EUROPEAN COMMISSION 
Brussels, 11.10.2011 
SEC(2011) 1166 final 
  
COMMISSION STAFF WORKING PAPER 
Executive summary of the 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) 1165 final}  
 
 1 
1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 
The European Commission (Commission) has been  working on a European contract law since 
2001. In July 2010 the Commission adopted a 'G reen Paper on policy options on progress 
towards a European contract law for cons umers and businesses' (Green Paper). The 
Commission's Work Programme for 2011 provide s for a legal instrument on European 
contract law as a strategi c initiative to be proposed in the last quarter of 2011. 
 
In April 2010 the Commission set up an Expert  Group (EG) to conduct a feasibility study on a 
draft instrument. The study was completed in  April 2011. An Impact Assessment Steering 
Group met 5 times to discuss the draft Green Pape r, the impact assessment (IA) report and the 
feasibility study.    
The Commission carried out continuous consu ltations. The Green Paper resulted in 320 
responses of a wide range of  stakeholders. They allowed the Commission to identify and 
address concerns relating to the policy op tions. The Commission also created a key 
stakeholders expert group representing busines s, consumers and legal practitioners. It was 
consulted continuously on the feasibility study to ensure its rules were covering all practical 
problems and were user-friendly. In addition, the Commission also surveyed business and 
consumers through Eurobarometers (EB), the SME Panel and the European Business Test 
Panel surveys. A workshop on co ntract law with business stak eholders was organised in 
November 2010. Commission officials also met re presentatives of BEUC and attended two 
meetings of the European Consum er Consultative Group (ECCG).  
 
2. PROBLEM DEFINITION 
2.1. Introduction 
Differences in contract law between Member St ates (MS) may hinder cr oss-border trade in 
the EU, by dissuading business and consumers from cross-border transactions. Businesses 
involved in the trade in goods that export in to other EU markets face unnecessary entry 
transaction costs close to €1 billion (bn) every year. The value of the trade foregone by those 
who are dissuaded due to differences 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 area of contract law is characterised by differences 
between the national laws.  While a number of EU and international le gal instruments have 
been adopted in the area of contract law, th ere is no uniform and comprehensive set of rules 
that businesses and consumers could use in cr oss-border transactions in the EU.     
 
2.3. Problem 1: Differences in contract law hinder businesses from cross border trade 
and limit their cross-border operations 
Currently on average only 9.3% of all EU busine sses involved in trade in goods export within 
the EU.. The majority of them (62% in B2B a nd 57% in B2C) export to no more than 3 other 
MS. One of the reasons for this relatively low level of cross-border tr ade are the remaining 
regulatory (e.g. differences in ta x regulations, contract law a nd administrative requirements) 
and practical barriers (e.g. language, transporta tion and after-sales maintenance) to cross-
border trade. 
 
 2 
Negative impact of contract law differences on cross-border trade:  Contract law related 
barriers dissuade some businesses from tradin g cross-border. 61% of businesses involved in 
B2B and 55% in B2C transactions were often or  at least occasionally deterred by contract law 
related barriers. Additionally, 3% of respondent s in the business-to-bus iness (B2B) and 2% in 
the business-to-consumer (B2C) EBs always gave up exports for th is reason. Secondly, 
contract law related barriers l ead businesses to limit their cr oss-border operat ions: Above 80% 
(both in B2B and B2C transactions ) of businesses active in or in terested in cross-border trade 
and affected by contract law barriers suggested that they exported to fewer EU countries for 
this reason. The value of failed intra-EU trade as a result of busine sses giving up cross-border 
trade due to contract law can be estimated at  a range between €26 bn (equivalent to the GDP 
of Lithuania) to €184 bn (slightly mo re than the GDP of Portugal).  
 Research suggests that bilateral trade between countries which have a legal system based on a 
common origin have a positive effect on trade.  If the contribution of removing differences in contract law were to be about 1 percentage point of this posit ive effect, the in crease in intra-
EU trade would be of the order of magnitude of €30 bn.   
2.3.1.  Additional transaction costs stemming  from differences in contract law 
hinder cross-border trade:  The need to apply different fo reign contract laws generates 
additional transaction costs compared to do mestic trade. These costs usually grow 
proportionately to the number of EU countries  a business trades with. Businesses estimate 
their transaction costs for entering one MS  between less than €1,000 to above €30,000. These 
costs have the greatest impact on micro and sma ll enterprises, as they  constitute a greater 
share of their turnover.  
2.3.2.   
The cumulative costs for all currently expor ting EU businesses are between €6 and €13 bn. 
The annual transaction costs amount to approximately €0.9-€1.9 bn.  In the absence of action, 
by the year 2020 they would accumulate to €9- €19 bn if the same level of export entry 
persists.  
2.3.3.  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. Businesses considered for instance the difficulty in finding out the foreign contract law provisions a t op barrier. It ranked 1
st for B2C and 3rd for B2B transactions.  
 
