termination.  Slightly + 
PL - There is no such provision. - There is a similar provision. Unde r Art. 560 §1 of the Civil Code the 
buyer’s termination of the contract is ineffective if the seller cures the 
non-conformity of goods with the c ontract (replace or repair the good) 
without unreasonable delay.  + 
= 
PT - The seller has a right to cure. 
- The buyer may refuse the cure if he opts for the rescission of the 
contract because of the defects – Ar t. 913 para 1 of the Civil Code.  = 
+ 
UK England and Wales: English la w contains the same rule.  
Scotland: The rules on the right to cu re a defective performance are not 
as clear or developed.  = 
+ 
 
Assessment of impacts:  
 
Costs for consumers Consumers are unlikely to be concerned. 
Benefits for 
consumers Consumers are unlikely to be concerned. 
 
Costs and benefits for businesses  
Costs for businesses There could be some additional costs for buyers as the sellers would have 
the right to cure for non-performance whereas at present in some Member 
States a buyer can refuse the cure and opt for the recession of contract. 
However, normally a buyer should be in terested in bringing the delivered 
goods in conformity as soon as possible and not having to search for a new supplier or becoming involved in disputes with the first supplier. 
Benefits for businesses In a number of Member States the ru les on the right to cure a defective 
performance are not as clear or developed (e.g. HU, ES, EE, IT). These rules would give the opportunity to th e seller to cure for non-performance 
and thus avoid additional costs if a bu yer opts for the recession of contract 
and compensation for damages. 
  
 
 208ANNEX IX: RANKING OF BARRIERS TO TRADE 
 
Surveys among businesses who are involved or interested in startin g cross-border trade 
provided data on obstacles to cros s-border transactions in the internal market. Eurobarometer 
320 European contract law in business-to-business transactions  (B2B) and Eurobarometer 
321 European contract law in business-to-consumer transactions  (B2C) list and rank the 
obstacles that have an impact on the cross-border trade of businesse s in the internal market.    
 The barriers identified are of a regulatory natu re (tax regulations, contract law related 
difficulties, licensing and registration requirements)  and of a practical na ture (e.g. after-sales 
maintenance). Cultural differences are also acco unted for. The obstacles identified below to a 
large extent comprehensively cover the various barriers that businesses may still encounter in 
the internal market. This is proven by the fact that in both surveys the share of respondents 
who indicated that they were affected by 'oth er obstacles' than those identified in the 
questionnaire was very small.   For the purpose of identifying how th e barriers to trade affect businesses, it is essential to find 
out how businesses perceive thes e barriers. While perceptions are by nature subjective, they 
are an important driver determining the business decision to enter into cross-border trade.  
The survey method is particularly appropriate fo r collecting data on perceptions, as it is based 
on the opinions of the respondents.    
1. Barriers to cross-border B2C tran sactions (based on EB 321) 
 
A contract law-related problem (difficulty in  finding out about the provisions of a foreign 
contract law) was ranked as th e top barrier for B2C transacti ons, with 40% of the surveyed 
companies indicating that it had an impact on their decision to trad e cross-border. Other 
contract law related problems ar e ranking third, sixth and seventh. 
 The overall picture of barriers to B2C cross-bo rder trade is illustrated by the figures below, 
with contract law related obstacles indicated in bold:  I - Difficulty in finding out about the provi sions of a foreign contract law, 40% 
II - Tax regulations, 39% III - The need to adapt and comply with diffe rent consumer protection rules in the 
foreign contract laws, 38% 
IV - Language (communication problems , translating documents, etc.), 36% 
V - Formal requirements e.g. licensi ng, registration procedure, 35% 
VI - Obtaining legal advice on foreign contract law, 35% 
VII - Problems in resolving cross-border conflict s, including costs of litigation abroad, 
34% 
VIII - Problems with cross-border delivery, 32% 
IX - After-sales maintenance abroad, 31% X - Cultural differences, 27% XI – Other, 11%  The above data shows that a significant percenta ge of companies who are interested in cross-
border trade are hindered by remaining barriers in the internal market. Contract law related 
obstacles rank high among the barr iers that hinder businesses.  
 
 
 209 
2. Barriers to cross-border B2B tran sactions (based on EB 320) 
 
Tax regulations were ranked as  the main obstacle in B2B tr ansactions, closely followed by 
formal requirements and a contract  law-related barrier, i.e. the difficulty in finding out about 
the provisions of a foreign contract law. Thus a contract la w related obstacle  ranked among 
the top three barriers to trade with 35% of respondents saying that it had an impact on their 
decision to trade cross-border. Other contract  law related problems ra nked sixth, seventh and 
ninth.  The overall picture of barriers to B2B cross-bo rder trade is illustrated by the figures below, 
with contract law related obstacles indicated in bold:  I – Tax regulations, 38% II - Formal requirements e.g. licensi ng, registration procedures, 36% 
III - Difficulty in finding out about the provi sions of a foreign contract law, 35%  
IV - Language (communication problems , translating documents, etc.), 34% 
V - Problems with cros s-border delivery, 34% 
VI - Problems in resolving cross-border conflict s, including costs of  litigation abroad, 
32% 
VII - Obtaining legal advice on foreign contract law, 31%  
VIII - After-sales maintenance abroad, 30% IX - Difficulty in agreeing on the forei gn applicable contract law, 30% 
X - Cultural differences, 25% XI – Other, 12%