2.4. Problem 2: Consumers are hindered from cross-border purchases and miss 
opportunities  
The level of cross-border shopping in the EU remains relatively low with 26% of consumers 
purchasing from another EU country when they travel and 9% from a distance. Barriers on the 
supply and demand side appear to hinder this grow th. While the impact of practical barriers is 
gradually decreasing, the importance of  the regulatory ones remains high.  
 
2.4.1.  Contract law differences impact ne gatively on cross-border shopping: 
Contract law includes rules prot ecting consumers. The certainty  about the content of these 
rules is a major factor determining consumer  confidence in cross- border shopping. When 
consumers are confronted with different foreign laws, they are uncertain about their rights in a 
cross-border context. Indeed, 44% of European  consumers say that uncertainty about their 
consumer rights discouraged them from purchasing from other EU countries. 
2.4.2.  Consumers miss out opportuniti es of the single market :  
 
 3A substantial number of consumers who prefer to shop domestically due to uncertainty about 
their cross-border rights, are often disadvantag ed by the limited choice and higher prices in 
their domestic markets. If the 44% of consum ers who shop online only domestically and who 
are uncertain about their cross- border rights, woul d make at least one  online cross-border 
purchase, they could save €380 million. 
 
On the other hand, consumers who try to access be tter offers in other MS are often refused a 
purchase by the trader. Almost a quarter of expo rt-oriented European retailers refused to sell 
due to contract law. The refusal of sales may dissuade proactive consumers from shopping 
cross-border and disadvan tages them economically. European consumers spend €42.3 bn 
annually on cross-border purchases. Assuming that  within a year the 3 million consumers who 
experienced a refusal to  sell were refused an order of a product of an average value of €52 , the 
value of failed transactions would be €156 million.  
 
2.5. Need for action at EU level and subsidiarity  
 
This initiative complies with the principle of subsidiarity. The objectives of facilitating the 
expansion of cross-border trade for business and purchases by consumers in the internal 
market cannot be fully achieved as long as differ ences in national contr act laws persist. As 
market trends evolve and prom pt MS to take action indepe ndently (e.g. regulating digital 
content products) regulatory divergences lead to increased  transaction costs and legal 
complexity for business; gaps in the protectio n of consumers risk growth. National contract 
laws can only be approximated by adopting measures  at EU level. The Union is best placed to 
address the problems outlined above as they  have a clear cross-border dimension.  
 
3. POLICY OBJECTIVES 
The overall objective is to suppor t the economic activity in the internal market by improving 
the conditions for cross-border trade by reducing th e barriers caused by differences in contract 
law between MS. The general objectives are to f acilitate the expansion of cross-border trade 
for business and cross-border purchases for consumers.  
  
4. POLICY OPTIONS  
4.1. Options for type of intervention  
 
Option 1: Baseline scenario (No policy change): The current legal framework would be 
maintained without further EU action.  
Option 2: A toolbox for the EU legislator: This would set out model definitions and rules 
on contract law topics that ar e likely to be subject to EU legislation. A Commission document 
or an inter-institutional agreement could be envisaged.  
Option 3: Recommendation onCommon European Sales Law: A Common European 
Sales Law instrument could be attached to a Recommendation addressed to the MS 
encouraging them to replace (option 3a) or inco rporate (option 3b) it into their national laws 
voluntarily, allowing them discretion on time, method and extent of implementation. This 
option may induce MS to replace their national contract laws or let them incorporate a Common European Sales Law instru ment as an optional regime. 
 
 4Option 4: Regulation or Directive setting up an optional Common European Sales Law 
instrument : An optional Common European Sales Law could be set up as a 'second regime' 
within each Member State's national civil law.  It would be a comprehens ive, self-standing set 
of contract law rules with a high level of c onsumer protection, which could be chosen by the 
parties as the law applicable to  their cross-border contracts. 
Option 5a and 5b: Directive on a ma ndatory Common European Sales Law : A Directive 
could harmonise the national contract laws of the 27 MS. It would complement the consumer 
acquis and would be based on a hi gh level of consumer protec tion. The harmonisation may be 
full (5a) or minimal (5b). 
Option 6: Regulation establishing a mandatory Common European Sales Law: This 
would create a uniform set of EU  contract law rules in all MS. 
Option 7: Regulation establishing a European Civil Code:  This would create a uniform set 
of European civil law rules in all MS.  
Discarded options: 
 
• Option 3a: Recommendation encouragi ng MS to replace national laws. 
• Option 7: Regulation establishing a European Civil Code. 
These options received hardly any support from stakeholders and are likely to go beyond what 
is necessary and thus be disproportionate. They also raise serious issues of not meeting the 
principle of subsidiarity. 
4.2. Options for scope and content  
The scope of a Common European  Sales Law instrument coul d apply only to cross-border 
transactions or to both domes tic and cross-border transactions. The scope could include B2C 
contracts only or also B2B contracts. A narrow substantive content of the instrument would be 
limited to core areas of general contract law. A broad scope could go beyond by including 
specific areas in contract law, such as service contracts and other areas of law, such as non-
contractual liability.  
This impact assessment analyses a combination of  the narrow and broad sc ope areas. It covers 
the vast majority of usual practical problems with in the lifecycle of a cross-border contract.  
The analysis focuses on the im pacts of substantive provisions  which impact upon consumers 
and businesses. 
 
5. ANALYSIS OF IMPACTS 
 
5.1. Main impacts of policy opti on 1: Baseline Scenario   
The baseline scenario (BS) would not remove th e additional transaction costs or reduce the 
level of legal complexity for businesses who wish to trade cross-border. Competition in the internal market would remain limited, and despite the adoption of the Consumer Rights 
Directive divergences between th e consumer protection rules of different MS would remain.  
  
5.2. Main impacts of policy option 2 
 
5.2.1.   2a: Toolbox as a Commission Document    
The toolbox would be used for the amendment of existing or preparation of future sectoral 
legislation. Therefore, compared to the BS, the positive impacts of this option on business and 
 
 5consumers would be indirect and also very limited. 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 whether and how 
widely this option would be used and accepted by the Council and Parliament, the impacts of 
this option would not really differ compared to the BS.  
 
5.2.2.  2b: Toolbox as an inter- institutional agreement   
Compared to option 2a, the only difference in th is option is that in the negotiations for new 
legislation or amendments to existing legislation Council and Pa rliament would make use of 
the toolbox provided there were no overriding sector-speci fic reasons. Howeve r, as this option 
would only concern national contr act law rules which would be modified following revised or 
new EU legislation, costs stemmi ng from differences of national contract laws would largely 
remain. In addition, this option w ould only have an impact at the earliest in the medium term. 
The overall positive impact of this option would therefore be, albeit greater than option 2a, 
still rather limited.  
5.3. Main impacts of policy option 3: Recommendation on a 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. However, this is highly unlikely. This option would help to a certain extent 
traders in a B2B contract (as they would have the freedom to decide on the law applicable to 
their contract). Therefore these traders would have the 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 in B2 C contracts, as they would have to research 
whether and where MS have changed the Co mmon European Sales Law with regards to 
mandatory consumer protection rules. This mean s that they would not be able to sell across 
borders to consumers on the basis of one si ngle law and would therefore incur transaction 
costs of the type indicated in the BS. Conseque ntly this option would only to a limited extent 
remove the hindrances to cross-border tr ade identified in th e problem definition. 
 
5.4. Main impacts of policy option 4: Regulation/Directive setting up an optional 
Common European Sales Law 
 
This option would significantly reduce transactio n costs because it woul d allow businesses to 
use one set of rules for cross border trade irresp ective of the number of countries they trade 
with in the EU. The decrease in  costs would provide incentives to increase trade which would 
result in more competition in the internal mark et and give consumers more product choice at a 
lower price.   If a business used the optional Common Europ ean Sales Law, administrative costs would 
amount to €3,000 for B2C contracts and to €1,500 for B2B contracts (on average per 
enterprise).  Assuming that in itially 25% of current  exporters decide to use the optional 
Common European Sales Law, one-off implemen tation costs would amount  to €1.89 billion. 
These costs would be however by far outweighe d by the savings which would be made from 
businesses not paying the additiona l transaction costs for when th ey trade with more than one 
MS. This option would result in costs savings  for new exporters an d potential savings by 
current exporters which would expand their cross-border sales to new countries. The annual 
savings for new exporters can be estimated at € 150-€400 million while th e potential savings 
 
 6for current exporters could be  estimated at €3.7-€4.3 billion. Do mestic businesses or those 
which do not choose the optional Common European  Sales Law would not face any costs as 
this option would not affect them.   This policy option meets the policy objectives as  it reduces costs for businesses and offers a 
less complex legal environment for those who wi sh to trade cross border to more than one 
MS. At the same time it provides a high level of consumer protection.    
5.5. Main impacts of policy options 5 and 6 
 
5.5.1.  Policy option 5a: full harmonisatio n Directive on a mandatory Common 
European Sales Law and policy option 6: Regulation establishing a mandatory Common European Sales Law  
Compared to the BS, an instrument under these options would have substantial costs attached 
to it. The instrument would weigh particular ly heavily on SMEs. Businesses which only trade 
domestically would face a very substantial cost to use the ne w instrument without an added 
value. These businesses (17,136,213 in B2B and 4,420,563 in B2C) would face a one-off 
implementation cost of €208.8 billio n to use the new legislation.  
 The instrument would create additional admini strative costs for 22 million businesses, i.e. 
including those who trade only domestically, which would amount on average per enterprise 
to €2,500 in B2C transactions a nd to €1,500 in B2B transactions . The businesses trading only 
domestically would be required to pay these costs with no re al financial gain, as this 
advantage would only be realis ed for those businesses tradi ng across a border. The one-off 
transactions costs for 22 million businesses (inc luding for those who trade only domestically) 
in the EU would amount to €217 billion.   However, the instrument would result in cost savings for new exporters as well as current 
exporters who would expand their cross-border sa les to new countries. The annual savings for 
new exporters would be €0.63-€1.6 billion. Similarly as under option 4, the current exporters that would start trading with a dditional countries could be estimat ed to have potential savings 
of at least €3.7 – €4.3 billion.   The instrument would increase competition in the internal market and l ead to a decrease in 
prices. Consumers would benefit from an incr eased choice of products at a lower price. 
Although the instrument would provide a high le vel of consumer protection, the replacing of 
national legislation could mean that some consumers may lose protection in some specific 
cases compared to their existing national law.   MS would be likely to find these options politica lly very difficult to agree and to implement 
as they would eliminate domestic laws and legal traditions. Although the instrument would 
harmonise existing contract law legislation and eliminate transaction costs, it would create 
other substantive disadvantages which would not only be of monetary value. Therefore taking 
these and the monetary costs into  account they outweigh by far the benefits of the instrument.  
 
5.5.2.  Policy option 5b: A minimum harm onisation Directive on a Common 
European Sales Law   
MS could implement this Directive going beyond its consumer protection level. As 
experience with existing minimum harmoni sation Directives shows, the level of 
 
 7implementation could maintain a considerable number of differences in national contract 
laws. This option would to a certain extent reduce transaction costs and increase the level of consumer protection allowing consumers to have more confidence to purc hase across borders.  
 However, as set out in options 5a and 6, there would be a very substantial one-off cost borne 
by domestic and cross border traders as they w ould have to adapt their contracts to use the 
new law. This cost would affect all businesse s involved in the trade in goods, irrespective of 
their desire to trade cross-border. In addition, due to th e nature of minimum harmonisation, 
there would still be some extra costs for businesses when trading cross border to consumers arising from the necessity to research the levels of consumer pr otection in other MS. 
Therefore, whilst there may be a worthwhile investment for B2B cross border transactions, 
those performing B2C cross-border  contracts as well as trading only domestically would have 
to pay very substantial additional co sts without a clear added value.  
 
6. COMPARATIVE ASSESSMENT OF OPTIONS 
The comparative assessment shows that that  option 4 (an optional Common European Sales 
Law), 5a (full harmonisation Directive on a mandatory Common European Sales Law) and 
option 6 (Regulation establishing a mandatory Common European Sales Law) best meet the 
policy objectives. However, the costs attached to options 5a and 6 are significant when 
compared to the other options be cause all businesses involved in  the trade in goods in the EU 
would need to adapt to a new legislative fr amework. In particular , they would create a 
financial burden which will not be compensated by any benefits for the businesses who only trade domestically and for whom cross border transactions costs do not create a problem. 
Therefore this is not a proportionate measure for the reduction of the contract law related 
obstacles to cross-border trade. Options 5a  and 6 also have little support from MS.   
The preferred policy option  is therefore option 4 which would meet the policy objectives in 
terms of reducing legal complexity and transac tion costs. Exporters w ho decide to use the 
optional Common European Sales Law would in itially face certain transaction costs. 
However, this option would be chosen voluntar ily by businesses. To businesses starting or 
extending their trade cr oss-border it would bring significant co sts savings. Businesses trading 
domestically or those who decide not to us e the optional Common European Sales Law when 
exporting would not face any costs as th is option would not affect them.   
 This option would also ensure a high level of  consumer protection which would increase 
consumer certainty and confidence about rights in  cross-border shopping. It would contribute 
to the cross-border trade and competitivene ss of the EU economy and would benefit the 
consumer by greater choice of products and be tter prices. As this option would be chosen 
voluntarily by businesses, it would not impose a dditional burdens but bring significant cost 
savings for businesses extendi ng their trade cross-border.  
 
7. MONITORING AND EVAL UATION ARRANGEMENTS  
 
The Commission will launch a monitoring and eval uation 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 inst rument. The intention is for the exercise to 
precede and feed into a review process which will examine the effectiveness of the Common 
European Sales Lawinstrument.